CHAPTER 1

OVERVIEW OF MANAGEMENT AND ORGANIZATION

Learning Objectives:

By the end of the chapter the students are expected to:

Define terms
Explain the basic concepts and principles of management and organization
Describe the process of management including the functions of management
Identify the basic managerial skills

Organization is a collection of people working together to achieve a common

purpose. It is the means used by people to achieve certain objectives.

Management

Management is a distinct process of planning, organizing, staffing, directing and

controlling, performed to determine and accomplish stated objectives by the use of
human being and other business resources. Conrado E. Iñigo, Jr., Ph. D.

The art of getting things done through people. Prof. Mary Parker Follet

Management is the process of planning, organizing, leading and controlling productive

resources, such as people, money, machines, materials and methods. Feliciano R.
Fajardo

Management is both a science and an art.

It is considered as a science because it has organized body of knowledge which

contains universal truth. It is called an Art because managing requires certain skills
which are personal possessions of managers.

Overview of Management Functions

1. Planning - is deciding in advance on what to do, when to do, and how to do

2. Organizing – is a process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals
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 3. Staffing – is concerned with evaluation, selection, and development of
employees to fit the needs of the organizational structure
4. Directing – is motivating people to do their jobs towards the attainment of the
organizational goals
5. Controlling – is the process of measuring and correcting actual performance
against standards established by the organization.

Importance of Management

1. Optimum use of resources 7. Stability and prosperity

2. Competitive strength 8. Team Spirit
3. Cordial industrial relations 9. Effective use of managers
4. Motivates employees 10. Reduces turnover and absenteeism
5. New techniques 11. Smoot functioning
6. Effective 12. Sound organization

The Manager

Manager - is one who plans, organizes, leads and controls other

individuals in the process of pursuing organizational goals. Managers are
vested titles like president, department head, dean, administrator,
supervisor, team leader, and the like.

Types of Managers in Three Levels of Management

Top-Level Managers – Managers at the top of one or two levels in an

organization. They are also known as C-level managers because they usually
have chief in their title.
Middle-Level Managers – Managers who are neither executives nor first-level
supervisors, but who serve as a link between the two managers.

First-level Managers – Managers who supervise operatives. They are also

known as first-line managers or supervisors

Types of Managers

Functional Managers- supervises the work of employees engaged in specialized

activities such as accounting, engineering, food preparation and the like.
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General Managers – They are responsible for the work of several different groups that
perform a variety of functions

Administrators – a manger who works in a public or non-profit organization, including

educational institutions, rather than business firm.

Entrepreneurs and Small Business Owners – A person who establishes and operates
an innovative business

Team Leaders – A manager who coordinates the work of a small group of people,
while acting as a facilitator

The Managerial Roles

1. Strategic planner 10. Negotiator

2. Operational planner 11. Motivator and Coach
3. Organizer 12. Team builder
4. Liaison 13. Team player
5. Staffing coordinator 14. Technical problem solver
6. Resource allocator 15. Monitor
7. Task delegator 16. Entrepreneur
8. Figurehead 17. Disturbance handler
9. Spokesperson

5 Key Managerial Skills

1. Technical Skill- involves an understanding of and proficiency in a specific

activity that involves methods, processes, procedures, or techniques.
Examples are: ability to prepare a budget, and demonstrate a piece of
electronic equipment
2. Interpersonal Skill – interpersonal or human relations skill is a manager’s
ability to work effectively as a team member and to build cooperative
effort in the unit
3. Conceptual Skill – ability to see the organization as a total entity. It
involves visualizing the relationship of the individual business to the
industry; the community; and the political, social and economic forces of
the nation as a whole.
4. Diagnostic skill- Ability to investigate a problem and then to decide on and
implement a remedy
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 5. Political skill – Ability to obtain power and prevent others from taking it away

Self Assessment :

True/False

1. Management is a process or series of continuing and related activities.

2. Management is both a science and an art.
3. Management requires creativity and personal skill which qualifies it as a science.
4. The process of bringing together business resources and developing productive
relationship among them is called planning.
5. Supervision and motivation of people is part of staffing function of management.
6. The lower level of management is the ultimate source of authority and responsible
for setting the overall goals of the organization.
7. Middle level is also known as the supervisory and operative level of management.
8. A pontificating manager is generally nurturing, considerate, and kind to his/her
subordinates.
9. Conceptual skill of a manager refers to his /her ability to think analytically.
10. A general manager is the one that supervises the work of employees engaged in
specialized activities such as accounting.

Chapter 2

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 EVOLUTION OF MANAGEMENT THOUGHT

Learning Objectives:

By the end of the chapter the students are expected to:

Trace and explain the various types of management theories

Identify the major developments in the evolution of management thought

Evolution of Management Theory

I. CLASSICAL APPROACH
The classical theory of management is built on principles. It is divided into
three branches:

1. Scientific Management
Focuses on the application of scientific method to increase individual worker’s
productivity
It advocates on high specialization of labor, centralized decision making, and profit
maximization

Forerunners of Scientific Management

a. Frederick W. Taylor – Father of Scientific Management
Four Basic Principles of Scientific Management
 The development of a true science of management so that the best method for
performing each task could be determined
 The scientific selection of the workers so that each worker would be given
responsibility for the task for he/she was best suited
 The scientific education and development of the worker
 Intimate, friendly cooperation between management and labor.

b. Henry L. Gantt - Originated the charting system for production scheduling which is
called the Gantt Chart
Gantt Chart is a visual progress report that identifies individual work stages in a
project’s execution and a deadline for completion of each stage.

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c. Frank and Lillian Gilbreth – Has a significant contribution in the fields of time and
motion study, and developed a three-position plan or promotion that was intended to
serve as an employee development program as well as morale booster
2. Bureaucratic Management
A classical management system that relies on rules, set hierarchy, a clear division of
labor and firm procedures that focuses on the overall organizational structure
Max Weber – a German social historian who is most closely associated with
bureaucratic management
Characteristics of Bureaucratic Management
 Formal system of rules
 Impersonality
 Division of Labor
 Hierarchical Structure
 Authority Structure
 Lifelong Career Commitment
 Rationality

3. Administrative Management
An approach to management focusing on managerial practices to increase efficiency in
organization.

Henry Fayol – a French industrialist who developed the fourteen principles of

management
1. Division of Work 8. Stability of Tenure
2. Authority and Responsibility 9. Esprit de Corps
3. Unity of Command 10. Span of Control
4. Subordination of Individual Interest to General Interest 11. Simplicity
5. Remuneration 12. Unity of Direction
6. Centralization 13. Order
7. Scalar Chain 14. Equity
II. HUMAN RESOURCE APPROACH
An approach to management which focuses on helping the managers deal effectively
with human side of organization , understanding the needs of people and reducing
some of the labor or management conflict rather than focusing strictly on the
functions of the managers.
This approach is also named as human relations or behavioral viewpoint on
management.
Basic Assumptions
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 Workers are motivated by social needs and get sense of identity through their
associations with one another
 Workers are more responsive to the social forces exerted by their peers than to
management financial incentives and rules
 Workers respond to managers who can help them to satisfy their needs
 Managers need to coordinate the work of their subordinates democratically in order
to improve efficiency

Proponents of Human Relations Viewpoint

1. Robert Owen
 Is a Scottish scholar who criticized fellow managers for failing to understand the
human element in a textile mill where he used to work in Scotland. He contended
that showing concern for workers resulted in greater profitability while at the same
time reducing hardship for the workers.
 He reported efforts to play careful attentions to the human element often resulted in
a 50% return on his investment. He was known as the “Father of the Personnel
Management”.
2. Mary Parker Follett
 Believed that management is a flowing, continuous process and nor a static one.
She stressed (1) the involvement of workers in solving and (2) the dynamics of
management, rather than static principles.
 Studied how managers did their jobs by observing them at work. Based on these
observations she concluded that coordination is vital to effective management. She
developed four principles of coordination for managers to apply.
a. Coordination is best achieved when the people responsible for making decision are
in direct contact.
b. Coordination during the early stages of planning and project implementation s
essential.
c. Coordination should address all the factors in situation.
d. Coordination must be worked at continuously.
3. Oliver Sheldon
 According to him management is generally bound to treat it workers with fairness
and honesty, and this each manager must combine the efficient values of scientific
management with the ethics of service to the community, according to three
principles:
a. “The policies, conditions, and methods of industry shall conduce to communal well
being”
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b. “Management shall endeavour to interpret the highest moral sanction of the
community as a whole to give practical effect to those ideals of social justice which
would generally accepted by the most unbiased portion of communal opinion”
c. “Management shall take the initiative in rising the general ethical standard and
conception of social justice”.
4. Chester Barnard
 Viewed organizations as social systems that required employee cooperation in order
to be effective an believed that successful management depends on maintaining
good relations with people outside the organization and others with whom managers
deal regularly
 Arrived at his central thesis: “ An enterprise can operate efficiently and survive only
when both the organization goals and aims and needs of the individual working for it
are kept in balance”
 Formulated the acceptance theory of the authority, which states that employees will
choose to the follows management orders if they (1) understand what is required, (2)
believed that the orders are consistent will the goals of the organization, and (3) see
the positive benefits to themselves in them sleep.
5. Hugo Munsterberg
 His major contribution was to apply the tools of psychology to help achieve the same
types of the productivity objectives sought by the management theories. In his major
work Psychology and Industrial Efficiency, he suggested the productivity could be
increased three ways: (1) through finding the best possible person- the work whose
mental qualities, single him or her out as best suited for the job, (2) through creating
the best possible work- the ideal psychological conditions for maximizing
productivity. (3) through the psychological influence which he called the best
possible effect” to motivate

Three Cornerstone of the Human Resource Approach

1. Hawthorne studies
 A famous series of studies of human behavior in work situations was conducted at
the Western Electric Company’s Hawthorne plant near Chicago from 1924 to 1993
to investigate the relationship between the level of lighting in the workplace and the
productivity weren’t caused by a physical but by a complex emotional chain reaction.
Employees would work harder if they believed that management was concerned
about their welfare and supervisors page special attention to them. This
phenomenon was subsequently labelled the HAWTHORNE effect

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2. Theory X and Theory Y by the Douglas McGregor
 Theory X- is a set of traditional assumption of people. Managers are pessimistic
about workers capabilities. They believed that workers dislikes works, seek to avoid
responsibilities, are not ambitious, and must be supervised closely.
 Theory Y- possesses an optimistic set of assumptions. It includes the idea that
people do accept the responsibility, can exercise self-control, possess the capacity
to innovate consider work to be as natural as rest or play.

DOUGLAS McGREGOR THEORY X AND Y

THEORY X THEORY Y
People are lazy People are energetic
People lack ambition People want to make
contributions
Dislike Responsibility People do have ambition
People are self-centered People will seek responsibility
People Don’t like change Consider work as natural as
rest and paly
People need close supervision

3. Abraham W. Maslow’s Hierarchy of Needs

 Discusses that human are motivated by efforts to satisfy a hierarchy of
needs, ranging from basic needs to those for self-actualization, or
reaching ones potential.

The Hierarchy of Needs

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 Sel
f-
act
ual
iza
Needtio
for Self
n
-Esteem

Need for Social Needs

Need for Security Need

Need for Physiological

Primary Strength of human resource approach: It encourages managers to take into

account the human element.

Primary weakness of human resource approach: it sometimes leads to an oversimplified

view of managing people.

III. QUANTITATIVE APPROACH

 Management is viewed as mathematical and logical
process which involves the use of quantitative techniques
such as concepts, symbol and models including statistics
information models and computer stimulations to aid in
managerial decision making planning and control

Four Basic Characteristics of Quantitative Techniques

1. The primary focus in decision making: The solution identifies direct actions that
managers can take
2. Alternative are based on economic criteria
3. Mathematical models are used
4. Computers are essential.

IV. SYSTEM APPROACH

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 The system approach to management attempts to view the organization
as a unified purposeful system composed of interrelated parts.
Key Concepts of System Approach
1. Entropy – is a concept of the systems approach to management which
takes that an organization will die without continuous input from
outside environment
2. Synergy – it states that the whole organization is greater than the sum
of its part
3. System Boundary - it states that each system has a boundary that
separates it from its environment
4. Flow – states that a system has a flow of information , materials and
synergy which enter the system from the environment as inputs,
undergo process of information within a system and exit the system as
outputs

V. CONTINGENCY APPROACH

Effective management varies with the organization and its environment

because some methods are highly effective in one situation but failed to
work in other situations. The best solution is being sought to respond to
the characteristics of the unique situation being faced. The motto of
contingency theory is “ it all depends”

Self - Assessments:

Classify and identify the following as to A. Classical Approach

B. Behavioral Approach C. Quantitative Approach D. Contingency Approach E.
Systems Approach

1. Relies on set rules and regulations

2. Workers are assumed to be motivated by their social needs
3. Mathematical models are used
4. Use of scientific method to increase worker’s efficiency/productivity
5. Views the organization as a unified purposeful system composed of interrelated
parts
6. “ it all depends”
7. Organizations policies shall conduce to communal well being
8. Softwares and data are very essential
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9. It advocates on profit maximization
10. Effective management varies with the organization and its environment

Match the items in Set A with the items in Set B.

1. Theory X and Theory Y a. Mary Follet

2. The Principles of Coordination b. Robert Owen
3. Father of Bureaucratic Management c.Hugo Munsterberg
4. The 14 Principles of Managemen t d.Max Weber
5. Father of Scientific Management e. Abraham Maslow
6. Psychology and Industrial Efficiency f. Frank and Lillian Gilbreth
7. Acceptance Theory of Management g. Henry Fayol
8. Father of Personnel Management h. Chester Barnard
9. The Time and Motion Study i. Frederick Taylor
10. The Hierarchy of Needs j. Douglas Mc Gregor

Chapter 3

BUSINESS AND ITS ENVIRONMENT

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 Learning Objectives:

By the end of the chapter the students are expected to:

Discuss business and its environment

Identify and explain the diffrent business functions

BUSINESS

A social process which involves the assembly and utilization of resources to

produce goods and services in order to satisfy the needs of society. (Prof. Lawrence
Gitman)

A business is any activity that seeks to provide goods and services to others
while operating at a profit.

Reasons Why People Engage in Business

1. Personal Satisfaction
2. Family Involvement
3. Independence and Power
4. Social Activities
5. Profit Expectation

BASIC SOURCES OF BUSINESS

1. Men- These are people who work in business enterprise

2. Money - Funds/amount needed in putting up business enterprise
3. Machines- Machineries used in production
4. Materials- Raw materials needed in the creation of products
5. Methods- Refers to technology or techniques of production

FUNCTIONS OF BUSINESS

 Human Resources
The HR deals with the human side of business.
It is concerned with obtaining and maintaining a capable and effective workforce ,
motivating the employees individual and in groups to contribute their maximum to
the fulfillment of organizational goals
 Finance and Accounting
Finance function of business is basically responsible in investment decisions,
dividend decisions and other financial related decisions.
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 Production
Production is the creation of goods and services with the help of certain processes.
The production of goods depends essentially in the organization of men, money,
materials, and facilities into a smooth operation.
 Marketing
Marketing is the process of getting goods and services into the hands of the
consumer with a view of satisfying the needs and desires of consumers and
producers.
Marketing function creates a process through which producers and consumers are
brought together in an exchange relationship and transfer of ownership takes place.

Self Assessment:.

Answer the following questions:

1. What are the major functions of business?
2. What are the basic sources needed by the business?

CHAPTER 4

The Different Forms of Business

Learning Objectives:

By the end of the chapter the students are expected to:

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 Diffrentiate the different forms of business organization

Forms of Business Organization

The legal forms of business organizations fall into three categories:

Sole Proprietorship
- it is owned by only one person who also acts as manager of the business

Advantages Disadvantages

1. Ease and Cost of Formation 1. Owner’s Lack of Ability and Experience

2. Secrecy 2. Difficulty in Attracting Good Employees

3. Distribution and Use of Profits 3. Difficulty of Raising Capital

4. Control of the Business 4. Limited Life of the Firm

5. Government Regulation 5. Unlimited Liability of the Proprietor

6. Taxation

7. Closing the Business

Partnership
- a contract whereby two or more persons bind themselves to contribute
money, property and industry into a common fund with an intention of
dividing the profits among themselves

Advantages Disadvantages

1. Ease Formation 1. Unlimited Liability

2. Pooling of Knowledge and Skills 2. Limited Life

3. More Funds Available 3. Potential Conflict Between Partners

4. Ability to Attract and Retain Employees 4. Difficulty in Dissolving the Business

5. Tax Advantage

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Corporation
- an artificial being created by operation of law having the right of succession
and attributes, powers and properties expressly authorized by law and
incident to its existence

Advantages Disadvantages

1. Limited Liability 1. More Expensive and Complicated to Organize

2. Ease of Expansion 2. Double Taxation

3. Ease of Transferring Ownership 3. More Extensive Government Restrictions and

Reporting Requirements
4. Relatively Long life 4. Employers Lack Personal Identification With
and Commitment to Corporate Goals
5. Greater Ability to Hire Specialized
Management

Distinction of Different Business Organization

Sole Partnership Corporation

Proprietorship
Manner of Will of the owner Mere agreement of By operation of law
creation two or more
persons
Management Sole Proprietor Partners/Managing Board of the Directors/
Partner Board of Trustees
Right of No No Has right of succession
Succession
Length of Dependent on the Dependent on the 50 yrs upon registration
Existence will of the owner will of the partners and is renewable
Obligation to the Unlimited liability Unlimited Liability Limited liability
3rd Party
Requirement by None Articles of Co- Articles of Incorporation
SEC Partnership
Forms of Business as to its Nature of Operations

1. Service Business
Business engaged in rendering skills and service for a fee
Examples: professionals like doctors, accountants, lawyers
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 repair shops, travel agencies, computer shops
2. Merchandising business
Business engaged in buying goods and selling these again in the same
form for profit
Examples: Hardware, Sari-sari store, bookstores, appliances stores
3. Manufacturing Business
Business engaged in converting raw materials into finished products
Examples: Vehicle assembly, pharmaceuticals, food and beverage
industry

The Goals of Business

1. Profit maximization
2. Provide the needs and wants of people in the community
3. Increase the value of business as an economic entity

Self Assessment:

Identify the following attributes of different business organizations. Write SP if it

describes sole proprietorship, P for partnership and C for corporation.
1. Its owners have limited liability.
2. It is the easiest to organize.
3. The most expensive to organize
4. It is subject to greater degree of government supervision.
5. Limited capacity to raise bigger capital
6. It is formed by mere agreement between the parties.
7. The owner reaps all the reward from his business.
8. In the eyes of the law it exist just like any person.
9. Ownership cannot be transferred without the consent of other owners
10. Managed by group of people called the Board of Directors

Skill Building Activity

List down (as many as you can) business organizations in your community and identify
as to service, trading or manufacturing type.

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 CHAPTER 5

ETHICS AND SOCIAL RESPONSIBLITY

Learning Objectives:

By the end of the chapter the students are expected to:

Identify the philosophical principles behind business ethics

Identify factors contributing to ethical dilema and violations
Present an overview of corporate social responsibility
Descibe social responsibility initiatives aimes pecifically at building a sustainable
environment

Ethics

The theory of morality of right conduct

Ethics is a set of moral principles by which people conduct themselves

personally, socially and personally

It is the practical science of morality of human acts

Morality refers to the quality of goodness or badness in a human act

Human act are actions that proceed from the deliberate free will of man. These are
actions done with knowledge and consent and willfully carried out by the person.

Importance of Ethics in Business

Business Ethics paves the way for a common understanding of the fundamental idea
what is good and what is bad in our human conduct. Without ethics people will set their
own moral standards, which would result into a kind of subjective morality.

Business Ethics

Refers to principles and standards that determine acceptable conduct in

business

Moral Reasoning

Moral reasoning is a process in which ethical issues and problems are

benchmarked against a moral standard so that a moral judgment is made possible.

Characteristics of Good Moral Standard

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 1. A good moral standard is one that looks at the issue as something that is very
serious
2. A good standard must be grounded on good moral argument
3. A good standard must be objective not subjective
4. A good moral standard, when violated, brings about the feelings of guilt, shame,
and remorse of conscience.

Some of the Ethical Problems and Issues in Business and the Corporate World

1. Sexual Harassment
2. Gift-giving and bribery
3. Workplace Romance
4. Conflict of interest
5. Tax Evasion and Tax Avoidance

Corporate Social Responsibility

Corporate social responsibility means seriously considering the impact of the company’s
actions on society. – Bauer

Social responsibility is the obligation of decision makers to take actions which protect
and improve the welfare of the society as a whole along with their own interests. – Davis
and Blomstrom

The idea of social responsibility supposes that the corporation has not economic and
legal obligations, but also certain responsibilities to society which extend beyond these
obligations.- Mc Guire

Philanthropic Activities
Good Corporate
citizenship
Ethical Responsibilities
Obligation to be ethical, do
what is right and avoid harm
Legal Responsibilities
(Compliance with laws and
regulations)
Economic Responsibilities
(Being Profitable)
10 Commandments of Social Responsibility

1. Take corrective action before it is required

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 2. Work with affected constituents to resolve mutual mutual problems
3. Work to establish industry-wide standards and self-regulations
4. Publicly admit your mistakes
5. Get involve in appropriate social programs
6. Help correct environmental problems
7. Monitor the changing social environment
8. Establish and enforce a corporate code of ethics
9. Take needed public stands on social issues
10. Strive to make profits on an ongoing basis

Ecology and Business

Ecology is the scientific study of the relations that living organism have with
respect to each other and their environment
The study of how living things – plants and animals – interact with one another in
an ecosystem

Dimensions of Ecological Issues and Problems

1. Population explosion
2. Depletion of natural resources
3. Pollution of the environment
4. Destruction of the earth

Self Assessment:

Write TRUE if the statement is correct and change the underlined word if it is wrong.
( number right x 2)

1. A good moral standard must be subjective.

2. Profit motive is a good and valid activity of business.
3. In general point of view, gifts of substantial value is unethical in business
regardless of purpose and position of the giver.
4. Ethics refers to the quality of goodness or badness in a human act.
5. Ethical responsibility is known to be the highest form of corporate responsibility.
Case Analysis

The Confused Accountant

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 Yvonne Pillar is a young accountant who came from a poor family. She was
recently hired by a big company called Chameleon Co.
When it was time to audit the accounting books of the company. Yvonne was
instructed by her boss to manipulate the numbers in order to reduce the taxes the
company will have to pay the government. The company official said that if she
would not heed the command she would be terminated.
The employment condition that time was really tight and the chance of finding
another job is very minimal.
If you were Yvonne Pillar will you obey your boss? Why or why not?

CHAPTER 6

MANAGING COMMUNICATION

Learning Objectives:

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 By the end of the chapter the students are expected to:

Describe the steps in the communication process

Explain and Illustrate the diffrence between formal and informal communication
channels
Explain and Illustrate the diffrent communication flows

Communication

It is the transfer of information and understanding from one person to another

It is a process of exchange of facts, ideas, opinions and a means that individuals or
organizations share the meaning and understanding with one another.

Importance of Communication

It is through communication that the individual members of the organization will know
important concerns such as:
 What their organization is
 What are the objectives
 What their roles are in achieving the organization’s objectives
 How they will achieve those objectives
 Who the individual members of the organization are

If there is no communication, employees cannot know what their co-workers are doing,
management cannot receive information inputs, and supervisors and team leaders
cannot give instructions.

The Six Components of an Effective Communication:

1. Sender
A communication source
Person who makes an attempt to send a message
2. Message
A purpose or an idea to e conveyed in a communication event
The actual physical product as a result of encoding
3. Channel
Is the medium through which the message travels.

Types of Channel
 Face-to-face
 Telephone/Cellphone
 E-mails
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  Written memos and letters
 Posted notices
 Bulletins
4. Receiver
The person receiving a message
5. Feedback
Process of communicating how one feels about something another person has
done or said.
6. Environment
Refers to the circumstances in which messages are transmitted and received

The Communication Process

1. Develop an Idea. The most important step in effective communication is

developing an idea. It is important that the idea to be conveyed must be useful
or of some value.

2. Encode. The next step is to encode the idea into words, illustrations, figures, or
other symbols suitable for transmission.
3. Transmit. Various channels available for transmission are the spoken word, body
movements, the written word, television, telephone, cellular phone, computer,
radio, artist’s painting, the movies, sound recording, and some others.
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 4. Receive. Actual receiving of the message by the intended receiver. The
requirement is for the receiver of the message to tune in to receive the message,
which may be done through listening or by other means.

5. Decode. Translating the message from the sender into a form that will have
meaning to the recipient. If the receiver knows the language and terminology
used in the message, successful decoding may be achieved.

6. Accept. The next step is for the receiver to accept or reject the message. Factors
that will affect the acceptance or rejection of a message are:
a. The accuracy of the message;
b. Whether or not the sender has the authority to send the message and /or
require action; and
c. The behavioral implication for the receiver.

7. Use. If the message provided something of importance to a relevant activity, then

the receiver could store it and retrieve it when required. If the message requires
a certain action to be made, then he may do so, otherwise, he discards it as soon
as it is received.

8. Provide Feedback. The last step in the communication process is for the receiver to
provide feedback to the sender.

Basic Methods of Interpersonal Communication

1. Verbal Communication
A major means of sending messages which includes one-on-one meetings,
speeches, telephone, grapevine and the like.
Verbal communication is appropriate if the sender:
 Wants to which are more like to appear informal

 Wants to invite suggestions and ideas which are more likely to spar off
discussion
 Is explaining something complex and people might need to ask clarification as he
goes along
 Has important news or impact
 Needs to be very diplomatic and feels he will be more effective than in writing
 Has something highly confidential to say and putting it in writing is risk
2. Nonverbal Communication
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 Communication that takes place through facial expression, body
movements, eye contact , and other physical gestures.

3. Written Communication

Communication which includes memos, notice boards, letters, internal

newspaper, mails, faxes, and instant messaging.

Kinds of Communication Flow

1. Downward Communication – message flows from higher levels to lower levels
Purpose:
to give instructions
to provide information about policies and procedures
to give feedback about performances
to motivate

Techniques: letters, meetings, manuals, handbooks and newsletters

2. Upward Communication – refers to messages from persons in lower level

positions to persons in higher positions
Purpose:
To provide feedback to higher-ups
To inform higher ups of progress towards goals
To perform current problems
Techniques: performance reports, suggestion systems, open-door policy,
exit interviews
3. Horizontal Communication – refers to messages sent to individuals or groups
from another of the same organizational level or position
Purpose:
To coordinate activities between departments
To persuade others at the same level of organization
To pass on information about activities or feelings
Techniques: memos, telephones, picnics dinners, social affairs

Self Assessment:

True/False
1. Horizontal communication is usually more formal than vertical communication.
2. Written communication is appropriate when sender wants to explain something
complex and wants to appear less formal.

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3. Upward communication refers to message flow from persons in lower level positions
to top management for the purpose of feedbacking and reporting.
4. The last step in communication process is to receive the message.
5. Verbal communication is most appropriate when the sender wants to relay
something complex and people might need some clarification.

CHAPTER 7

PLANNING

Learning Objectives:

By the end of the chapter the students are expected to:

Discuss the nature of planning
Describe planning at different levels in the firm
Enumerate and explain the planning process
Apply appropriate planning techniques and tools

Planning
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 Refers to the process of determining objectives, the alternative courses of action
to accomplish the objectives, and choosing the best course of action after an evaluation
of the different alternatives. It involves an analysis of organization’s current position,
forecast of future environment and evaluation of alternative courses of action in terms of
their potential future impact.

The Planning Process

1. Define the present situation
2. Establish goals and objectives
3. Analyze environment in terms aids and barriers to goals and objectives
4. Develop action plans to reach goals and objectives
5. Develop budget
6. Implement the plans
7. Control the plans

Importance of Planning
 Planning provides direction to managers/non-managers
 Planning reduces uncertainty
 Planning minimizes wastes and redundancy
 Planning establishes the goals and standards used in controlling

Principles of Planning
It must be realistic
It must be based on felt needs
It must be flexible
It must be democratic
It must include social responsibility

Types of Plan

Corporate Planning
A formal, systematic, managerial process, organized by responsibility, time and
information to insure that operational planning, project planning, and strategic planning
are carried out regularly to enable top management to direct and control the future of
the enterprise.

Strategic Planning
The process of making decisions which will tend to optimize the organization’s
future position despite changes in future environments.
Strategy is a plan, an integration of organization’s important objectives, policies and
programs into a cohesive whole.

Project planning

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 It refers to working out the detailed execution of an action outside the scope of
current operations such as a new plan, a new product, new market, adoption of a new
system, or the acquisition of another company.

Operational planning
It refers to the forward planning of existing operations. It involves the
determination of how to effectively use current resources to attain both short-range and
long-range goals.

Financial Planning
It refers to the process of determining the best uses of the financial resources of
an organization to attain its predetermined objectives, and the procurement of the
required funds at the least cost.

Three Basic Questions that Facilitate the Financial Planning Process

1. Where are we now?
2. How did we get here?
3. Where do we want to go?

Budget
Is a formal statement of a planned course of action expressed in quantitative terms.

Objectives of budgeting
1. Planning
2. Coordination
3. Control

Other Form of Plans

Policies
They are general guidelines to follow when making decisions and taking actions.
Policies are designed to be consistent with strategic plans, and must allow room or
interpretation by the individual manager.

Procedures
A customary method of handling an activity. It guides action rather than thinking.

Rules
Are specific course of action or conduct that must be followed. It is considered to
be the simplest form of plan.

Programs

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 Are a combination of plans for a major undertaking to attain a major goal.
Programming refers to the process of determining the different major activities of
an enterprise geared towards attainment of the goals.

Mission
Purpose, basic function or task which is assigned to them by the society

Planning Tools

1. Quantitative planning tools – Numerical data in which sufficient information is

available to determine relationships between variables is used.
a. Program evaluation and review techniques (PERT)
It is used to schedule and control projects whose completion cannot
be precisely determined.
b. Critical Path Method (CPM)
It is used to schedule and control projects whose completion can be
precisely predicted.
c. Break-Even Analysis – It measures income equal to expenses
d. Extrapolation – Extension of some benchmark data to some desired
period in order to obtain data which are not available.
2. Qualitative Planning Tools – These are based on expert judgment, opinion, or
experience
a. Delphi Technique – forecast are performed by consultants, experts, or
specialists who are outsiders
b. Brainstorming – Participants are experts who are employees of the
organization where they feel free to discuss their ideas or suggestions.
c. Quality Circle – Cooperative effort of employees and supervisors.
Sessions are conducted regularly to discuss only one problem the supervisor, or
participants want to solve.
d. Management by Objectives – setting of mutually agreed goals and using
those goals to evaluate employee performance

Relationship of Planning in Other Functions of Management

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Self Assessment:

Simple Recall

1. Specific course of action that must be followed

2. It reflects the purpose or basic function of the organization
3. General guidelines to follow when making decisions/ taking actions
4. Formal statement of planned course of action expressed in quantitative terms
5. Process of determining the best uses and procurement of the required funds
6. Forward planning of existing operations
7. It provides customary method of handling an activity
8. Combination of plans for a major undertaking to attain major goal
9. Quantitative planning tool than can be used for scheduling and controlling of non-
repetitive projects
10. Process of determining objectives and the alternative courses to achieve them
Word Bank

Planning Policies Programs

Strategic Planning Rules CPM
Operational Planning Mission PERT
Financial Planning Vision Procedures
Project Planning Budget Extrapolation

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 CHAPTER 8

ORGANIZING

Learning Objectives:

By the end of the chapter the students are expected to:

Formulate a decision from several alternatives

Discuss the nature and concept of organization
What kind of organizational structure to
Distinguish the various types of organization structures
Differentiate formal from informal organization have

What kind of people we need and when

Organizing is a management function which relates to the structuring of resources and
Plans
activities to accomplish
Objectives and objectives in an efficient and effective manner. The aim of
Necessary for deciding
organizing
how to activities
achieve is to have a collection of people in the organization who perform
How to effectively lead people
activities
themfor a specific purpose.
By furnishing standards of control
Organization

It is a collection of people working together to achieve a common purpose better

than they could be working separately.

Organizational Structure

Is the arrangement of people and tasks to accomplish organizational goals

Defines how job tasks are formally divided, grouped and coordinated

Underlying Principles of Organization

1. Division of Labor/ Specialization -is the degree to which tasks in the organization are
subdivided into separate jobs. Rather than an entire job done by one individual, it is
broken down into a number of steps, each step being completed by a separate
individual.
2. Delegation - It is defined the assignment of duties, authority, and responsibility to
others.
It is one of the means to communicate the relationship and duties determined by
division of labor.
3. Departmentalization - Is the basis by which jobs are grouped together. One of the most
popular ways to group activities is by function performed. Departmentalization could
be by business function, process, by customer, by geographic region.
4. Line vs. Staff
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 Line – is the power to command that is exercised by a person over his direct
subordinates in the formal structure
Staff – are those which provide advice or services to other units of the organization
5. Chain of command - Is an unbroken line of authority that extends from the top of the
organization to the lowest echelon and clarifies who reports to whom.
It asks the questions, “To whom do I go if I have a problem,” or “To whom am I
responsible?”
6. Authority – Rights inherent in a managerial position to give orders and expect orders to
be obeyed

7. Span of Control - It refers to the number of subordinates reporting to a single

supervisor.

8. Centralization vs. decentralization

Centralization – refers to the degree to which decision making is concentrated at a
single point in the organization.
Decentralization – lower-level personnel provide input or are actually given the
discretion to make decisions.
9. Formalization - Refers to the degree to which jobs within the organization are
standardized.
It is the degree to which rules and procedures prescribe employees’ jobs and activities.
A. Formal Organization
It is an official statement of reporting relationships, rules and regulations. It covers all
the events and transactions that are likely to take place in conducting business of the
organization.
B. Informal Organization
It is a set of unofficial working relationships that emerges to take care of the events and
transactions not covered by the formal structure.

Determinants of Organizational Structure

1. Strategy
A set of plans and actions necessary to achieve organizational goals

2. Structural imperatives
It sought to address the question “What are the compelling factors that determine the
how the organization must be structured to be effective?”

a. Size
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 Usually measured in terms of total number of employees , value of organization’s
assets, sales volume, and physical capacity
b. Technology
Refers to the mechanical and intellectual processes that transform inputs into
outputs
c. Environment
Includes everything outside the an organization such as people , other
organizations, economic factors , objects and events

Organizational Designs
1. Mechanistic Design Hierarchical in nature
 Interactions and communications typically are vertical
 Instructions come from the boss
 Knowledge is concentrated at the top
 Continued membership requires loyalty and obedience

2. Organic Design
 Resembles a network
 Interactions and communications are horizontal
 Knowledge resides wherever it is most useful to the organization
 Membership requires a commitment to the organization’s tasks

3. Matrix Designs
Combines two different designs to gain the benefit of each.
A matrix structure is appropriate when three conditions exists:
1.There is external pressure for a dual focus
2. There is pressure for high information-processing capacity
3. There is pressure for shared resources

Self Assessment:

True/False

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1. Organizing allows subdivision of various job resulting to completion of maximum work
in minimum time.
2. Organizing function of manager starts with departmentalization.
3. Organic structure of organization primary hierarchical and usually has a vertical
communication flow.
4. The bigger the size and scope of operation of an organization, the more complex its
organizational structure.
5. The more the policies and rules there are specifying how people should behave, the
more formalized the organization.
6. Scalar chain of command facilitates the work flow in an organization which helps in
achieving company goals.
7. Organizational structure refers to the arrangement of people and tasks to accomplish
organizational goals.
8. Bureaucratic structure is characterized by large complex administrative system.
9. As an organization grows matures, it inevitably needs centralized controls and degree
of bureaucracy.
10. Centralization is the extent to which authority is retained at the top of organization.

CHAPTER 9

STAFFING

Learning Objectives:

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 By the end of the chapter the students are expected to:

Define terms and explain the basic concepts and principles of staffing
Enumerate and explain the staffing procedure
Understand and explain the importance of effective staffing

Staffing

Staffing is defined as the process of supplying the organization with the needed
personnel to achieve the objective for which it has been established.
Also termed as talent management- a deliberate approach to attract, develop, and
retain people with the aptitude and abilities to meet current and future organizational
needs.

The Staffing Process

1. Awareness of legal aspects
2. Strategic Human-Resource planning
3. Recruitment
4. Selection
5. Orientation, training, and development
6. Performance evaluation
7. Compensation

I.Legal Aspects of Staffing

National, state, provincial and local laws influence every aspect of talent
management. Managers and human resource specialists must keep the major
provisions of these laws in mind whenever they make decisions about any phase of
employment.
Prohibited Practices in Recruitment and Placement Under the Labor Code of the
Philippines
a. To charge or accept, directly or indirectly, any amount greater than that specified in
the schedule of allowable fees prescribed by the Secretary of Labor, or to make a
worker pay any amount greater than that actually received by him as a loan or advance;
b. To furnish or publish any false notice or information or document in relation to
recruitment or employment;
c. To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code.
d. To induce or attempt to induce a worker already employed to quit his employment in
order to offer him to another unless the transfer is designed to liberate the worker from
oppressive terms and conditions of employment;
e. To influence or to attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency;

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f. To engage in the recruitment or placement of workers in jobs harmful to public health
or morality or to the dignity of the Republic of the Philippines;
g. To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly
authorized representatives;
h. To fail to file reports on the status of employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor.
i. To substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the
periods of expiration of the same without the approval of the Secretary of Labor;
j. To become an officer or member of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the management of a travel agency;
and
k. To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under this Code and
its implementing rules and regulations.

Employment of Minors
a. No child below 15 years of age shall be employed, except when he works directly
under the sole responsibility of his parent or guardian , and his employment does
not in any way interrupt with his schooling.
b. Any person between 15 and 18 years of age maybe employed for such number
of hours and such periods of the day as determined by Secretary of DOLE with
appropriate regulations.
c. The foregoing provisions shall in no case allow the employment of a person
below 18 in an undertaking which is hazardous or deleterious in nature as
determined by the secretary of DOLE.

II.Strategic Human Resource Planning

The process of anticipating and providing the movement of people into, within,
and out of an organization to support the firms business strategy.
Steps in HR Planning
1. Planning for future needs
2. Planning for future turnover
3. Planning for recruitment, selection, and layoffs
4. Planning for training and development
III.Recruitment
Is the process of attracting job candidates with the right characteristics and skills
to fit job openings.
The major purpose of recruitment and selection is to find qualified employees
who fit well into culture of the organization. A starting point in recruiting is to understand
the nature of the job to be filled and the qualifications sought.

The job description explains in detail what the jobholder is supposed to do.

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Job specification is a statement of a personal characteristics needed to perform the job.

Recruiting Sources
1. Present employees
2. Referrals by present and former employees
3. Online recruiting including company web sites
4. External sources like recruiting advertisement-print, radio, and television,
placement offices, employment agencies

IV.Selection
Involves the choosing of from applicants a suitable candidate to fill the a post
Selection Process
1. Applicant is recruited 5. Job interview
2. Preliminary screening interview 6. Reference Checking
3. Completion of application form 7. Physical Examination
4. Psychological testing

V. Employee Orientation (Onboarding)

A formal activity designed to acquaint new employees with the organization.
Training
Any procedure intended to foster and enhance learning among employees,
particularly directed at acquiring job skills.
Development
A form of personal improvement that usually consist of enhancing knowledge and
skills of a complex and unstructured nature

VI. Performance Evaluation (Appraisal)

A formal system for measuring, evaluating, and reviewing performance. The

main purpose is to decide whether an employee should receive a merit increase and
how large that increase should be. The evaluation process also identifies employees
with potential for promotion and it helps the manages carryout the leadership function in
several ways.

Major Components of Performance

Task performance is the accomplishment of duties and responsibilities associated with

a given job

Citizenship performance is behavior that contributes to the goals of organization by

contributing to its social and psychological environment

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Counterproductive performance is voluntary behavior that harms the well-being of the
organization.

VII. Compensation

It includes pay and benefits

Types of Pay

Wages – payments to employees for their services, computed on an hourly basis or on

the basis of the amount of work produced.

Salary – an annual amount of money paid to a worker; it does not depend directly on
output or hours worked

Employee benefits is any non-cash payment given to workers as part of compensation

for their employment.

Examples Employee Benefits

1. Health care benefits

2. Personal Services
3. Financial Benefits
4. Family-friendly Benefits

Self Assessment:

True/False
1. The legal age for employment is 15 years of age.
2. Staffing begins with the prediction about how many and what types of people will
be needed to conduct the work.
3. Job description usually includes education, experience, and skills required to
perform the job successfully.
4. Performance evaluation provide basis for employee promotion, demotion and
merits to be received.
5. Staffing is also termed as talent management.

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 Compare and Contrast
1. Wages vs. Salary
2. Recruitment vs. Selection
3. Job Description vs. Job Specification

CHAPTER 10

LEADING

Learning Objectives:

By the end of the chapter the students are expected to:

Discuss the nature of leadership

Differentiate styles of leadership
Explain the different leadership theories
Recognize the interrelationships of Filipino from foreign cultures

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Leading

Process of guiding and directing the behavior of the people in the organization in order
to achieve certain objectives

Foundations for Effective Leadership

Managerial Power = Position Power + Personal Power

Power of the POSITION:

Based on things managers can offer to others.
Rewards: "If you do what I ask, I'll give you a reward."
Coercion: "If you don't do what I ask, I'll punish you."
Legitimacy: "Because I am the boss; you must do as I ask."

Power of the PERSON:

Based on how managers are viewed by others.
Expertise—as a source of special knowledge and information.
Reference—as a person with whom others like to identify.

Definition of Terms
Power
The ability to get others to do what you want them to do
Reward Power
The capacity to offer something of value as a means of influencing other people
Coercive Power
The capacity to punish or withhold positive outcomes as a means of influencing
other people.
Legitimate Power
The capacity to influence other people by virtue of formal authority or the rights of
office.
Expert Power
The capacity to influence other people by virtue of specialized knowledge.
Referent Power
The capacity to influence other people because of their desire to identify
personally with you

Leadership Styles
The recurring pattern of behaviors exhibited by a leader

Autocratic Style
 Leader makes decisions without reference to anyone else
 High degree of dependency on the leader
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  Can create de-motivation and alienation of staff
 May be valuable in some types of business where decisions need to be made
quickly and decisively

Human Relation Style

Emphasizes people over tasks
Democratic Style
Democratic:
Encourages participation in decision making from different perspectives –
leadership may be emphasized throughout the organization
Consultative: process of consultation before decisions are taken
Persuasive: Leader takes decision and seeks to persuade others that the
decision is correct
 May help motivation and involvement
 Workers feel ownership of the firm and its ideas
 Improves the sharing of ideas and experiences within the business
 Can delay decision making

Laissez-Faire Style:
 ‘Let it be’ – the leadership responsibilities are shared by all
 Can be very useful in businesses where creative ideas are important
 Can be highly motivational, as people have control over their working life
 Can make coordination and decision making time-consuming and lacking in
overall direction
 Relies on good team work
 Relies on good interpersonal relations

Theories of Leadership

Trait Theory

Trait theory of leadership consider leaders to possess common traits

Traits Often Shared by Effective Leaders

1. Drive
Successful leaders have high energy, display initiative, and are tenacious.
2. Self-confidence
Successful leaders trust themselves and have confidence in their abilities.
3. Creativity
Successful leaders are creative and original in their thinking.
4. Cognitive ability
Successful leaders have the intelligence to integrate and interpret information.
5. Business knowledge
Successful leaders know their industry and its technical foundations.
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 6. Motivation
Successful leaders enjoy influencing others to achieve shared goals.
7. Flexibility
Successful leaders adapt to fit the needs of followers and demands of situations.
8. Honesty and integrity
Successful leaders are trustworthy; they are honest, predictable, and
dependable.
Behavioral Theories
Imply that leaders can be trained – focus on the way of doing things
Structure based behavioral theories – focus on the leader instituting structures –
task orientated
Relationship based behavioral theories – focus on the development and
maintenance of relationships – process oriented

Contingency Theories:
Leadership as being more flexible – different leadership styles used at different
times depending on the circumstance.
Suggests leadership is not a fixed series of characteristics that can be
transposed into different contexts
May depend on:
 Type of staff
 History of the business
 Culture of the business
 Quality of the relationships
 Nature of the changes needed
 Accepted norms within the institution
Fiedler’s Contingency Theory
Suggests that the best leadership style depends on the situation
Fiedler believes that leadership success requires the right style–situation
match. He classifies leadership styles as either task-motivated or relationship
motivated, and views them as strongly rooted in our individual personalities.

House’s Path Goal Theory

Leaders are most effective when they help followers move along paths through
which they can achieve both professional and personal goals

House’s Four Path-Goal Leadership Styles

1. “Directive leader” lets others know what is expected; gives directions, maintains
standards.
2. “Supportive leader” makes work more pleasant; treats others as equals, acts
friendly, shows concern.
3. “Achievement-oriented leader” sets challenging goals; expects high performance,
shows confidence.

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4. “Participative leader” involves others in decision making; asks for and uses
suggestions.

Transformational Theories
Transformational leadership inspires enthusiasm and extraordinary performance.

Characteristics of a Transformational Leader

Visionn- Has ideas and a clear sense of direction; communicates them to

others; develops excitement about accomplishing shared “dreams.”
Charisma - Uses power of personal reference and emotion to arouse others’
enthusiasm, faith, loyalty, pride, and trust in themselves.
Symbolism - Identifies “heroes” and holds spontaneous and planned
ceremonies to celebrate excellence and high achievement.
Empowerment- Helps others grow and develop by removing
performance obstacles, sharing responsibilities, and delegating
truly challenging work.
Intellectual stimulation- Gains the involvement of others by creating
awareness of problems and stirring their imaginations.
Integrity - Is honest and credible; acts consistently and out of personal
conviction; follows through on commitments.
Transactional Theories:
 Focus on the management of the organization
 Focus on procedures and efficiency
 Focus on working to rules and contracts
 Managing current issues and problems

Trends in Leadership Development

Transformational leadership inspires enthusiasm and extraordinary
performance.
• Emotionally intelligent leadership handles emotions and
relationships well.
• Interactive leadership emphasizes communication, listening, and
participation.
• Moral leadership builds trust from a foundation of personal integrity.
• Servant leadership is follower centered and empowering.

Peter Drucker’s “Good Old-Fashioned Leadership”

 Good leaders have integrity; they mean what they say, earning and keeping the
trust of followers.
 Good leaders define and establish a sense of mission; they set goals, priorities
and standards.
 Good leaders accept leadership as responsibility, not a rank; they surround
themselves with talented people.
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Self Assessment:

Identify the following types of leader

1. A leader that makes decision without reference to anyone

2. A leader that that encourages participation and consultation before making decision
3. A leader that sets challenging goals and expects high performance.
4. A leader that inspires enthusiasm and extraordinary performance.
5. A follower-centered and an empowering leader
6. A leader that takes decision and persuade others that his decision is correct.
7. A leader that focuses in building trust through personal integrity
8. A leader that often gives directions, maintains standards, and let the people know
what is expected.
9. A leader that maintains friendly relationship, treats other equally, and shows concern
to his people
10. A leader that encourages participation in decision making from different perspectives
of organization

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 CHOICES

a. Democratic Leader g. Supportive Leader

b. Autocratic Leader
c. Consultative Leader
d. Directive Leader
e. Participative Leader
f. Persuasive Leader
h. Transformational Leader
i. Servant Leader
j. Moral Leader
k. Achievement-Oriented Leader
l. Interactive Leader

CHAPTER 11

MOTIVATION

Learning Objectives:

By the end of the chapter the students are expected to:

o Discuss the nature of motivation

o Analyze the factors that contribute to motivation
o Identify the different theories of motivation

Motivating refers to the act of giving employees reasons or incentives to work to

achieve organizational objectives. It refers to the process of activating behaviour,
sustaining it, and directing it toward a particular goal.

Plus MOTIVATION
NEEDS
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 This leads to
readiness for the leads to
next need

NEED ACTION OR
SATISFACTION GOAL-
This results in DIRECTED
BEHAVIOR

The Process of Motivation

FACTORS CONTRIBUTING TO MOTIVATION

1. Willingness to Do the Job – People who like what they are doing are highly
motivated to produce the expected output.

2. Self-Confidence in Carrying out the Task – When employees feel that they have
the required skill and training to perform the task, they get more motivated.

3. Need Satisfaction – People will do their job well if they feel that by doing so, their
needs will be satisfied.

THEORIES OF MOTIVATION

1. Maslow’s Need Hierarchy Theory – Abraham Maslow, an eminent

psychologist, theorized that human beings have five basic needs, which relate to
the following: physiological, security, social, esteem, and self-actualization.
These needs would have to be satisfied first before satisfying the other needs.

2. Herzberg’s Two-Factor Theory – The two-factor theory, developed by Frederick

Herzberg, indicates that a satisfied employee is motivated fro within to work
harder and that a dissatisfied employee is not self-motivated.

Herzberg identified two classes of factors:

1. Satisfiers or motivation factors – as responsible for job satisfaction:

achievement, recognition, the work itself, responsibility, advancement, and
growth.
2. Dissatisfiers or hygiene factors - as responsible for job dissatisfaction:
company policy and administration, supervision, relationship with supervisor,

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 work conditions, salary, relationship with peers, personal life, relationship with
subordinates, status, and security.

3. Expectancy Theory – Victor Vroom. This is a motivation model based on the

assumption that an individual will work depending on his perception of the
probability of his expectations to happen.
The theory poses the idea that motivation is determined by expectancies
and valences. Expectancy is a belief about the likelihood or probability that a
particular behavioural act (like attending training sessions) will lead to a particular
outcome (like a promotion). Valence is the value an individual places on the
expected outcome or rewards.

4. Goal Setting Theory – Edwin A. Locke. Goal setting theory refers to the process
of improving performance with objectives, deadlines, or quality standard. When
individuals or groups are assigned specific goals, a clear direction is provided
and which later motivates them to achieve those goals. The goal setting model
consists of the following components.

Self Assessment :

1. What is the relationship between motivation and performance?

2. There are several programs for motivating employees are described on
the internet. Find one motivational program of any existing company
/institution and answer the following questions:
a. Which theory of motivation appears to underlie the work of the program?
b. What edge this motivational program have over managers simply thanking
workers for a job well done?

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 CHAPTER 12

CONTROLLING

Learning Objectives:

By the end of the chapter the students are expected to:

Discuss the nature of controlling functions

Distinguish control methods and systems

Controlling

It is sometimes referred to terminal management function because it takes place after

other functions have been completed. Controlling helps measure how well planning,
organizing, and leading have been performed.

The control function is extremely important because it helps managers evaluate whether
all four major functions have been implemented.

Control according to time applied

1. Preventive Control – A control that takes place prior to the performance of an

activity

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 2. Concurrent control- A type of control that monitors activities while they are
carried out
3. Feedback control – A control that evaluates an activity after it is performed

Control Strategies

1. External Control Strategy – An approach to control based on the belief that

employees are motivated primarily by external rewards and must be controlled by
their managers
2. Internal Control Strategy – An approach to control based on the belief that
employees can be motivated by building their commitment to organizational
goals

Steps in Control Process

1. Setting appropriate performance standards

Standards – unit of measurement used to evaluate results
2. Measuring performance
Important conditions for effective performance measurement:
Agree on specific aspects of performance to be measured
Agree on the accuracy of measurement needed
Agree on who will use the measurements
3. Comparing of actual performance from standards
Deviation- In a control system, the size of discrepancy between
performance standards and actual results
4. Take corrective action
Possible courses of action:
Do nothing – if the evaluation reveals that events are proceeding
according to plan
Solve the problem – if the deviation of actual from plan is significant
Revise the standard – if the deviation is due to an unrealistic performance
standard due to changes in external environment

Control Techniques

1. Qualitative Control Techniques – Methods of controlling based on human

judgments about performance that results in a verbal rather than numerical
evaluation
2. Quantitative Control Techniques – Methods of controlling based on numerical
measures of performance

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 Budgetary Control Techniques

Budgetary control – refers to the use of budgets and budgetary reports to coordinate
evaluate and control day to day operations to attain the goals specified by the
budget.

Budget
Is a formal statement of a planned course of action expressed in quantitative
terms.
Budgeting provides a framework for performance evaluation.
Actual results of operations can be compared with the budgeted figures to monitor the
firm’s performance. Any deviation of actual figures with the budgeted amounts are
noted, evaluated, and investigated to determine the necessary corrective action, if any.

Master budget – is the consolidation of all the budgets of the different sub-units in all
enterprise. Serves as the management principal vehicle for coordinating the plans of the
firm. It consist of the following.

1. Operating budget or profit plan – this refers to the plan of operations where
details or revenues, expenses and net income are shown. It takes the form of
budgeted income statement.
Sales Forecast
Is a passive statement of the expected volume of sales. It is considered as the
cornerstone of budgeting.
Sales budget
It refers to the planned volume and amount of sales chosen by the management
to serve as basis in the financial planning of all sub-units in an enterprise.

Production Budget
It shows the planned units of production based on the sales budget and the
inventory the beginning and end of the period.
2. Financial resources budget – refers to projections of the planned operations per
operating budget on the financial resources of the enterprise.
a. Cash budget – shows the effects of management’s plan on cash inflows and
outflows.
b. Projected statement of financial position (or budgeted balanced sheet) –
shows the planned assets, liability and equity levels.
c. Projected funds flow statement – shows the sources and uses of working
capital.

3. Capital expenditure budget – shows the planned procurement and disposal of

plant, property and equipment.

Non-Budgetary Control Techniques

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The Balance Scorecard

A set of measures to provide a quick but comprehensive view of business

Activity-based Costing

An accounting procedure that allocates the costs of producing a product or

service to the activities performed and the resources used.

Characteristics of Effective Control

1. The controls must be accepted

2. The control measures must be appropriate and meaningful
3. An effective control measure provides diagnostic information
4. Effective controls allow for self-feedback and self-control
5. Effective control systems provide timely information
6. Control measures are more effective when employees have control over the
results measured
7. Effective control do not contradict each other
8. Effective controls allow for random variations from standards
9. Effective controls are cost-effective
10. The controls do not limit innovation

Self Assessment:

1. Explain how controlling relates to the other management functions.

2. Describe the different steps in the control process.
3. Provide an example of how feedback from customers can be used as part of
control system.

REFERENCES:
1. Medina, Roberto 2015.Business Organization and Management. Revised
Edition.Rex Bookstore, Inc. And Roberto G. Medina
2. Andrew J. Dubrin. 2014. Introduction to Management Ninth Edition. Cengage
Learning Asia Pte Ltd.
3. Jose A. Morales, Jose Jr.,et.al.2014. Business Organization Operations and
Management.Copyright 2014. Jose a. Morales,Jr.,Margarita R. Saidali.
MindshapersCo, Inc.

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 4. Payos,Ranulfo P. 2016.Organizatiiona and Management.Phil. Copyright 2016.Rex
Bookstore, Inc.and Ranulfo P. Payos, Ernesto G. Espinosa, Orlando S. Zorilla .
5. Dr. Pedrito R. Pereda and Dr. Purisima P. Pereda, Principles of Managment &
Organization, Copyright 2014.
6. Dr. Roberto G. Medina, Business Organization and Management, Copyright
2006.Rex Bookstore, Inc.
7. WWW. Online Resources

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