OVERVIEW OF BUSINESS AND MANAGEMENT

1.1 THE UNDERLYING FRAMEWORK OF BUSINESS

Under the free enterprise system, the growth of the economy lies in the ability of
private individuals to achieve economic objectives. The quest for profit is usually
undertaken by engagement in business operations. Business firms and the government are
expected to provide goods and services to the society. The major part of this task, however, is
assigned to the private business firms. Under the system, firms are free to compete with each
other and competition leads to the offering of new and improved products and services to the
society. The standard of living is raised or lowered depending to a large extent on the
performance of business firms.
Business is largely responsible for bringing into the market a wide array of products,
which were not made available in the past. High technology items like colored television, video
equipment, cellular phones and computers are sold openly in the market. This happens even
as business firms continue to provide mankind with basic necessities like food and shelter.
Even amusement centers like Disneyland and resorts like Boracay are made possible because
of business.

Business may be defined as all profit-seeking activities and enterprises that provide
goods and services necessary to an economic system.

A business firm is established primarily for profit. There are other reasons, however, why
anyone would want to start a business. Some of these are to do work that is enjoyable, to do
something for pleasure and pride, and to achieve financial independence.

Professional managers maintain that a business firm should achieve the following multiple
objectives: 1 creation and distribution of product or service; 2 satisfaction of personal
objectives like profits for owners, salaries and other compensation for executives, wages and
other compensation for employees, psychic income for all, including pride in work, security,
recognition and acceptance; 3 protection and enhancement of the human and physical
resources of society; and 4 economy and effectiveness of operation.

1.2 RELATIONSHIP OF BUSINESS, ECONOMY AND MANAGEMENT

The critical role that business plays in the economy cannot be overemphasized. Imagine
a world where we have to produce everything that we consume – food, clothes, vehicle,
furniture, etc. it not only takes time and effort but oftentimes huge resources in order to build or
manufacture what we consume. Business obtains such resources as materials, labor, and
equipment to be able to produce goods and services. As a result of business, commerce and
markets, consumers are able to live more comfortably and improve their standard of living
conditions. Consumers are able to enjoy a variety of goods and services because procedures
and suppliers compete for markets and regularly attempt to improve their products and services
so that the same will be patronized.
1.3 ELEMENTS OF BUSINESS SYSTEM
1. Land – all natural resources needed for production in business including the land itself
2. Labor – physical and mental input of the people who produce the goods and services
3. Capital – the financial resources needed in production of goods and services
4. Entrepreneur – the one who buys and organizes the land, labor and capital to provide
goods and services

1.4 KINDS OF BUSINESS

1. Commerce. Business firms which are engaged in buying and selling of goods and services.
Also included in this category are trading, merchandizing, and marketing. Ex.
Supermarkets, dry good stores, peddlers, sari-sari stores, importers, etc.
2. Industry. Industries which are mainly engaged in production. Goods produced intended for
ultimate consumption are consumer’s goods while goods for use of business and industry
are called producer’s goods.
a. Genetic industries are those involved in agriculture, forestry, and fish culture
b. Extractive industries are those involved in extraction of goods from natural resources
which include mining, lumbering, hunting and fishing
c. Manufacturing industries convert raw materials into finished products like firms
engaged in manufacturing drugs, plastics, food, liquor, footwear, motorcars, tools, office
supplies, etc.
d. Construction industries are those engaged in building infrastructures like airports,
seaports, dams, and highways and dwelling units
3. Services. A business which sells service to the
buyer.
a. Recreation – movie houses, television, radio stations, theaters, resorts
b. Personal – restaurants, barber shops, transportations, hotels, tailoring shop
c. Finance – bank, insurance companies, investment houses, financing institutions, credit
unions, savings and loans associations

1.5 LEGAL FORMS OF BUSINESS

Forms of Business Ownership

1. Sole Proprietorship is a type of business entity owned and operated by a single person.
Advantages:
a. Ease and cost of formation
b. Secrecy
c. Distribution and use of profits
d. Control of the business
e. Government regulation
f. Taxation
g. Closing the business
Disadvantages:
a. Owner’s lack of ability and experience
b. Difficulty in attracting good employees
c. Difficulty in raising capital
d. Limited life of the firm
e. Unlimited liability of the proprietor

2. Partnership is a legal association of two or more persons as co-owners of an

unincorporated business
Types of Partnership
A. GENERAL PARTNERSHIP is an association of two or more persons, each with
unlimited liability, who are actively involved in the business.
B. LIMITED PARTNERSHIP is an arrangement in which the liability of one or more
partners is limited to the amount of assets they have invested in the business.
Advantages:
a. Ease of formation
b. Pooling of knowledge of skills c.
More funds available
d. Ability to attract and retain employees e.
Tax advantage
Disadvantages:
a. Unlimited liability b.
Limited life
c. Potential conflict between partners
d. Difficulty in dissolving the business

3. Corporation is an enterprise chartered by law, with most of the legal rights of a person,
including the right to conduct a business, to own and sell property, to borrow money, and to
sue or be sued. Owners of corporations are called stockholders and they are issued with
certificates of ownership called stocks.
Advantages:
a. Limited liability
b. Ease of expansion
c. Ease of transferring ownership
d. Relatively long life
e. Greater ability to hire specialized management
Disadvantages:
a. More expensive and complicated to organize
b. Double taxation
c. More extensive government restrictions and reporting requirements
d. Employees lack personal identification with and commitment to corporate goals
Modifications of the Corporate Form of Ownership
The corporate form of ownership has been modified to cater to special needs.
1. COOPERATIVES is an organization composed of individuals or small businesses that have
banded together to reap the benefits of a larger organization. It is no organized for profit, but
to make its members individually profitable or to save money.
a. Credit union – accepts deposits from members and lends money to its members at a
very reasonable interest rate
b. Producers cooperative – assists one another in the procurement of raw materials,
machinery, equipment, and other time-saving devices
c. Marketing cooperative – assists members in the marketing of their produce
d. Consumers cooperative – provides members with quality goods and services at
reasonable prices
e. Service cooperative – makes services readily available and at a lower price
2. MUTUAL COMPANIES are financial-service firm owned by its policyholders or depositors.
They are classified according to the products or services they carry.
a. Mutual Savings Bank – are owned by depositors and specialize in savings and
mortgage loans. The profits of the company are credited to the account of the depositors.
b. Mutual Insurance Company – is a cooperative corporation organized and owned by its
policyholders. Voting control is in the hands of the insured. Profits earned by the
company can be used to pay policy dividends to policyholders and to strengthen the
insurer by building its surplus.

OTHER FORMS OF BUSINESS ORGANIZATIONS

1. Joint Stock Company – a form of business enterprise in which the capital is divided into
small units permitting a number of investors to contribute varying amounts to the total, profits
being divided between stockholders in proportion to the number of shares they own.
2. Joint Venture – is created for the purpose of bringing together several partners to engage
in a business activity, which is normally very specialized and which exists for a limited,
specific purpose.
3. Business Trust – a legal form of organization in which a trustee is appointed to manage the
business and its operations through a trust relationship.
1.6 KINDS OF ECONOMIC SYSTEM
1. Capitalism – a system in which the means of production are owned and operated by private
individuals. It is a system wherein privately-owned capital, and property rights
are privately invested with the ultimate aim of personal gain.
2. Socialism – an ownership of production and capital by the government and the regulation
by society, as a whole, of the process of production and distribution, and
of the giving of essential services. It is a free enterprise system with government participation.
3. Communism – a collective ownership by the government of consumption goods and
production goods.

1.7 PHASES OF ECONOMIC DEVELOPMENT

1. Malthusian (Robert Malthus) – population growth occurs exponentially but food
production increases arithmetically, dangers of excessive population growth
2. Government-led (local economic development) – decreasing poverty by creating jobs
through making the local economy grow, thus create income opportunities
3. A la Kuznets (Simon Kuznets) – leads to environment deterioration, but after a certain
level of economic growth, a society begins to improve its relationship with the
government and levels of environmental degradation reduces.
4. Human capital-based – widespread investment in human capital creates in the labor-
force the skill-based indispensable for economic growth.
5. Post demographic transition – population growth is negligible, or even enters a decline,
low birth and low death rates
 MANAGEMENT PRINCIPLES AND PRACTICES

2.1. Definition, Significance and Functions of Management

DEFINITION OF MANAGEMENT
Management is defined in so many ways depending upon the viewpoint, beliefs, and
interpretations of the manager. But the generally accepted definition used is:

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

and controlling (POSDICON), performed to determine and accomplish stated
objectives by the use of human being and other business resources.

In other words, there are different activities that make up a management process.
Furthermore, these activities are performed to accomplish stated objectives and are
performed by men with the help of other resources.

Here are some definitions of Management from different proponents:

F. W. Taylor - “Management is an art of knowing what is to be done and seeing that it is

done in the best possible manner.” Management is knowing exactly what you want men
to do, and then seeing that they do it in the best and cheapest way.”

Henri Fayol - “Management according to him is “to forecast and plan, to organize,
to command, to co-ordinate and to control.”

Harold Koontz - “Management is an art of getting things done through and with
the people in formally organized groups. It is an art of creating an environment in
which people and individual can perform and can co-operate towards attainment
of group goals.”

Management is a set of principles relating to the functions of planning, organizing,

directing, and controlling, and the applications of these principles in harnessing physical,
financial, human, and informational resources efficiently and effectively to achieve
organizational goals”.

Management is a function that directs and coordinates the efforts of the people to
accomplish goals and objectives by using available resources efficiently and effectively. It is also
a process of accomplishing the organization’s goals by working with and through people. Its task
includes planning, organizing, staffing, leading or directing and controlling.

MANAGEMENT AS A SCIENCE AND AS AN ART

Management is both science and art. It is an art because it results in the accomplishment
of objectives through the use of human efforts. It requires skill and careful study in the
management of any endeavor.
Management is a science because it is a systematic body of knowledge. It gathers and
analyzes facts and formulates general laws or principles from these facts.
As an art and as a science, therefore, management seeks to integrate into a unified,
coordinated whole the essential factors that make up an organization. Management is a broad
field of knowledge with its own areas of specialization – personnel, production, finance, sales or
marketing, purchasing and procurement, administration, and advertising.
SIGNIFICANCE OF STUDYING MANAGEMENT
Management is the most important subject in business because it deals with people,
establishing and achieving objectives. It is consequently used in almost every human activity.
Management exists to some degree in the factory, office, school, bank, store, labor union, hotel,
church, armed forces, hospital or home.

In today’s tough and uncertain economy, a company needs strong managers to lead its staff
toward accomplishing business goals. But managers are more than just leaders – they’re
problem solvers, cheerleaders, and planners as well. And managers don’t come in one-size-fits-
all shapes or forms. Managers fulfill many roles and have many different responsibilities at each
level of management within an organization.

Organizations abound in today’s society. Groups and individuals constantly join forces to
accomplish common goals. Sometimes the goals of these organizations are for profit and some
are not. But no matter what their aims, all these organizations share two things in common:
They’re made up of people, and certain individuals are in charge of these people.

Managers make decisions. They administer and coordinate resources effectively and
efficiently to achieve the goals of an organization. In essence, managers get the job done
through other people. In order to achieve an objective, the available basic resources including
men and women, materials, machines, methods, money and markets should be put together.
These resources are what we call the six M’s of management which are used and related
harmoniously so that the expected end-result may be attained, all within the anticipated
problems of time, effort, and expense.

No matter what type of organization managers work in, they are generally responsible for a
group of individuals’ performance. As leaders, managers must encourage this group to reach
common business goals, such as bringing a new product to market in a timely fashion. To
accomplish these goals, managers not only use their human resources, but they also take
advantage of various materials resources as well, such as technology.

Think of a team, for example. Managers may be in charge of a certain department whose
task is to develop a new product. The manager needs to coordinate the efforts of his
department’s tam members, as well as give them the material tools they need to accomplish the
job well. If the team fails, ultimately it is the manager who shoulders the responsibility.

FUNCTIONS OF MANAGEMENT
 Managers just don’t go out and haphazardly perform their responsibilities. Good
managers discover how to master five basic functions: planning, organizing, staffing,
leading/directing and controlling.

1. PLANNING: This step involves mapping out exactly how to achieve a particular goal. Say for
example, that the organization’s goal is to improve company sales. The manager first needs
to decide which steps are necessary to accomplish that goal. These steps may include
increasing advertising, inventory, and sales staff. These necessary steps are developed into
a plan. When the plan is in place, the manager can follow it to accomplish the goal of improving
company sales.

Peter Drucker has defined planning as follows: “Planning is the continuous process of making
present entrepreneurial decisions systematically and with best possible knowledge of their futurity,
organizing systematically the efforts needed to carry out these decisions and measuring the results
of these decisions against the expectations through organized and systematic feedback”.

2. ORGANIZING: After a plan is in place, a manager needs to organize his team and materials
according to his plan. Assigning work and granting authority are two important elements of
organizing.

Henry Fayol states that “To organize a business is to provide it with everything useful for its
functioning i.e. raw material, tools, capital and personnel”

3. STAFFING: After a manager discerns his area’s needs, he may decide to beef up his staffing
by recruiting, selecting, training and developing employees. A manager in a large organization
often works with the company’s human resources department to accomplish this goal.

According to Koontz & O’Donnell, “Managerial function of staffing involves manning

the organizational structure through the proper and effective selection, appraisal
& development of personnel to fill the roles designed in the structure”.

4. DIRECTING: A manager needs to do more than just plan, organize and staff her team to achieve
the goal. She must also lead. Leading involves motivating, communicating, guiding and
encouraging. It requires the manager to coach, assist, and solve the problems of employees.

Directing is concerned with leadership, communication, motivation, and supervision so that the
employees perform their activities in the most efficient manner possible, in order to achieve the
desired goals.

5. CONTROLLING: After the other elements are in place, a manager’s job is not finished. He
needs to continuously check results against goals and take any corrective actions necessary
to make sure that his area’s plans remain on track.

Koontz & O’Donnell, “Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and plans desired to obtain
them as being accomplished”.

2.2. ROLE OF A MANAGER

A manager wears many hats. Not only a manager, a team leader, but he is a planner,
organizer, cheerleader, coach, problem solver and decision maker – all rolled into one. And
these are just a few of a manager’s roles.
 In addition, manager’s schedules are usually jam-packed. Whether they’re busy with
employee meetings, unexpected problems, or strategy sessions, managers often find little
spare time on their calendars.

In his classic book, The Nature of Managerial Work, Henry Mintzberg describes a set of
ten roles that a manager fills. These roles fall into three categories:
. Interpersonal: this role involves human interaction
. Informational: this role involves the sharing and analyzing of information
. Decisional: this role involves decision making

CATEGORY ROLE ACTIVITY

Monitor Seek and receive information; scan periodicals and
reports; maintain personal contact with stakeholders
INFORMATIONAL
Disseminator Forward information to organization members via
memos, reports, and phone calls
Spokesperson Transmit information to outsiders via reports, memos
and speeches

Figurehead Perform ceremonial and symbolic duties, such as

greeting visitors and signing legal documents
INTERPERSONAL
Leader Direct and motivate subordinates; counsel and
communicate with subordinates
Liaison Maintain information links both inside and outside
organization via mail, phone calls, and meetings

Entrepreneur Initiate improvement projects; identify new ideas and

delegate idea responsibility to others
Take corrective action during disputes or crises;
Disturbance
resolve conflicts among subordinates; adapt to
handler
DECISIONAL environments
Resource Decide who gets resources; prepare budgets; set
allocator schedules and determine priorities
Negotiator Represent department during negotiation as of union
contracts, sales, purchases, and budgets
2.3 MANAGEMENT HIERARCHY
Two leaders may serve as managers within the same company but have very different
titles and purposes. Large organizations, in particular, may break down management into
different levels because so many more people need to managed. Typical management levels
falls into the following categories:

Top Level. Managers at this level ensure that major performance objectives are established
and accomplished. Common job titles for top managers include CEO, COO, president,
and vice president. These senior managers are considered executives, responsible for the
performance of an organization as a whole or for one of its significant parts.
Middle Level. They report to top managers and are in charge of relatively large departments
or division consisting several smaller units. Examples of middle managers include clinic
directors in hospitals, deans in universities; and division managers, plant managers, and
branch sales managers in businesses. They develop and implement action plans
consistent with company objectives, such as increasing market presence.
Low Level. The initial management job that most people attain is typically a first-line
management position, such as a team leader or supervisor – a person in charge of smaller
work units composed of hands-on workers. Job titles for these first-line managers vary
greatly, but include such designations as department head, group leader and unit leader.
First-line managers ensure that their work teams or units meet performance objectives,
such as producing a set number of items at a given quality, that are consistent with the
plans of middle and top management.

2.4. MANAGERIAL SKILLS

Not everyone can be a manager. Certain skills or abilities to translate knowledge into
action that results ion desired performance, are required to help other employees become more
productive. These skills fall under the following categories:

1. TECHNICAL

This skill requires the ability to use a special proficiency or expertise to perform particular
tasks. Accountants, engineers, market researchers and computer scientists, as examples,
possess technical skills. Managers acquire these skills initially through formal education and
then further develop them through training and job experience.

2. HUMAN

This skill demonstrates the ability to work well in cooperation with others. Human skills
emerge in the workplace as a spirit of trust, enthusiasm and genuine involvement in interpersonal
relationships. A manager with good human skills has a high degree of self-awareness and a
capacity to understand or empathize with the feelings of others. Some managers are naturally
born with great human skills, while others improve their skills through classes or experience. No
matter how human skills are acquired, they’re critical for all managers because of the highly
interpersonal nature of managerial work.
3. CONCEPTUAL

This skill calls for the ability to think analytically. Analytical skills enable managers to break
down problems into smaller parts, to see the relations among the parts, and to recognize the
implications of any one problem for others. As managers assume ever higher responsibilities in
organizations, they must deal with more ambiguous problems that have long-term
consequences. Again, managers may acquire skills initially through formal education and then
further develop them by training and job experience. The higher the management level, the more
important conceptual skills become.

SKILLS AND PERSONAL CHARACTERISTICS

(American Assembly of Collegiate Schools of Business)

Leadership – ability to influence others to perform tasks

Self-objectivity – ability to evaluate yourself realistically
Analytic thinking – ability to interpret and explain patterns in information
Behavioral flexibility – ability to modify personal behavior to react objectively rather than
subjectively to accomplish organizational goals
Oral communication – ability to express ideas clearly in words
Written communication – ability to express ideas clearly in writing
Personal impact – ability to create a good impression and instill confidence
Resistance to stress – ability to perform under stressful conditions
Tolerance for uncertainty – ability to perform in ambiguous situations
 EVOLUTION OF MANAGEMENT THEORIES

The ever-changing business environment has forced management thinking to

evolve throughout the centuries. Several management theories and philosophies have
emerged over the years. Most of the evolutionary changes and new perspectives
occurred as a result of the industrial revolution that transformed agricultural societies
into industrial societies. Today, management thinking continues to evolve to meet the
challenges of rapid and dramatic societal changes.

The simplest definition of management is getting things done through people. It

implies that an organization, whether small, medium or large is composed of people.
A business organization exists for a purpose. Business entities exist for a profit, social
responsibility and have people.

It is the people in the organizations that get work done. To ensure that their
assigned tasks are done properly and efficiently, these people have to be managed.
The person managing them could be the owner-proprietor, the Manager or Supervisor.

The Industrial Revolution in light of business concern was to improve employees’

productivity and efficiency triggered in the development of management theories.
Beginning in the late 19th century after the Industrial Revolution but saw more definitive
form in the 20th century. Industrial Revolution refers to the transition from hand
production methods to the use of different machines, new chemical manufacturing
process, iron production processes, increasing use of steam power, and the
development of machine tools.

1910s-1940s: Management as Science

Management as Science was developed in the early 20th century and
focused on increasing productivity and efficiency through standardization, division of
labor, centralization and hierarchy. A very ‘top down’ management with strict control
over people and processes dominated across industries.

1950s-1960s: Functional Organizations

Due to growing and more complex organizations, the 1950s and 1960s saw
the emergence of functional organizations and the Human Resource (HR) movement.
Managers began to understand the human factor in production and productivity and
tools such as goal-setting, performance reviews and job descriptions were born.
.
Human Resource is composed of all the efforts, skills or capabilities of all the
people who work for the organizations. Staff, workforce, personnel, employees
are other name for human resource.

1970s: Strategic Planning

The focus is from measuring function to resource allocation and tools like
Strategic Planning, Growth Share Matrix, and SWOT (identification and analysis of
the company’s Strengths, Weaknesses, Opportunities and Threats) were used to
formalize strategic planning processes. After several decades of ‘best practice’ and
‘one size fits all’ solutions, academics began to develop contingency theories.
.
 Strategic Planning – an activity carried out annually using a formal structured
approach to plan on the needs of the current and future customers and support
the strategic and business goals of the organization

Growth Share Matrix – provides a valuable tool for corporate-level strategists

that indicates where expansion should and can take place, and which business
units should be sold off.
.
SWOT – a strategy of critically examining the internal and external factors that
could have positive or negative effects to the organization

1980s: Competitive Advantage

As the business environment grew increasingly competitive and connected,
and with a blooming management consultancy industry, Competitive Advantage
became a priority for organization in the 1980s. Tools like Total Quality Management,
Six Sigma and Lean Management were used to measure processes and improve
productivity. Employees were more involved by collecting data, but decisions were still
made at the top, and goals were used to manage people and maintain control.

. Total Quality Management - a management approach of an organization,

centered on quality, based on the participation of all its members and aiming at
long term success through customer satisfaction and benefits to the members
of the organization and the society
. Kaizen – a strategy for gradual, orderly and continuous improvement
. Six Sigma – a vision of quality which equates with only 3.4 defects PMO for
each product or service transaction and strives for perfection
. Lean Management – systems that uses minimal amounts of resources to
produce high volume of high-quality goods with some variety

1990s: Process Optimization

Benchmarking and business process reengineering became popular in the
1990s, and by the middle of the decade, 60% of Fortune 500 companies claimed to
have plans for or have already initiated such projects. TQM, Six Sigma and Lean
remained popular and more holistic, organization-wide approach and strategy
implementation took the stage with tools such as Strategy Maps and Balance
Scorecards.
. Benchmarking – an activity that tells you your position or status by comparing
yourself to others and knowing the areas that needs improvement
. Business Process Reengineering – fundamental rethinking and radical
redesign of business process to achieve dramatic improvement in critical,
contemporary measures of performance, such as cost, quality, service and
speed
. Strategy Maps – a diagram that is used to document the primary strategic goals
being pursued by an organization or management team.
. Balance Scorecards – framework for operationalizing a firm’s strategic plan by
focusing on measurable financial, business process, customer and learning and
growth outcomes of firm performance
 2000s: Big Data
Largely driven by the consulting industry under the banner of Big Data,
organizations in the 2000s started to focus on using technology for growth and value
creation. Big data is a broad term for data sets so large or complex that traditional
data processing applications are inadequate. Accuracy in big data may lead to more
confident decision-making. And better decisions can mean greater operational
efficiency, cost-reductions, and reduced risks.
. Cloud Computing - Web-based applications that are stored on remote servers
and accessed via the "cloud" of the Internet using a standard Web browser
. E-tailer - Online retail stores from the giant Amazon to tiny local stores that have
Web sites where retail goods are sold
. Digital firm - an organization where nearly all significant business processes
and relationships with customers, suppliers and employees are digitally enabled,
and key corporate assets are managed through digital means
. WEB 2.0 – second-generation, interactive internet-based services that
enable people to collaborate, share information, and create new services
online, including mashups, blogs, RSS, and wikis

After several decades of trying to manage people through the different management
theories, one has to realize that what worked before just simply is not enough
anymore. Traditional management is fine if one wants compliance, but if one wants
innovation and growth, management has to engage its people on a whole new level.
Top down control is a thing of the post. Succeeding in today’s environment requires a
management style that inspires and is participatory.

3.1 CLASSICAL APPROACH TO MANAGEMENT

CLASSICAL SCHOOLS OF MANAGEMENT – developed during the Industrial

Revolution when new problems related to the factory system began to appear.
Managers were unsure of how to train employees or deal with increased labor
dissatisfaction, they began to test solutions. As a result, the classical
management theory developed from efforts to find the “one best way” to perform
and manage tasks. This school of though is made up of two branches: classical
scientific and classical administrative.

a. Classical Scientific School - arose because of the need to increase

productivity and efficiency. The emphasis was on trying to find the best way to get
the most work done by examining how the work process was actually
accomplished and by scrutinizing the skills of the workforce.

i. Frederick Taylor (father of Scientific Management)

- believed that organizations should study tasks and develop precise
procedures (time and motion study)
- he developed a piece rate incentive system that paid workers more
money for meeting the new standard
PRINCIPLES OF SCIENTIFIC MANAGEMENT
1. Develop a science for each element of a man’s work
2. Scientifically select and train workers
3. Cooperate with workers
4. Divide work equally between management and workers
 ii. Henry Gantt (associate of Taylor)
- developed the Gantt chart, a bar graph that measures planned and
completed work along each stage of production. Based on time
instead of quantity, volume, or weight, this visual display chart has
been a widely used planning and control tool since its development
in 1910

iii. Frank and Lilian Gilbreth (a husband-and-wife team, studied job

motions)
- the basic ideas regarding scientific management were developed.
- Developing new standard methods for doing each job
- developed ideal motions required to perform a job
-17 therbligs (elemental hand or arm motion, resulted to 200%
productivity rate)
- Selecting, training, and developing workers of allowing them to
choose their own tasks and train themselves
- Developing a spirit of cooperation between workers and
management to ensure that work is carried out in accordance with
devised procedures
- Dividing work between workers and management in almost equal
shares, with each group taking over the work for which it is best fitted

b. Classical Administrative School - Whereas scientific management focused

on the productivity of individuals, the classical administrative approach
concentrates on the total organization. The emphasis is on the development of
managerial principles rather than work methods.

i. Max Weber
- In the late 1800s, Max Weber disliked that many European
organizations were managed on a “personal” family-like basis and
that employees were loyal to individual supervisors rather than to the
organization. He believed that organizations should be managed
impersonally and that a formal organizational structure, where
specific rules were followed, was important. In other words, he didn’t
think that authority should be based on a person’s personality. He
thought authority should be something that was part of a person’s
job and passed from individual to individual as one person left and
another took over. This nonpersonal, objective form of organization
was called a bureaucracy.

Weber believed that all bureaucracies have the following

characteristics:
A well-defined hierarchy. All positions within a bureaucracy
are structured in a way that permits the higher positions to
supervise and control the lower positions. This clear chain of
 command facilitates control and order throughout the
organization.
Division of labor and specialization. All responsibilities in
an organization are specialized so that each employee has
the necessary expertise to do a particular task.
Rules and regulations. Standard operating procedures
govern all organizational activities to provide certainty and
facilitate coordination.
Impersonal relationships between managers and
employees. Managers should maintain an impersonal
relationship with employees so that favoritism and personal
prejudice do not influence decisions.
Competence. Competence, not “who you know,” should be
the basis for all decisions made in hiring, job assignments and
promotions in order to foster ability and merit as the primary
characteristics of a bureaucratic organization.
Records. A bureaucracy needs to maintain complete files
regarding all its activities.

ii. Henri Fayol (French mining engineer)

- developed 14 principles of management based on his management
experiences. These principles provide modern-day managers with
general guidelines on how a supervisor should organize her
department and manage her staff.

PRINCIPLES OF MANAGEMENT
1. Division of Work
According to this principle, the whole work is divided into small
tasks. The specialization of the workforce according to the skills of a
person, creating personal and professional development within the
labor force, and therefore increasing productivity, leads to
specialization which increases the efficiency of labor. By separating
a small part of work, the worker’s speed and accuracy in his/her
performance increases. This principle is applicable to both technical
as well as managerial work. This can be made useful in case of
project works, too.

2. Authority and responsibility

This refers to the issue of commands followed by
responsibility for their consequences. Authority means the right of a
superior to give enhanced order to his subordinates; responsibility
means obligation for performance. Henri Fayol finds authority and
responsibility to be related and inseparable. Authority is the right to
give orders and the power to exact obedience. A manager has official
authority because of her position. Authority creates responsibility.
3. Discipline
Discipline refers to obedience, proper conduct in relation to
others, respect of authority, etc. it is essential for the smooth
functioning of all organizations. This will also help shape the culture
inside the organization. Discipline is absolutely necessary for
enterprises to function well.

4. Unity of Command
This principle states that each subordinate should receive
orders and be accountable to one superior. If an employee receives
order from more than one superior, it is likely to create confusion and
conflict. Unity of command also makes it easier to fix responsibility
for mistakes.

5. Unity of Direction
All those working in the same line of activity must understand
and pursue the same objectives. All related activities should be put
under one group, there should be one plan of action for them, and
they should be under the control of one manager.
It seeks to ensure unity of action, focusing on efforts, and
coordination of strength.

6. Subordination of Individual Interest

The management must put aside personal considerations and
put company objectives first. Therefore, the interests of goals of the
organization must prevail over the personal interests of individuals.

7. Remuneration
Workers must be paid sufficiently as this is a chief motivation
of employees and therefore greatly influences productivity. The
quantum and methods of remuneration payable should be fair,
reasonable, and rewarding of effort. Remuneration is paid to worker
as per their capacity and productivity. The main objective of an
organization is to maximize the wealth and the net profit as well. For
this purpose, the organization has paid wages, salaries, and benefits
to their staff properly and scientifically so that organizational
efficiency can be ensured.

8. The Degree of Centralization

The amount of power wielded with the central management
depends on company size. Centralization implies the concentration
of decision-making authority at the top management. Sharing of
authority with lower level is called decentralization. The organization
should strive to achieve a proper balance.
9. Scalar Chain
Scalar Chain refers to the chain of superiors ranging from top
management to the lowest rank. The principle suggests that there
should be a clear line of authority from top bottom linking all
managers at all levels. It is considered a chain of command.
However, there is a concept called a “gang plank” in which a
subordinate may contact a superior in case of an emergency, defying
the hierarchy of control. In this event, the immediate superiors must
be informed about the matter.

10. Order
Social order ensures the fluid operation of a company through
authoritative procedure. Material order ensures safety and efficiency
in the workplace. Order should be acceptable and under the rules of
the company.

11. Equity
Employees must be treated kindly, and justice must be
enacted to ensure a just workplace. Managers should be fair and
impartial when dealing with employees, giving equal attention toward
all employees.

12. Stability of Tenure of Personnel

The period of service should not be too short and employees
should not be moved from positions frequently. An employee cannot
render useful service if he/she is removed before she/he becomes
accustomed to the work assigned to him/her.

13. Initiative
Using the initiative of employees can add strength and new
ideas to an organization. Initiative on the part of employees is a
source of strength for an organization because it provides new and
better ideas. Employees are likely to take greater interest in the
functioning of the organization.

14. Esprit de Corps

This refers to the need of managers to ensure and develop
morale in the workplace; individually and communally. Team spirit
helps develop an atmosphere of mutual trust and understanding.
Team spirit helps to finish the task on time.

Key Roles
Fayol also divided the management function into five key roles:
. To organize
. To plan and forecast
. To command
. To control
. To coordinate
iii. Mary Parker Follett
- stressed the importance of an organization establishing common
goals for its employees. However, she also began to think somewhat
differently than the other theorists of her day, discarding command-
style hierarchical organizations where employees were treated like
robots. She began to talk about such things as ethics, power, and
leadership. She encouraged managers to allow employees to
participate in decision making.

iv. Chester I. Barnard (President of New Jersey Bell Telephone Company)

- introduced the idea of the informal organization – cliques (exclusive
groups of people) that naturally form within a company. He felt that
these informal organizations provided necessary and vital
communication functions for the overall organization and that they
could help the organization accomplish its goals.
- Barnard felt that it was particularly important for managers to
develop a sense of common purpose where a willingness to
cooperate is strongly encouraged. He is credited with developing the
acceptance theory of management, which emphasizes the
willingness of employees to accept that managers have legitimate
authority to act. Barnard felt that four factors affected the willingness
of employees to accept authority:
the employees must understand the communication
the employees accept the communication as being consistent
with the organization’s purposes
the employees feel that their actions will be consistent with the
needs and desires of other employees
the employees feel that they are mentally and physically able
to carry out the order
- Barnard’s sympathy for and understanding of employee needs
positioned him as a bridge to the behavioral school of management,
the next school of thought to emerge.

3.2 BEHAVIORAL APPROACH TO MANAGEMENT

BEHAVIORAL SCHOOL OF MANAGEMENT - often called the human
relations movement because it addresses the human dimension of work.
Behavioral theorists believed that a better understanding of human behavior at
work, such as motivation, conflict, expectations and group dynamics, improved
productivity. The theorists who contributed to this school viewed employees as
individuals, resources and assets to be developed and worked with – not as
machines, as in the past.

i. Elton Mayo
- Elton Mayo’s contributions came as part of the Hawthorne studies, a series
of experiments that rigorously applied classical management theory only to
reveal its shortcomings. The Hawthorne experiments consisted of two
studies conducted at the Hawthorne Works of the Western Electric
Company in Chicago from 1924 to 1932. The first study was conducted by
a group of engineers seeking to determine the relationship of lighting levels
to worker productivity. A few years later, a second group of experiments
 began. Harvard researchers Mayo and F.J. Roethlisberger supervised a
group of five women in a bank wiring room.

ii. F. J. Roethlisberger
- concluded that the increase in productivity resulted from the supervisory
arrangement rather the changes in lighting or other associated worker
benefits. The general conclusion from the Hawthorne studies was that
human relations and the social needs of workers are crucial aspects of
business management. This principle of human motivation helped
revolutionize theories and practices of management.

iii. Abraham Maslow (a practicing psychologists)

- developed one of the most widely recognized theories, a theory of
motivation based upon a consideration of human needs. His theory of
human needs had three assumptions:
Human needs are never completely satisfied
Human behavior is purposeful and is motivated by the need for
satisfaction
Needs can be classified according to a hierarchical structure of
importance, from the lowest to highest.

Maslow broke down the needs hierarchy into five specific areas:
1. Physiological needs. Maslow grouped all physical needs necessary for
maintaining basic human well-being, such as food and drink, into this
category. After the need is satisfied, however, it is no longer is a motivator.
2. Safety needs. These needs include the need for basic security, stability,
protection, and freedom from fear. A normal state exists for an individual to
have all these needs generally satisfied. Otherwise, they become primary
motivators.
3. Belonging and love needs. After the physical and safety needs are
satisfied and are no longer motivators, the need for belonging and love
emerges as a primary motivator. The individual strives to establish
meaningful relationships with significant others.
4. Esteem needs. An individual must develop self-confidence and wants to
achieve status, reputation, fame and glory.
5. Self-actualization needs. Assuming that all the previous needs in the
hierarchy are satisfied, an individual feels a need to find himself.

iv. Douglas McGregor

- Douglas McGregor was heavily influenced by both the Hawthorne studies
and Maslow. He believed that two basic kinds of managers exist. One type,
the Theory X manager, has a negative view of employees and assumes that
they are lazy, untrustworthy and incapable of assuming responsibility. On
the other hand, the Theory Y manager assumes that employees are not
only trustworthy and capable of assuming responsibility, but also have high
levels of motivation.
-An important aspect of McGregor’s idea was his belief that managers who
hold either set of assumptions can create self-fulfilling prophecies –that
through their behavior, these managers create situations where
subordinates act in ways that confirm the manager’s original expectations.
 As a group, these theorists discovered that people worked for inner
satisfaction and not materialistic rewards, shifting the focus to the role of
individuals in an organization’s performance.

3.3 SYSTEMS APPROACH TO MANAGEMENT

SYSTEMS MANAGEMENT THEORY (integrating various approaches to
the study of management)
The systems management theory has had a significant effect on
management science. A system is an interrelated set of elements functioning as
a whole. An organization as a system is composed of four elements:
. Inputs. Material or human resources
. Transformation processes – technological and managerial processes
. Outputs – products or services
. Feedback – reactions from the environment

In relationship to an organization, inputs include resources such as raw

materials, money, technologies and people. These inputs go through a
transformation process where they’re planned, organized, motivated and
controlled to ultimately meet the organization’s goals. The outputs are the
products or services designed to enhance the quality of life or productivity for
customers/clients. Feedback includes comments from customers or clients using
the products. This overall systems framework applies to any department or
program in the overall organization.
The systems theory approach encourages managers to look at the
organization from a broader perspective. Managers are beginning to recognize
the various parts of the organization, and, in particular, the interrelations of the
parts.
Contemporary system theorists find it helpful to analyze the effectiveness
of organizations according to the degree that they are open or closed. The
following terminology is important to your understanding of the systems
approach:
. An organization that interacts little with its external environment
(outside environment) and therefore receives little feedback from it is called
a closed system.
. An open system, in contrast, interacts continually with its
environment. Therefore, it is well informed about changes within its
surroundings and its position relative to these changes.
. A subsystem is any system that is part of a larger one.
. Entropy is the tendency of systems to deteriorate or breakdown over time.
. Synergy is the ability of the whole system to equal more than the sum of its
parts.

3.4 QUANTITATIVE APPROACH TO MANAGEMENT

During World War II, mathematicians, physicists, and other scientist joined
together to solve military problems. The quantitative school of management is a
result of the research conducted during World War II. The quantitative approach
to management involves the use of quantitative techniques, such as statistics,
information models, and computer simulations, to improve decision making. This
school consists of several branches.

a. Management Science
The management science school emerged to treat the problems associated
with global warfare. Today, this view encourages managers to use mathematics,
statistics, and other quantitative techniques to make management decisions.
Management can use computer models to figure out the best way to do
something-saving both money and time. Managers use several science
applications.
. Mathematical forecasting helps make projections that are useful in
the planning process.
. Inventory modeling helps control inventories by mathematically
establishing how and when to order a product
. Queuing theory helps allocate service personnel or workstations to
minimize customer waiting and service cost.

b. Operations Management
Operations management is a narrow branch of the quantitative approach to
management. It focuses on managing process of transforming materials, labor and
capital into useful goods and/or services. The product outputs can be either goods
or services; effective operations management is a concern for both manufacturing
and service organizations. The resource inputs, or factors of production, include
the wide variety of raw materials, technologies, capital information, and people
needed to create finished products. The transformation process, in turn, is the
actual set of operations or activities through which various resources are utilized
to produce finished goods or services of value to customers or clients. Operations
management today pays close attention to the demands of quality, customer
service, and competition. The process begins with attention to the needs of
customers: What do they want? Where do they want it? When do they want it?
Based on the answers to these questions, managers line up resources and take
any action necessary to meet customer expectations.

c. Management Information System

Management Information system (MIS) is the most recent subfield of
quantitative school. A management information system organizes past, present
and projected data from both internal and external sources and processes it into
usable information, which it then makes available to managers at all organizational
levels. The information systems are also able to organize data into usable and
accessible formats. As a result, managers can identify alternatives quickly,
evaluate alternatives by using a spreadsheet program, pose a series of “what-if”
questions, and finally, select the best alternatives based on the answers to these
questions.
 THEORISTS
i. F.W. Lanchester – predicts success or probability towards success or
defeat
ii. Thomas Alba Edison – studied anti-submarine warfare to come up with
a means to evade and destroy submarines with the use of surface ship
iii. A.K. Erlag – Danish Mathematician, who makes formula which are
fundamental to telephone traffic

3.5 MODERN APPROACH TO MANAGEMENT

CONTINGENCY SCHOOL OF MANAGEMENT (theorizes that different

situations and conditions require different management approaches)
The contingency school of management can be summarized as an “it all
depends” approach. The appropriate management actions and approaches
depend on the situation. Managers with a contingency view use a flexible
approach, draw on a variety of theories and experiences, and evaluate many
options as they solve problems.
Contingency management recognizes that there is no one best way to
manage. In the contingency perspective, managers are faced with the task of
determining which managerial approach is likely to be most effective in a given
situations. It avoids the classical “one best way” arguments and recognizes the
need to understand situational differences and respond appropriately to them. It
does not apply certain management principles to any situation.
Contingency theory is recognition of the extreme importance of individual
manager performance in any given situation. The contingency approach is highly
dependent on the experience and judgment of the manager in a given
organizational environment.

QUALITY SCHOOL OF MANAGEMENT

The quality school of management is a comprehensive concept for leading
and operating an organization, aimed at continually improving performance by
focusing on customers while addressing the needs of all stakeholders. In other
words, this concept focuses on managing the total organization to deliver high
quality to customers.
The quality school of management considers the following in its theory:
. Organization makeup. Organizations are made up of complex systems
of customers and suppliers. Every individual, executive, manager and
worker functions as both a supplier and a customer
. Quality of goods and services. Meeting the customers’ requirements
is a priority goal and presumed to be a key to organizational survival and
growth
. Continuous improvement in goods and services. Recognizing the
need to pinpoint internal and external requirements and continuously
strive to improve. It is an idea that says, “The Company is good, but it
can always become better.”
. Employees working in teams. These groups are primary vehicles for
planning and problem solving.
 . Developing openness and trust. Confidence among members of the
organization at all levels is an important condition for success.

The definition of quality as per the ISO 9000 standard is: “The totality of
features and characteristics of a product or service, that bear on its ability to
satisfy a given or implied need”.

APPROACHES:
a. Kaizen Approach
The commitment to work toward steady, continual improvement. The best
support for continuous improvement is an organization of people who give a high
priority in learning. In this process, everyone in the organization participates by
identifying opportunities for improvement, testing new approaches, recording the
results and recommending changes.

b. Reengineering Approach
The reengineering approach to management focuses on creating change-
big change-and fast. It centers on sensing the need to change, seeing change
coming and reacting effectively to change when it comes.
Reengineering is the radical design of business process to achieve
dramatic improvements in cost, quality, service and speed.

QUALITY GURUS (spiritual guide who are considered to have attained complete insight
on quality)

Walter Shewhart. “BRINGING A PROCESS INTO A STATE OF STATISTICAL

CONTROL AND KEEPING IT IN CONTROL IS NECESSARY TO MANAGE A
PROCESS ECONOMICALLY”
A statistician at Bell Telephone Laboratories who studied randomness in
industrial process. Walter Shewhart was a genuine pioneer in the field of
quality control, and he became known as the “father of statistical quality
control.” He developed control charts for analyzing the output of processes
to determine when corrective action was necessary. Shewhart had a strong
influence on the thinking of two other gurus, W. Edwards Deming and
Joseph Juran.

W. Edwards Deming. “QUALITY SHOULD BE AIMED AT THE NEEDS OF THE

CUSTOMER,
PRESENT & FUTURE”
Philosophy: “Quality and Productivity increases when process fluctuation
decreases”
Deming, a statistics professor at New York University in the 1940s, went to
Japan after World War II to assist the Japanese in improving quality and
productivity. The Union of Japanese Scientists, who had invited Deming,
were so impressed that in 1951, after a series of lectures presented by
 Deming, they established the Deming Prize, which is awarded annually to
firms that distinguish themselves with quality management programs.

Although the Japanese revered Deming, he was largely unknown to

business leaders in the United States. In fact, he worked with the Japanese
for almost 30 years before he gained recognition in his own country.
Before his death in 1993, U.S. companies turned their attention to Deming,
embraced his philosophy, and requested his assistance in setting up quality
improvement programs.
Deming compiled a famous list of 14 points he believed were the
prescription needed to achieve quality in an organization. His message was
that the cause of inefficiency and poor quality is the system, not the
employees. Deming felt that it was management’s responsibility to correct
the system to achieve the desired results. In addition to the 14 points,
Deming stressed the need to reduce variation in output (deviation from a
standard), which can be accomplished by distinguishing between special
causes of variation (i.e., correctable) and common causes of variation (i.e.,
random).Deming’s concept of profound knowledge incorporates the
beliefs and values about learning that guided Japan’s rise to a world
economic power.

DEMING’S 14 POINTS FOR TOP MANAGEMENT

1. Create Constancy of purpose for improvement of Products and Services
2. Adopt the New Philosophy
3. Cease Dependence on Mass Inspection
4. End the Practice of Awarding Business on the Basis of Price Tag Alone
5. Constantly Improve the System of Production and Services
6. Institute Training
7. Adopt and Institute Leadership
8. Drive out Fear
9. Break Down Barriers Between Staff Areas
11. a) Eliminate Numerical Quota for the Workforce b) Eliminate Numerical
Goals for People in management
12. Remove Barriers that Rob People of Pride of Workmanship
13. Encourage Education and Self-improvement for Everyone
14. Take Action to Accomplish the Transformation

Joseph M. Juran. “QUALITY IS FITNESS FOR USE”

Philosophy: “Quality doesn’t happen by accident”
Juran, like Deming, taught Japanese manufacturers how to improve the
quality of their goods, and he, too, can be regarded as a major force in
Japan’s success in quality. Juran viewed quality as fitness-for-use. He also
believed that roughly 80 percent of quality defects are management
controllable; thus, management has the responsibility to correct this
deficiency. He described quality management in terms of a trilogy consisting
of quality planning, quality control, and quality improvement. According to
 Juran, quality planning is necessary to establish processes that are
capable of meeting quality standards; quality control is necessary in order
to know when corrective action is needed; and quality improvement will
help to find better ways of doing things. A key element of Juran’s philosophy
is the commitment of management to continual improvement. NJuran
is credited as one of the first to measure the cost of quality, and he
demonstrated the potential for increased profits that would result if the
costs of poor quality could be reduced.

Armand Feigenbaum. “QUALITY IS A TOTAL FIELD, THE CUSTOMER

DEFINES QUALITY”
Feigenbaum was instrumental in advancing the “cost of
nonconformance” approach as a reason for management to commit to
quality. He recognized that quality was not simply a collection of tools and
techniques, but a “total field.” According to Feigenbaum, it is the customer
who defines quality.

Philip B. Crosby. “QUALITY IS FREE; ZERO DEFECTS”

Crosby developed the concept of zero defects and popularized the phrase
“Do it right the first time.” He stressed prevention, and he argued against
the idea that “there will always be some level of defectives.” The quality-is-
free concept presented in his book, Quality Is Free, is that the costs of poor
quality are much greater than traditionally defined. According to Crosby,
these costs are so great that rather than viewing quality efforts as costs,
organizations should view them as a way to reduce costs, because the
improvements generated by quality efforts will more than pay for
themselves. Crosby believes that any level of defects is too high and that
achieving quality can be relatively easy, as explained in his book Quality
Without Tears: The Art of Hassle-Free Management.

David A. Garvin. "IF QUALITY IS TO BE MANAGED, IT MUST FIRST BE

UNDERSTOOD"
Give the 8 dimensions of quality namely: performance, features, reliability,
conformance, durability, serviceability, aesthetics, perceived quality

Kaoru Ishikawa. “OVER-RELIANCE ON THE QUALITY PROFESSIONAL

WOULD LIMIT THE POTENTIAL FOR IMPROVEMENT”
The late Japanese expert on quality was strongly influenced by both
Deming and Juran, although he made significant contributions of his own to
quality management. Among his key contributions were the development of
the cause-and-effect diagram (also known as a fishbone diagram) for
problem solving and the implementation of quality circles, which involve
workers in quality improvement. He was the first quality expert to call
attention to the internal customer —the next person in the process, the
next operation, within the organization.
Genichi Taguchi. “ANY DEVIATION FROM THE TARGET VALUE
REPRESENTS POOR QUALITY”
Taguchi is best known for the Taguchi loss function, which involves a
formula for determining the cost of poor quality. The idea is that the
deviation of a part from a standard causes a loss, and the combined effect
of deviations of all parts from their standards can be large, even though
each individual deviation is small. An important part of his philosophy is the
cost to society of poor quality.
Taguchi Loss Function
A Japanese quality expert, holds a nontraditional view of what
constitutes poor quality, and hence the cost of poor quality. The
traditional view is that as long as output is within specifications, there
is no cost. Taguchi believes that any deviation from the target value
represents poor quality, and that the farther away from target a
deviation is, the greater the cost. The implication for Taguchi is that
reducing the variation inherent in a process (i.e., increasing its
capability ratio) will result in lowering the cost of poor quality, and
consequently, the loss to society.

Taiichi Ohno. “AT NO STAGE OF MANUFACTURING, NOBODY OR NOTHING

WAITS FOR ANYTHING”
Tai-ichi of Toyota motors refined an idea for JIT. This means that at no stage
of manufacturing nobody or nothing waits for anything. This is to ensure that
there is no wastage of machinery, materials and manpower. JIT focuses
on right scheduling so as to keep inventory as low as possible. This
requires a perfect partnership between supplier and customer.

Shigeo Shingo. “ERRORS ARE INEVITABLE, AND DEFECTS, ARE RESULT

WHEN AN ERROR REACHES A CUSTOMER”
Shigeo Shingo made a very significant contribution to lean operation
(highly skilled workforce and flexible equipment) with the development of
what is called the single-minute exchange of die (SMED) system for
reducing changeover time. It involves first categorizing changeover
activities as either “internal” or “external” activities. Internal activities are
those that can only be done while a machine is stopped (i.e., not running).
Hence, they contribute to long changeover times. External activities are
those that do not involve stopping the machine; they can be done before or
after the changeover. The Poka-yoke or mistake proofing system is the
principle of stopping error before it becomes defect. One the error is
detected, the production is stopped, error is corrected and once corrected,
the production continues.

BIG DATA focuses on using technology for growth and value creation. Big
data is a broad term for data sets so large or complex that traditional data
processing applications are inadequate. Accuracy in big data may lead to more
confident decision-making. And better decisions can mean greater operational
efficiency, cost-reductions, and reduced risks.
. Definition: datasets that grow so large that they become awkward to work with
using on-hand database management tools
. Challenge: capturing, storing, searching, sharing, analyzing, and visualizing.
. Characteristics:
1. Volume - large amount of data we are getting from many sources as the
world becomes more and more instrumented
2. Variety - data we receive can be structured, semi-structured, or
unstructured
3. Velocity - we are being bombarded with these data at huge speeds, all the
time, any time
4. Veracity - level of uncertainty and reliability associated with the types and
sources of data (e.g., the utility of www.snopes.com to verify viral posts on the
internet.
 THE CONCEPT OF PLANNING

If managing an organization is to be pursued vigorously, planning will be an important

and necessary activity. Managers who plan are afforded with the opportunity to
carefully analyze situations, which directly contribute to effective decision making.
Plans provides the manager with the opportunity to concentrate on implementation.

Planning is defined as selecting the best course of action in anticipation of future

trends so that the desired result may be achieved. It must be stressed that the desired
result takes first priority and the course of action chosen is the means to realize the
goal.

Before a manager can tackle any of other functions, he must first devise a plan. A plan
is a blueprint for goal achievement that specifies the necessary resource allocations,
schedules, tasks and other actions.

4.1 The Nature of Planning

The military saying, “if you fail to plan, you plan to fail,” is very true. Without a plan,
managers are set up to encounter errors, waste and delays. A plan helps managers
organize resources and activities efficiently and effectively to achieve goals.

1. Gives an organization a sense of direction

Without plans, organizations merely react to daily occurrences without
considering what will happen in the long run. For example, the solution that
makes sense in the short term doesn’t always make sense in the long term.
Plans avoid this drift situation and ensure that short range efforts will support
and harmonize with future goals.

2. Focuses attention on objectives and results

Plans keep the people who carry them out focused on the anticipated results.
In addition, keeping sight of the goal also motivates employees.

3. Establishes a basis for teamwork

Diverse groups cannot effectively cooperate in joint projects without an
integrated plan.

4. Helps anticipate problems and cope with change

When management plans, it can help forecast future problems and make any
necessary changes up front to avoid them. planning of potential problems helps
to minimize mistakes and reduce the “surprises” that inevitably occur.

5. Provides guidelines for decision making

Decisions are future-oriented. If management doesn’t have any plans for the
future, they will have few guidelines for making current decisions.

6. Serves as a prerequisite to employing all other management functions

Planning is primary, because without knowing what an organization wants to
accomplish, management can’t intelligently undertake any of the other basic
managerial activities.
4.2 The Hierarchy of Planning/ Major and Other Types of Plans
Since managers could be occupying positions in any of the various management
levels, it will be useful for them to know some aspects of planning undertaken at the
different management levels.

1. Strategic Planning for Top Management. Strategic Planning refers to the

process of determining the major goals of the organization and the policies and
strategies for obtaining and using resources to achieve those goals. In here, the
whole company is considered, specifically its objectives and current resources.
The output of strategic planning is the strategic plan, which spells out the
decision about long-range goals and the course of action to achieve those goals.
2. Intermediate Planning for Middle Managers. Intermediate planning refers to
the process of determining the contributions that subunits can make with
allocated resources. In here, the goals of a subunit are determined and a plan
is prepared to provide a guide for the realization of the goals. It is designed to
support the strategic plan.
3. Operational Planning for Lower Management. Operational planning is the
process of determining how specific tasks can be best be accomplished in time
with available resources. It must be performed in support of the strategic and
intermediate plans.

OTHER TYPES OF PLANS

Plans are of different types. They may be classified in terms of functional areas, time
horizon and frequency of use.
1. Functional Area Plans. Plans prepared according to the needs of the different
functional areas.
a. Marketing Plan – is the written document or blueprint for implementing and
controlling an organization’s marketing activities related to a particular
marketing strategy.
b. Production Plan – is a written document that states the quantity of output
a company must produce in broad terms and byproduct family.
c. Financial Plan – is a document that summarizes the current financial
situation of the firm, analyzes financial needs, and recommends a direction
for financial activities.
d. Human Resource Plan – is a document that indicates the human resource
needs of a company detailed in terms of quantity and quality and based on
the requirements of the company’s strategic plan.

Plans with Time Horizon.

a. Short-range Plans – are plans intended to cover a period of less than one
year.
b. Long-range Plans – are plans covering a time span of more than one year
3. Plans with Varied Frequency of Use.
a. Standing Plans. These are plans that re used again and again, and they
focus on managerial situations that recur repeatedly.
1. Policies – refer to broad guideline used by managers to help make
decisions and take actions on specific circumstances.
2. Procedures – are plans that describes the exact series of actions to be
taken in a given situation.
3. Rules – are statements that either require or forbid a certain action.

b. Single-used Plans. These plans are specifically developed to implement

courses of action that are relatively unique and are unlikely to be repeated.
1. Budget Plan - sets forth the projected expenditures for a certain activity
and explains where the required funds will come from.
2. Program Plan – is designed to coordinate a large set of activities.
3. Project Plan – is usually more limited in scope than a program plan and
is sometimes prepared to support a program.

4.3 Mission, Vision, Goals, Objectives and Values

To be an effective leader/manager of a business, he should ensure that his personal
vision, mission, and values are aligned to those of the organization. If they are not
aligned, there will be inconsistencies in company policies, people will be confused;
and the organization will not move in the same direction.

It is the responsibility of the leader/manager to define the company vision, mission,

goals, objectives, goals and values and to share these to everyone in the organization.

Vision
A commonly shared picture of what the organizations wants and is committed to
become sometime in the future. It is the guiding and motivating compass of the
organization-capturing the desired spirit of its people can passionately make the
organization to become. A vision can be expressed as the state in the future of what
the organization’s services, customers, stakeholders, core competencies, processes,
and structure may be.

Mission
It is an enduring statement of purpose of an organization’s existence that distinguishes
itself from others. It answers the questions: Who are we? Why do we exist?
Goals
Are precise statements of results sought, quantified in time and magnitude, where
possible. It is a concrete result that the organization intends to achieve within a
specified period. Goals are derived from a sound and clear understanding of the vision
and mission or purpose of the organization. It should be SMART (Specific,
Measurable, Attainable, Results-focused and Time-bound)

Objectives
Prime parts of the plan. The estimated end results/direction desired or expected by
the organization in the future.it is usually expressed in quantifiable manner.
Values
Are fundamental and shared beliefs that will provide the organization’s behavior in
meeting its objectives and in dealing with others. It is the organization’s moral
compass. They answer the question, “What is important to us?”

4.4 The Formal Planning Process

1. Setting Organizational, Divisional, or Unit Goals. The first task of the
manager is to provide a sense of direction to his firm (if he is the CEO), to his
division (if he heads a division), or to his unit (if he is a supervisor). The setting of
goals provides an answer to the said concern. If everybody in the firm (or division
or unit) is aware of the goals, there is a big chance that everybody will contribute
his share in the realization of such goals.
COMPANY GOAL – To expand market share by 20%
DIVISION GOAL – To increase the number of products manufactured and sold
by the company
UNIT GOAL – To increase the number of product managers

2. Developing Strategies or Tactics to Reach Goals. After determining the

goals, the next task is to devise some means to realize them. the ways chosen to
realize the goals are called strategies and these will be the concern of top
management. The middle and lower management will adapt their own tactics to
implement their plans.
Strategy is a course of action aimed at ensuring that the organization will
achieve its objectives.
Tactic is a short-term action by management to adjust to
negative or external influences. They are formulated and implemented in support
of the firm’s strategies.
The decision of a construction firm’s management to diversify its business by
also engaging in the trading of construction materials and supplies. (strategy)
Hiring of contractual workers to augment the company’s current workforce.
(tactic)

3. Determining the Resources Needed. When particular sets of strategies and

tactics have been devised, the manager will then determine the human and non-
human resources required by such strategies and tactics. Even if the resource
requirements are currently available, they must be specified.
A new business unit will be organized to deal with the buying and selling of
construction materials and supplies. The amount of P55million shall be set aside
to finance the activity. Qualified persons shall be recruited for the purpose.

4. Setting Standards. The standards for measuring performance may be set at

the planning stage. When actual performance does not match with the planned
performance, corrections may me made or reinforcements given.
Standard is a quantitative or qualitative measuring device designed to help
monitor the performance of people, capital, goods, or processes.
The minimum number of units that must be produced by a worker per day in a
given work situation.
4.5 Planning Tools and Techniques
Planning is done so that some desired results may be achieved. At times, however,
failure in planning occurs. Planning may be made successful by recognizing the
planning barriers, by using the aids in planning and by adapting appropriate tools and
techniques in planning.

1. Recognizing the planning barriers. Various barriers can inhibit successful

planning. In order for plans to be effective and yield the desired results, managers
must identify any potential problems and work to overcome them.
Manager’s inability to plan or inadequate planning. Managers are not
born with the ability to plan. Some managers are not successful planners
because they lack the background, education, and/or ability. Other may
have never been taught how to plan. When these two types of managers
take the time to plan, they may not know how to conduct planning as a
process.
Improper planning process. The development of a plan is hard work; it is
much easier for a manager to claim that he or she doesn’t have the time to
work the required planning process than to actually devote the time to
developing a plan.
Lack of commitment to the planning process. Fear of failure of
managers may result to choosing to do little thing or nothing to help in the
planning process.
Improper information. Facts are out-of-date, of poor quality, or of
insufficient quantity.
Focusing on the present at the expense of the future. Failure to consider
the long-term effects of a plan because of emphasis on short term problems
may lead to trouble in preparing for the future. Managers should try to keep
the big picture-their long-term goals-in mind when developing their plans.
Too much reliance on the planning department. Many companies have
a planning department or a planning and development team. These
departments conduct studies, do research, build models, and project
probable results, but they do not implement plans.
Concentrating on only the controllable variables. Managers can find
themselves concentrating on the things and events that they can control,
such as new product development, but then fail to consider outside factors,
such as poor economy.
2. Using the aids in planning
Gathering as much information as possible
Developing multiple sources of information
Involving others in the planning process
3. Adapt appropriate tools and techniques
Qualitative Techniques – the use of intuition and subjective judgment in
planning
Quantitative Techniques – the use of rational and analytical methods in
planning
Forecasting – attempting to predict future
Scheduling – planning time for completion of activities
Management by Objectives – a philosophy of converting
organizational objectives to personal objectives

THE NATURE OF DECISION MAKING

 Managers of all kinds and types are primarily tasked to provide leadership in the quest
for the attainment of the organization’s objectives. If he is to become effective, he must
learn the intricacies of decision making. Many times, he will be confronted by
situations where he will have to choose from among various options. Whatever option
he chooses, it will have effects, good or bad, immediate or long-term, in the operations
of his organization.
The manager’s decision making skills are very crucial to his success as a professional. A major
blunder in his decision making may be sufficient to cause destruction of his organization. On the
other hand, when good decisions are made, the right
environment is provided for continuous growth and success of any organized effort.

5.1 Adaptability and Creativity

Decision Making is the process of defining the problem and identifying and choosing
alternative courses of action in a manner appropriate to the demands of the situation.
The definition indicates that the manager must adapt a certain procedure designed to
determine the best option available to solve certain problems.

Decisions are made at various management levels and at various management

functions. Because of this, decision making is regarded as “the heart” of all
management functions.

5.2 The Decision Making Environments

Managers make problem solving decisions under three different conditions: certainty,
risk and uncertainty. All managers make decisions under each environment, but risk
and uncertainty are common to the more complex and unstructured problems faced
by the top managers.
1. Environment of Certainty – decisions are made when the manager has
perfect knowledge of all the information needed to make a decision
2. Environment of Risk – the manager lacks complete information, there is no
guarantee how each solution will work but has probabilities of occurrence of all
the outcomes
3. Environment of Uncertainty – information is poor that managers can’t even
assign probabilities to the likely outcomes of alternatives

5.3 The Rational Decision Making Process

1. Diagnose the Problem. If the manager wants to make an intelligent decision,
his first move must be to identify the problem. If the manager fails in this aspect,
his next moves will be useless. If the manager is not able to identify the real
problem, the solution he will offer will be irrelevant and may even be costly and
destructive. Being able to identify the real problem is tantamount to having the
problem half-solved.

2. Analyzing the Environment. The environment where the organization is

situated plays a very significant role in the success or failure of such an
organization. It is, therefore, very important that an analysis of the environment
is undertaken. In here the objective is the identification of constraints, which
may be internal or external limitations.
Internal Environment consists of organizational activities within a firm that
surround decision making. External Environment refers to variables that are
outside the organization and not typically within the short-run control of top
 management. The government, labor unions, suppliers, banks, public,
competitors, climate, and professional managers comprises the external
environment while the organizational structure, policies, procedures, rules,
ability of management, products strategy, promotion strategy, recruitment
processes, incentive systems, inventory control, plant facility layout, and
profitability of the organizations are the internal environment of a firm.

3. Develop Viable Alternatives. Oftentimes, a problem may be solved by any of

the solutions offered. In solving a problem, however, the best among the
alternative solutions must be considered by management. This is made
possible by using a procedure with the following steps: prepare a list of
alternative solutions; determine the viability of each solutions; and revise the
list by striking out those which are not viable.

4. Evaluate Alternatives. After determining the viability of the alternatives and a

revised list is made, an evaluation of the remaining alternatives is necessary.
This is important because the next step involves making a choice. Proper
evaluation makes choosing the right solution less difficult.
How the alternatives will be evaluated will depend on the nature of the problem,
the objective of the firm, and the nature of the alternatives presented. Each
alternative must be analyzed and evaluated in terms of value or the benefits
that can be expected from it, cost (out-of-pocket cost, opportunity cost, and
follow-on cost) and risk characteristics which refer to the likelihood of
achieving the goals of the alternatives.

5. Make a Choice. After the alternatives have been evaluated, the decision-
maker must now be ready to make a choice. This is the point where he must
be convinced that all the previous steps were correctly undertaken.
Choice-making refers to the process of selecting among the alternatives
representing potential solutions to a problem. At this point, specific effort should
be made to identify all significant consequences of each choice. To make the
selection process easier, the alternatives can be ranked from the best to worst
on the basis of some factors like benefit, cost and risk.

6. Implement Decision. After decision has been made, implementation follows.

This is necessary or decision making will be an exercise in futility.
Implementation refers to carryout out the decision so that the objectives
sought will be achieved. To make implementation effective, a plan must be
devised.
At this stage, the resources must be made available so that the decision may
be properly implemented. Those who will be involved in implementation must
understand and accept the solution; otherwise, the execution of the plan will be
a failure.

7. Evaluate and Adapt Decision Results. In implementing the decision, the

results expected may or may not happen. It is, therefore, important for the
manager to use control and feedback mechanisms to ensure results and to
provide information for future decisions.
Feedback refers to the process which requires checking each stage of the
process to assure that the alternatives generated, the criteria used in
evaluation, and the solution selected for implementation are in keeping with the
original goals and objectives.
Control refers to actions made to ensure that activities performed match the
desired activities or goals that have been set. In this stage of the decision making
process, the manager will find out whether or not the desired result is achieved. If the
result was positive, one may assume that the decision made was good. Otherwise
further analysis is necessary.
 THE CONCEPT OF ORGANIZING

The second function of management is organizing. After a manager has a plan in place,
she can structure her teams and resources. Skill in organizing is a very critical factor in
the accomplishment of the objectives of many organizations, whether they are private
businesses or otherwise. The aim of organizing activities is to have a collection of people
in the organization who perform activities for a specific purpose.

Organizing is undertaken to facilitate the implementation of plans. In effective organizing,

steps are undertaken to break up the total job into more manageable man-size jobs. Doing
these will make it possible to assign the particular tasks to particular persons. In turn,
these will help facilitate the assignment of authority, responsibility and accountability for
certain functions and tasks. Efforts expended in organizing may also result to easier
coordination among the various activities.

6.1 Organizing Defined

A managerial function that establishes the orderly use of resources by assigning
and coordinating tasks to accomplish objectives in an efficient and effective
manner.

6.2 The Nature and Development of Organizations

Organization Defined
The framework or backbone by which the work of an organization is
performed and it provides the required channels, points of origin, and flow of
management direction and control

The Core of Organizations

We are involved in organizational life from the time we get out of the bed. For
example, the minute we get up and drink a cup of coffee in the morning, we are
engaging services such as electricity, water, etc. which are provided by
organization. Organizations are an important part of our daily lives and it is hard
to imagine a day without engaging in a task that does not have an input from
an organization. (schools, universities, hospitals, places of worships, LGU)
Mullins describes an organization as a “a consciously, coordinated unit
created by groups in society to achieve specific purposes, common aims and
objectives by means of planned and coordinated activities”. Organizations are
created by people who decide to work together in order to attain their specific
objectives. Organizations function through the division of labor and on
hierarchy of authority. People and business processes are structured to
achieve organizational objectives.

There are three main types of organizations in the business environment:

Private Sector Organization – governed by the laws of capitalism.
Their aim is to make private profit and they have no governmental
component in their structure.
Public Sector Organization – owned and controlled by the
government. Their main aim is not to make profit, but to deliver
government services to citizens at national, regional and local levels.
Non-Profit Organizations – ones that provide goods and services for
the benefit without seeking private profit in return. Any profit that is made
by a NPO is kept in the organization for future use and not owned by
any individual or a group.

Classification of Organizations
Formal and Informal Organizations
Formal Organization “is the part of the system that has legitimacy and
official recognition”. It is the planned structure representing the intended
configuration of positions, job duties, and lines of authority among the
components parts of the organization.
Informal Organization is not a part of the formal organization and it
does not have a formal performance purpose. It is formed through
friendship, common interest, proximity, need satisfaction, collective
power, group goals, and etc.

Centralized and Decentralized Organizations

Centralized Organization systematically works to concentrate authority
at the upper levels. In a decentralized organization, management
consciously attempts to spread authority to the lower organization
levels.
A variety or factors can influence the extent to which a firm is centralized
and decentralized. The following is a list of possible determinants:
The external environment in which the firm operates. The
more complex and predictable this environment, the more likely
it is that top management will let low-level managers make
important decisions. After all, low-level managers are closer to
problems because they are more likely to have direct contact
with customers and workers. Therefore, they are in a better
position to determine problems and concerns.
The nature of the decision itself. The riskier or the more
important the decision, the greater tendency to centralize
decision making.
The abilities of low-level managers. If these managers do not
have strong decision-making skills, top managers will be
 reluctant to decentralize. Strong low-level decision-making
skills encourage decentralization.
The organization’s tradition of management. An
organization that traditionally practiced centralization or
decentralization is likely to maintain that posture in the future.

Bureaucratic and Organic Organizations

Bureaucratic Organizations is based on logic, order, and the
legitimate use of formal authority. It is meant to be orderly, fair and highly
efficient. Their features include a clear-cut division of labor, strict
hierarchy of authority, formal rules and procedures, and promotion
based on competency. It is appropriate for fairly stable environment.
Organic Organization is a management system founded on
cooperation and knowledge-based authority. It works better in dynamic
environments where managers need to react quickly to change. It is
much less formal and much more flexible. It is characterized by: roles
are not highly defined, tasks are continually redefined, little reliance on
formal authority, decentralized control, fast decision making, and
informal patterns of both delegation and communication.
Organizational Structure and Its Types
Organization Structure defines how job tasks are formally divided, grouped,
and coordinated. It is a framework that shows hierarchy, set of formal tasks
assigned to individuals and departments, the formal reporting relationships and
the design of systems to ensure effective coordination of employees and
departments.

TYPES OF ORGANIZATIONAL STRUCTURE

TALL OR FLAT STRUCTURE (Levels of Management and
Supervision)
1. Tall structure has many levels of management.

Advantages
• span of control is narrower, supervisory load is less
• more opportunities for promotion, more levels of position
• opportunities to specialize
• less demand for managers with multiple skills
 • managers are afforded with more time to attend to other important
problems
Disadvantages
• communications tend to be slower and distorted because of the
number of levels it has to pass through
• number of management levels also hinders effective decision
making
• more expensive to maintain as there are more to compensate

2. Flat structure has few levels of management.

Advantages
• communication is generally faster and less distorted
• decisions can be made quickly
• supervisor’s salaries are eliminated
Disadvantages
• require manager’s with experience in the various tasks
• a manager may have a little time for all subordinates
• when the manager is out, the group has no leader
• managers may have a little time to anticipate problems

LINE OR STAFF STRUCTURE (Function and Authority)

1. Line Function is the basic organization framework. It has a direct,
vertical relationship between different levels in the firm.
Advantages
• direct chain of command
• managers are given complete authority and responsibility over the
activities involving their functional areas
• directly involve in accomplishing primary goals of the organization
Disadvantages
• manager must be familiar with diverse activities related to the
operation of the department
• neglects specialists
• Overload tasks

2. Staff Function supports line authority by advising, servicing and

assisting but the authority is typically limited. An example of staff
functions are HR, Quality Assurance, and Corporate Planning.
Advantages
• provide expertise, advice, and support for the line positions
 • managers have assistants delegated with specific advisory
responsibility
Disadvantages
• limited authority
• they don’t have to be obeyed

FUNCTIONAL, DIVISIONAL OR MATRIX STRUCTURE (Design)

1. Functional Design grouped together the employees in separate
departments on the basis of common tasks, skills or activities they
performed in an organization.

Advantages
• efficient use of resources
• in-depth skill development
• clear career paths
• unity of direction
• enhanced coordination within functions
Disadvantages
• slow decision making
• less innovation
• unclear performance responsibility
• poor coordination across functions

2. Divisional Design is that type where all activities needed to produce a

good or service are grouped together into independent units

.
Advantages
• adaptation to unstable environment
• high customer satisfaction
• high task coordination
• clear performance responsibility
Disadvantages
 • inefficient use of resources
• focus is on division objectives
• loss of control
• costly

3. Matrix Design implements functional and divisional structures

simultaneously in each department. The employee is supervised by the
functional manager in his work as a specialist. The divisional manager
integrates the activities of the specialists. The following conditions favor
the use of this design:
- Environmental pressures exist for a dual focus, such as
innovation and quality;
- Large quantities of information must be processed;
- Efficiency is needed in the use of resources

Advantages
• allows demands from the environment to be met simultaneously
• provides flexibility
• encourages resource efficiency
• enhances skill development
• increases motivation and commitment among employees
• aids top management in planning
Disadvantages
• creates confusion
• power struggles within the group are potential problems
• place stress on individuals

Organizational Chart
The visual representation of the structure of the organization.

8.3 Delegation
The downward transfer of authority from a manager to a subordinate.
Most organizations today encourage managers to delegate authority in order to
provide maximum flexibility in meeting customer needs. In addition, delegation leads
to empowerment, in that people have the freedom to contribute ideas and do their jobs
in the best possible ways. This involvement can increase job satisfaction for the
individual and frequently results in better job performance. Without delegation,
managers do all the work themselves and underutilize their workers. The ability to
delegate is crucial to managerial success.

PRINCIPLES IN DELEGATION
Principle 1 Match the Employee to the Task. Managers should carefully consider
the employees to whom they delegate tasks. The individual selected
should possess the skills and capabilities needed to complete the tasks.
Perhaps even more important is to delegate to an individual who is not
only able to complete the task but also willing to complete the task.
Therefore, managers should delegate to employees who will view their
accomplishments as personal beliefs.
Principle 2 Be Organized and Communicate Clearly. The manager must have a
clear understanding of what needs to be done, what deadlines exist, and
what special skills are required. Furthermore, managers must be capable
of communicating their instructions effectively if their subordinates are to
perform up to their expectations.
Principle 3 Transfer Authority and Accountability with the Task. The delegation
process is doomed to failure if the individual to whom the task is delegated
is not given the authority to succeed at accomplishing the task and is not
held accountable for the results as well. Managers must expect
employees with the necessary resources and power to succeed, giving
them timely feedback on their progress, and holding them fully
accountable for the results of their efforts. Managers also should be
available to answer questions as needed.
Principle 4 Choose the Level of Delegation Carefully. Delegation does not mean
that the manager can walk away from the task or the person to whom the
task is delegated. The manager must maintain some control of both the
process and the results of the delegated activities. Depending upon the
confidence the manager has in the subordinate and the importance of the
task, the manager can choose to delegate at several levels.

6.4 Departmentalization and its Types

Departmentation is the grouping of jobs based on criteria that managers believe

to help in the coordination and control of activities. A decision must also be made
on whether the organization would be departmentalized or not. Departmentation
advantages are:
- Supervision is made easier
- The sharing of resources results in maximum use of resources
- Common measures of performance are established
- Communication is encouraged
 TYPES
1. According to Knowledge and Skills
2. According to Work Process and Function
3. According to Time
4. According to Product
5. According to Customer
6. According to Location

6.5 Reorganization
Reorganization is the process by which an existing organization undergoes changes
in the size and shape of the organization structure. It involves changes in hierarchy of
authority, goals, structural characteristics, administrative procedures and
management systems.

Types of Organizational Change

1. Strategic – adjusting a company’s strategy to achieve the goals of the
company or even change the mission statement of the organization in response
to the demands of external environment.
2. Structural – redesigning the structure of the company due to the influences
from the external environment. It involves changes in the hierarchy of authority,
goals, structural characteristics, administrative procedures, and management
systems.
3. Process-oriented – reengineering the processes to achieve optimum workflow
and productivity. It is often related to an organization’s production process or
how the organization assembles delivers services.
4. People-centered – altering attitudes, behaviors, skills or performance of
employees in the company. It involves communicating, motivating, leading and
interacting within groups.

Opposition to Change
Uncertainty and insecurity
Reaction against the way change is presented
Threats to vested interests Cynicism and
lack of trust
Perceptual differences and lack of understanding
Faulty thinking
Inadequate change process
Insufficient resources
Lack of commitment to change
Poor timing
A culture resistant to change

Overcoming Resistance to Change

involve workers in the change process
communicate openly about the changes
provide advance notice of an upcoming change
exercising sensitivity to worker’s concerns
reassuring workers that change will not affect their security
 THE CONCEPT OF STAFFING

After an organization’s structural design is in place, it needs people with the right
skills, knowledge, and abilities to fill in the structure. It is the people that either
create or undermine an organization’s reputation for quality in both products and
services. Business organizations are very sensitive to whatever staffing errors are made.
Placing the wrong person in a highly specialized position like quality control, for
instance, may bring enough damage to the firm to cause its bankruptcy. Yet, this refers
to a single error in staffing.

Many of the reasons leading to business failure could be traced to errors in

staffing. Accidents involving millions of pesos could be result of hiring an accident-prone
person. Hiring an unqualified person may cause demoralization among employees
who have been serving the company well.

There is no doubt that effective staffing places the company on a competitive

stance. Effective staffing may not make a company number one among competitors,
but ineffective staffing will make the company’s survival highly improbable.

7.1 The Staffing Process

The manager must be concerned with putting the right persons in various
positions within his area of concern. Although some of the important aspects of staffing
may be delegated to the human resources department, the manager assumes a great
responsibility in assuring that the right persons are assigned to positions that fit their
qualifications.

Staffing is a managerial function that determines human resources needs, recruits,

selects, trains, and develops human resources for jobs created by an organization. It
is undertaken to match people with jobs so that the realization of the organization’s
will be facilitated. Attracting, developing, rewarding and retaining the people needed
to reach organizational goals are the activities that make up the staffing function.

The staffing process consists of the following series of steps:

1. Human Resource Planning. This begins with a job analysis in which
descriptions of all jobs (tasks) and the qualifications needed for each position
are developed. A job description is a written statement of what a jobholder
does, how it’s done, and why it’s done. It typically portrays job content,
environment, and conditions of employment. The job specification states the
minimum acceptable qualifications needed to perform a given job successfully.
It identifies the knowledge, skills and abilities needed to do the job effectively.
Job analysis is then followed by a human resource inventory, which catalogs
qualifications and interests. Next, a human resource forecast is developed to
predict the organization’s future needs for jobs and people based on its
strategic plans and normal attrition. The forecast is then compared to the
2. Recruitment. When different positions had been identified as necessary and
the decision to fill them with persons had been made, the next logical step is
 recruitment. Recruitment refers to attracting qualified persons to apply for
vacant positions in the company so that those who are best suited to serve the
company may be selected.

Keep in mind that recruiting strategies differ among organizations. Although

one may instantly think of campus recruiting as a typical recruiting activity,
many organizations use internal recruiting, or promote-from-within
policies, to fill their high-level positions. Open positions are posted, and current
employees are given preferences when these positions become available.
Internal recruitment is less costly than an external search. It also generates
higher employee commitment, development and satisfaction because it offers
opportunities for career advancement to employees rather than outsiders.
If internal sources do not produce an acceptable candidate, many external
recruiting strategies are available, including the following:
• Newspaper Advertising
• Recruitment Firms (private, public or temporary
agencies)
• Employee Referrals • Internship Programs
• Internet Employment
Sites
• Schools/Universities
• Competitors

3. Selection. This refers to the act of choosing from those that are available
individuals the most likely to succeed on the job. A requisite for effective
selection is the preparation of a list indicating that an adequate pool of
candidates is available. The purpose of selection is to evaluate each candidate
and to pick the most suited for the position available.

Ways of determining the Qualifications of a Job Candidate

• Application Forms. It provides a record of salient information about the
applicants for positions, and also furnish data for personnel research.
• References. Those statement given by previous employers, co-
workers, teachers, etc. that provides some vital information about the
character of applicant. Reference checking allows employers to verify
information supplied by the candidate.
• Interviews. A formal, in-depth conversation conducted to evaluate an
applicant’s acceptability. In general, the interviewer seeks to answer
three broad questions: can the applicant do the job?, Will the application
do the job? and How does the applicant compare with others who are
being considered for the job?
• Testing. This involves an evaluation of the future behavior or
performance of an applicant.
1. Psychological Test – is an objective, standard measure of a
sample behavior of the individual. It is further classified as follows:
 i. Aptitude Test – measures a person’s capacity or potential
ability to learn
ii. Performance Test – measures a person’s current
knowledge of a subject
iii. Personality Test – measures personality traits or
temperament
iv. Interest Test – measures a person’s interest in the work.
2. Physical Examination – is done to assess the applicant’s physical
health is adequate to meet the job requirements.

4. Induction and Orientation. After an applicant is finally selected and

subsequently hired, the next step to be undertaken are induction and
orientation.
In induction, the new employee is provided with the necessary information
about the company. His duties, responsibilities, and benefits are relayed to him.
Personnel and health forms are filled out, and passes are issued. The company
history, its products and services, and the organization structure are explained
to the new employee.
In orientation, the new employee is introduced to the immediate working
environment and co-workers. Location, rules, equipment, procedures, training
plans, and performance expectations are discussed. The new employee also
undergoes the “socialization process” by pairing him with an experienced
employee and having a one-on-one discussion with the manager.

5. Training and Development. If the newly-hired (or newly-promoted)

employee is assessed to be lacking the necessary skills required by the job,
training becomes a necessity.

Training refers to the learning that is provided in order to improve job

performance. It is a systematic development of the attitude/ knowledge /
behavior patterns for the adequate performance of a given job or task.

Training programs may be classified into the following:

a. Training Programs for Non-Managers. This type of training is directed
to non-managers to increase knowledge and skills to perform a particular
job. The four techniques under this are:
i. On-the-job Training. The trainee is placed in an actual work
situation under the direction of his immediate supervisor, who
acts as trainer. This situation motivates strongly the trainee to
learn.
ii. Vestibule Training. The trainee is placed in a situation almost
exactly as the work environment. It duplicates the job, as well
as the required machinery and materials. The trainee is taught
with how to perform the job by a skilled person and is able to
learn a job at a comfortable pace without the pressure of
production schedules and output.
 iii. Apprenticeship Training. A combination of on-the-job
training and experience with classroom instruction in
particular subject.
iv. Special Courses. Those that provide more emphasis on
education rather than training.it is useful for teaching actual
material, concepts, principles, and theories to large groups
with limited or no knowledge of the subject.

b. Training Programs for Managers. The training needs of managers may

be classified into four types: decision-making skills, interpersonal skills,
job knowledge and organizational knowledge.

1. Decision Making Skills

i. In-Basket. The trainee is provided with a set of notes,
messages, telephone calls, letters, and reports, all pertaining
to a given company situation. The trainee is expected to
handle the situation within a given period of 1 or 2 hours.
ii. Management Games. A training method where trainees are
placed in a simulated situation and are required to make an
ongoing series of decisions about that situation.
iii. Case Studies. This presents actual situations in
organizations and enables one to examine successful and
unsuccessful operations. Case studies emphasize the
manager’s environment, improve communication skills, offer
rewards in solving problems, possess the quality of illustration
and establish concrete reference points for connecting theory
in practice.

2. Interpersonal Competence
i. Role-Playing. In this method, the trainees are assigned with
roles to playing a given case incident. They are provided with
a script or a description of a given problem and of the key
persons they are to play. Th purpose of this method is to
improve the skill of the trainees in human relations,
supervision and leadership.
ii. Behavior Modeling. It attempts to influence the trainee by
showing model persons behaving effectively in a problem
situation. The trainee is expected to adapt the behavior of the
model and use it effectively in some instances later on.
iii. Sensitivity Training. Under this method, awareness and
sensitivity to behavioral patterns of oneself and others are
developed.
 iv. Transactional Analysis. This method intends to help
individuals not only understand themselves and others but
also improve their interpersonal communication skills. This is
actually the study of social transactions between people so as
to develop improved communication and human
relationships.

3. Job Knowledge Skills

i. On-the-job Experience. It provides valuable opportunities for
the trainee to learn various skills while actually engaged in the
performance of a job.
ii. Coaching. This method requires a senior manager to assist
a lower-level manager by teaching him the needed skills and
generally providing direction, advice, and helpful criticism.
The senior manager must be skilled himself and have the
ability to educate; otherwise, the method will be ineffective.
iii. Understudy. Under this method, a manager works as
assistant to a higher-level manager and participates in
planning and other managerial functions until he is ready to
assume such position himself.

4. Organizational Knowledge Skills

i. Position Rotation. Under this method, the manager is given
assignments in a variety of departments. The purpose is to
expose him to different functions of the organization.
ii. Multiple Management. This method is premised on the idea
that junior executives must be provided with means to prepare
them for higher management position. To achieve this, a
junior board of directors is created consisting of junior
executives as members. The board is given the authority to
discuss problems that the senior board could discuss. The
members are encouraged to take a broad business outlook
rather than concentrating on their specialized lines of work.

6. Performance Appraisal. It is the measurement of employee performance. The

purpose of appraisal are as follows:
• To influence employee performance and development
• To determine merit of pay increase
• To plan for future performance goals
• To determine training and development needs
• To assess the promotion of potential employees

Ways of Appraising Performance. An employee’s performance may be

measured using any of the following methods:
1. Rating Scale Method. Each trait or characteristics to be rated is
represented by a line on which the rater indicates the degree to which
the individual possesses the trait or characteristics.
2. Essay Method. The evaluator in this method composes statements that
best describe the person evaluated.
 3. Management by Objectives Method. Specific goals are set
collaboratively for the organization as a whole, for various subunits, and
for each individual member. Individuals are then evaluated on the basis
of how well they have achieved the results specified by the goals.
4. Assessment Center Method. One is evaluated by persons other than
the immediate superior. This method is used for evaluating managers.
5. Checklist Method. The evaluator checks statement on a list that are
deemed to characterize an employee’s behavior or performance.
6. Work Standards Method. Standards are set for a realistic worker
output and later on used in evaluating the performance of non-
managerial employees.
7. Ranking Method. Each evaluator arranges employees’ names in rank
order from the best to the poorest.
8. Critical-Incident Method. The evaluator recalls and writes down
specific but critical incidents that indicate the employee’s performance.
A critical incident refers to the specific instance of inferior or superior
performance of the employee.

7.2 Changes in Employment Status

Employment Decisions
After evaluating the performance of employees, the management will now be
ready to make employment decisions. This is the process of identifying monetary,
non-monetary compensations and other types of remuneration, incentives and other
considerations to motivate, inspire and retain employees. These may consist of the
following:
• Compensation - refers to a wide range of financial and non-financial
rewards to employees for their services rendered to the organization.
➢ Monetary Rewards – are direct compensation, it refers to monetary
benefits offered and provided to employees in return of the services
they provide to the organization. It includes basic salary, house rent
allowance, conveyance, leave travel allowance, medical
reimbursements, special allowances, bonus, Gratuity, etc.
➢ Non-monetary Rewards – are indirect/supplementary
compensation, it refers to non-monetary benefits offered and
provided to employees in lieu of the services provided by them to
the organization. It includes leave policy, overtime policy, car policy,
hospitalization, insurance, leave travel assistance limits, retirement
benefits, holiday homes, etc.
• Promotion – refers to the movement by a person into a position of
higher pay and greater responsibilities and is given as a reward for
competence and ambition.
• Transfer – the movement of a person to a different job at the same or
similar level of responsibility in the organization. Transfers are made to
provide growth opportunities for the persons involved or to get rid of
poorly performing employees.
• Demotion – a movement from one position to another which has less
pay or responsibility attached to it. Demotion is used as a form of
punishment or as a temporary measure to keep an employee until he is
offered with a higher position.
Separation. it is either a voluntary or involuntary and permanent or temporary
termination of an employee’s services. In case of voluntary termination, the
organization’s management must find out the real reason. If the presence of
defect is determined in the organization, corrective action is necessary.
• Lay-off – it is temporary or permanent and involuntary separation, this
happens when economic conditions and competition faced by
employers significantly affect the rates they are able to pay. Competition
and recessions can force prices down and reduce the income from
which compensation payments are derived. In such situations,
employers have little choice but to reduce wages and/or lay-off
employees, or, even worse, to go out of business.
• Discharge/Firings – it is permanent and involuntary separation, this
happens when the employee’s performance is poor even after training
efforts or reasonable steps to rehabilitate the employee’s performance.
In some cases, such as gross insubordination or theft, immediate
dismissal is required.
• Resignation – it is permanent and voluntary separation of an employee
to the organization due to his personal reasons. Forced resignation is
used as substitute to discharge because it connotes positive meaning
while discharge is negative.
• Retirement – it is permanent and voluntary, this happens when an
employee reached a certain age and not because of any other reason.
 THE CONCEPT OF DIRECTING

After the various requirements for maintaining a business organization are put in
place, the firm will still need a sort of engine that will propel it to become a
successful venture. When competitors are beginning to demonstrate the ability to
derail the plans of the company, somebody must take charge of not letting this
happen.

Assets, even if they are abundant, cannot, on their own, achieve company
objectives. Human resources, even if they are fully trained and properly motivated,
may still proceed to move toward the wrong direction. Some employees are easily
affected by disruptions and minor failures. The potential damage may be great if
these few persons perform key functions. The effective use of assets will need the
wisdom of somebody who will provide guidance on their proper utilization.
Somebody must console the employees who are distracted by minor setbacks.
Somebody must uplift their spirits when they feel demoralized.

Successful firms recognize the need to address the above-mentioned concerns

and the answer lies on effective directing. As a result, they place a high priority on
providing trainings on leadership, communication and motivation.

Managers, in whatever level they happen to be, are not exempted from the
problem of effective directing. If this is really so, then they must be concerned with
the management function of directing.

8.1 Directing Defined

A managerial function that refers to the process of communicating,
motivating and leading others to engage in the work behaviors necessary
to reach goals.

8.2 Communication
People organize themselves into groups to facilitate the achievement of
objectives. The synchronization of activities will make the organization more
effective and efficient. This may be made possible, however, if each
member knows exactly what his responsibilities are, where and when his
actions will be required, and how intense his action should be. Proper
understanding of responsibilities is a function of effective communication. A
person will perform according to what he perceives to be his role and the
right perception of roles happens with sufficient motivation. The success of
efforts to motivate, however, will depend on whether or not they are properly
communicated.

Communication Defined
Communication is the process of sharing information through
verbal and nonverbal means, including words, messages, and
body movements.
 Communication is the transfer of information and understanding from one
person to another person. It is a way of reaching others by transmitting
ideas, facts, thoughts, feelings, and values. Its goal is to have the receiver
understand the message as it was intended. When communication is
effective, it provides a bridge of meaning between the two people so that
they can share what they feel and know. By using this bridge, both parties
can safely cross the river of misunderstanding that sometimes separates
people.

Importance of Communication
Organizations cannot exist without communication. 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. Coordination of work is impossible, and
the organization will collapse for lack of it. Cooperation also becomes
impossible, because people cannot communicate their needs and feelings
for others. We can say with confidence that every act of communication
influences the organization. Communication helps accomplish all the basic
management functions-planning, organizing, leading and controlling – so
that organizations can achieve their goals and meet their challenges.
When the communication is effective, it tends to encourage better
performance and job satisfaction. People understand their jobs better and
feel more involved in them. In some instances, they even will voluntarily give
up some of their long-established privileges because they see that a
sacrifice is necessary.

Poor Communication is probably the most frequently cited source of

interpersonal conflict. Because individuals spend nearly 70 percent of their
waking hours communicating – writing, speaking, listening – it seems
reasonable that one of the biggest inhibitors of group performance is lack
of effective communication. Good communication skills are critical to career
success. Polls or recruiters nearly always show communication skills
among the most desired characteristics.

No individual, group or organization can exist without sharing meaning

among its members. It is only thus that we can convey information and
ideas. Communicating is more than merely imparting meaning, that
meaning must be understood. Communication must include both the
transfer and the understanding of meaning.

Functions of Communication
Communication may be used to serve nay of the following functions:
1. Information Function. Information provided through communication
may be used in decision making at various levels in the organization.
Decisions are often dependent upon the quality and quantity of
information received.
2. Motivation Function. Communication is used to motivate employees to
commit themselves to the organization’s objectives. When objectives
are clearly stated, direction is provided, and achieving them becomes a
matter of course.
3. Control Function. When reports, policies and plans define roles; clarify
duties, authorities and responsibilities are property communicated then
effective control is facilitated.
4. Emotive Function. When feelings are repressed, employees are
affected by anxiety, which in turn, affects performance. Whatever types
of emotions are involved, whether satisfaction, dissatisfaction,
happiness, or bitterness, communication provides a means to decrease
the internal pressure affecting the individual.

THE COMMUNICATION PROCESS

Before a communication can take place, it needs a purpose, a message to

be conveyed between a sender and a receiver. The sender encodes the
message (converts it to a symbolic form) and passes it through a medium
(channel) to the receiver, who decodes it, the result is transfer of meaning
from one person to another.
The sender initiates the message by encoding a thought. The
message is the actual physical product of the sender’s encoding. When we
speak, the speech is the message. When we write, the writing is the
message. When we gesture, the movements of our arms and the
expressions on our faces are the message. The channel is the medium
through which the message travels. The sender selects it, determining
whether to use a formal or informal channel. Formal channels are
established by the organization and transmit messages related to the
professional activities of members. They traditionally follow the authority
chain within the organization. Other forms of messages, such as personal
or social, follow informal channels, which are spontaneous and emerge as
response to individual choices. The receiver is the person(s) to whom the
message is directed, who must first translate the symbols into
understandable form. This step is the decoding of the message. Noise
represents communication barriers that distort the clarity of the message,
such as perceptual problems, information overload, semantic difficulties, or
cultural differences. The final link in the communication process is a
feedback loop. Feedback is the check on how successful we have been in
transferring our messages as originally intended. It determines whether
understanding has been achieved.
The two-way communication process is the method by which a
sender reaches a receiver with a message. The process always requires
eight steps, whether the two parties talk, use hand signals, or employ some
advanced-technology means of communication.
1. Develop an Idea. To develop an idea that the sender wishes to transmit.
This is the key step, because unless there is a worthwhile message, all
the other steps are somewhat useless.
2. Encode. To encode or convert the idea into suitable words, charts, or
other symbols for transmission. At this point the sender determines the
method of transmission so that the words and symbols may be
organized in suitable fashion for the type of transmission. The key to
successful encoding lies in the process of framing an issue for
presentation. Framing uses rich, colorful, carefully selected language to
shape the perceptions of recipients. The sender of a communication
attempts to frame an issue by placing it in a particular context or
background to manage the meaning in the way it was intended. Framing
is a potent tool for managers to create vivid images and memorable
messages, and thereby shape the attitudes and actions of their
followers.
3. Transmit. When the message is finally developed, the next step is to
transmit it by the method chosen, such as memo, phone call, or personal
visit. The sender also chooses a certain channel such as bypassing or
not bypassing the superintendent, and communicates with careful
timing. The sender also tries to keep the communication channel free of
barriers, or interference, so that the message has a chance to reach the
receiver and hold his or her attention. In employment interviewing or
performance appraisals, for example, freedom from distraction is
desirable.
4. Receive. Transmission allows another person to receive a message. In
this step the initiative transfers to the receiver, who tunes in to receive
the message. If it is oral, the receiver needs to be good listener. If the
receiver does not function, the message is lost.
5. Decode. To decode the message so that it can be understood. The
sender wants the receiver to understand the message exactly as it was
sent. Understanding can occur only in a receiver’s mind. A
communicator may make others listen, but there is no way to make them
understand. The receiver alone chooses whether to understand or not.
Many employers overlook this fact when giving instructions or
explanations. They think that telling someone is sufficient, but the
communication cannot proceed until there is understanding. This
process is known as “getting through” to a person.
6. Accept. Once the receiver has obtained and decoded a message, that
person has the opportunity to accept or reject it. The sender would like
the receiver to accept the communication in the manner intended so that
activities can progress as planned. Acceptance is a matter of choice and
 degree, such that the receiver has considerable control over whether or
not to embrace all the message or just parts of it. Some factors affecting
the acceptance decision revolve around perceptions of the message’s
accuracy, the authority and credibility of the sender, the sender’s
persuasive skills and the behavioral implications for the receiver.
7. Use. The next is for the receiver to use the information. The receiver
may discard it, perform the task as directed, store the information for the
future, or do something else. This is a critical action step, and the
receiver is largely in control of what to do.
8. Provide Feedback. When the receiver acknowledges the message and
responds to the sender, feedback has occurred. Feedback completes
the communication loop, because there is a message flow from the
sender to the receiver and a back the sender.

Two-way communication, made possibly by feedback, has a back-and forth

pattern. In two-way communication, the speaker sends a message and the
receiver’s response comes back to the speaker. The result is a developing
play-by-play situation in which the speaker can, and should, adjust the next
message to fit the previous response of the receiver. The sender needs
feedback – the final step – because it tells whether the message was
received, decoded properly, accepted, and used. If necessary, the sender
should seek and request feedback from the receiver. When this two-way
communication occurs, both parties experience greater satisfaction,
frustration is prevented, and work accuracy is much improved.

Communication Symbols
1. Words – main communication symbol used on the job. “Words do not
provide meaning, but people do”
2. Pictures – used to clarify word communication such as blueprints, charts,
diagrams, causal maps, visual aids in training programs, scale models of
products and similar devices. “A picture is worth a thousand words”
3. Action (nonverbal Communication) – “Actions speak louder than words”
body language, facial expressions

TYPES OF COMMUNICATION FOR ORGANIZATIONS

1. DOWNWARD COMMUNICATION
Communication that flows from one level of a group or organization to a
lower level. Group leaders and managers use it to assign goals, provide job
instructions, explain policies and procedures, point out problems that
needed attention, and offer feedback about performance.

DOWNWARD COMMUNICATION WAYS

1. Job instructions – employees needed proper instruction regarding
their work
2. Performance feedback – employees need feedback to know what to
do and how well they are meeting their own goals.
 3. News – employees need fresh and timely news to know updates
regarding the organization
4. Social support – the employees have the perception that they are
cared for, esteemed, and valued. The presence (and caring delivery)
of communication is what the employees valued.

2. UPWARD COMMUNICATION
Upward communication flows to a higher level in the group or organization.
It’s used to provide feedback to higher-ups, inform them of progress toward
goals, and relay current problems. Upward communication keeps managers
aware of how employees feel about their jobs, co-workers, and the
organization in general. Managers also rely on upward communication for
ideas on how conditions can be improved.

UPWARD COMMUNICATION PRACTICES

1. Questioning – management takes an interest in employees’ opinions,
desires additional information and values their inputs
2. Listening – management actively listens to their employees
3. Employee Meetings – management encourages meetings between
employees to talk about job problems, needs and management
practices that can help and interfere their performance
4. Open-door policy – management encourages employees to come to
higher management with any matter that concerns them. More
effective if managers practice MBWA in which they take initiative in
making contact with large number of employees
5. Participation in Social groups – management implements informal,
casual recreational vents, parties, picnics, sports events trips to know
or share more information with employees

3. HORIZONTAL COMMUNICATION
When communication takes place among members of the same work
group, members of work groups at the same level, managers at the same
level, or any other horizontally equivalent workers, is describe as lateral
communication. Lateral communication saves time and facilitates
coordination. Among the techniques appropriate for horizontal
communication are: memos, meetings, telephones, picnics, dinners, and
other social affairs.
The purpose of horizontal communication are:
a. To coordinate activities between departments;
b. To persuade others at the same level of organizations; and
c. To pass on information about activities or feelings.

BARRIERS TO COMMUNICATION
Various factors may impede the efficient flow of communication. Any or all
of these factors may, at any stage, derail the process. Even if the message
is transmitted by the channel, the timing and the meaning of the message
may be affected by some factors. The barriers to communication may be
classified generally as:

1. PERSONAL BARRIERS – these are hindrances to effective

communication arising from the communicator’s characteristics as a
person, including emotions, values, poor listening habits, sex, age, race,
socioeconomic status, religion, education, and so on.

Emotion cloud the communicator’s ability to correctly judge the real

meaning of the messages received, assuming that this could even be
received at all. People with different values will find it hard to
communicate with each other. Poor listening habits of a receiver
frustrate the communication efforts of the sender. The sex, age, race,
socioeconomic status, religion, and education of both the sender and
the receiver provide formidable barriers to effective communication.

2. PHYSICAL BARRIERS – these are interferences to effective

communication occurring in the environment where the communication
is undertaken. The very loud sound produced by a passing jet
temporarily drowns out the voice of a guest delivering a speech. Such
distraction does not allow full understanding of the meaning of the entire
message and is an example of a physical barrier.

Physical barriers include distances between people, walls, a noisy

sound system near a phone, etc. an office that is too classy may
sometimes inhibit a person from meeting the occupant of the office face-
to-face. A menacing pet dog (or secretary) posted near the door may
also prevent a person from directly communicating with the object
person behind the door.

A communication channel that is overloaded may also prevent important

information to reach the intended user. Another physical barrier to
communication is poor timing, for instance, how may one expect a
person who just lost a loved one to immediately accede to a personal
request from a fellow employee.?

3. SEMANTIC BARRIERS – Semantics is the study of meaning as

expressed in symbols. Words, pictures, or actions are symbols that
suggest certain meanings. When the wrong meaning has been chosen
by the receiver, misunderstanding occurs. Such error constitutes a
barrier to communication.

A semantic barrier may be defined as an interference with the reception

of a message that occurs when the message is misunderstood even
though it is received exactly as transmitted.
 For example, the words “wise” and “salvage” will be interpreted
differently by an English-speaking foreigner from the way the Filipinos,
interpret them.

Overcoming Barriers to Communication

1. Use feedback to facilitate understanding and increase the potential
for appropriate action.
2. Repeat messages in order to provide assurance that they are properly
received.
3. Use multiple channels so that the accuracy of information may be
enhanced.
4. Use simplified language that is easily understandable and which
eliminates the possibility of people getting mixed-up with meanings.

8.3 Motivation
Business must produce outputs that will help maintain their competitive
stance in the market. Products or services must be produced with the least
cost, even if it is only one of the factors required for business survival and
growth.

Economy in production, however, will depend on how motivated the

employees are in the performance of their assigned tasks. As the outputs
will be needed by customers in various qualities and quantities, at different
times and places, the firm must be able to deliver the requirement, or it will
be driven out of the market.

It will take a different motivation level to meet quality standards than to

produce the required quantity. Although motivation is a common ground
among the various activities, the levels may not be so, and this makes
motivation a complicated undertaking.

In any case, it is important for management to understand that motivation is

a function that can be used as a powerful means to achieve the company’s
objectives. Literature abounds with stories of organizations, which
succeeded because of highly motivated employees.

Motivation Defined
The process of activating behavior, sustaining it and directing it towards a
particular goal.
 Motivating refers to the act of giving employees reasons or incentives to
work to achieve organizational objectives.

Elements of Motivation
The three key elements are intensity, direction and persistence.
Intensity describes how hard a person tries. This is the element most of us
focus on when we talk about motivation. However, high intensity is unlikely
to lead to favorable job-performance outcomes unless the effort is
channeled in a direction that benefits the organization. Therefore, we
consider the quality of effort as well as its intensity. Effort directed toward
that consistent with the organization’s goals, is the kind of effort we should
be seeking. Finally, motivation has a persistence dimension. This
measures how long a person can maintain effort. Motivated individuals stay
with a task long enough to achieve their goal.

A MODEL OF MOTIVATION: DRIVES AND NEEDS

The motivation process starts with a need. And the tension is to satisfy
immediately the need. For example is in the workplace, if a person is in
need of a job. He then searches in the environment on the type of job and
organization he may fit in. He looks for opportunities and screens his
options. If his goal is just to find any job regardless of the degree he
obtained in college, it will be a lot easier for him to choose from among
several options. If he will try to tailor fit with his degree, then his goal is to
find a good company to work for with consideration of his college degree.

If he finds a job, he will put his best efforts to satisfy his employers. With
his good performance and ability, he is then rewarded for his efforts.
Then, his need is satisfied.

TYPES OF MOTIVATION
Individuals or groups of individuals may be motivated to perform through
the use of various techniques. These techniques may be classified as
motivation though job design, motivation through rewards, motivation
though employee participation, and other motivation techniques for the
diverse workforce.
1. MOTIVATION THROUGH JOB DESIGN. A person will be highly
motivated to perform if he is assigned a job he likes. The first requisite,
however, is to design jobs that will meet the requirements of the
organization and the persons who will occupy them.
Job Design is concerned with specifying the tasks that constitute a job
for an individual or group.

In motivating through the use of job design, two approaches may

be used:
a. Fitting People to Jobs. Routine and repetitive tasks make workers
suffer from chronic dissatisfaction. To avoid this, the following
remedies may be adapted:
i. Realistic Job Preview – undertaken by management by
“conveying to applicants what organizational life will actually
be like on the job, warts and all.”
ii. Job Rotation – undertaken when people are moved
periodically from one specialized job to another.
iii. Limited Exposure – undertaken when a worker’s exposure
to a highly fragmented and tedious job is limited.
 b. Fitting Jobs to People. Instead of changing the person,
management could consider changing the job. this may be achieved
with the use of the following:
i. Job Enlargement – when two or more specialized tasks in a
work flow sequence is combined into a single job.
ii. Job Enrichment – when efforts are made to make jobs more
interesting, challenging and rewarding.

2. MOTIVATION THROUGH REWARDS. Rewards consists of material

and psychological benefits to employees for performing tasks in the
workplace. Properly administered reward system can improve job
performance and satisfaction.
Rewards may be classified into two categories:
a. Extrinsic rewards – refer to rewards external to the job, such as
pay, promotion or fringe benefits. Examples are Monthly pay, 13th
month pay, 14th month pay, housing allowance, sick leave benefits,
vacation leave benefits, pension plan, paid vacation trip, health
insurance and accident insurance
Management of Extrinsic Rewards. To motivate job performance
effectively, extrinsic rewards must be managed in line with the
following:
i. it must satisfy individual’s needs
ii. the employees must believe effort will lead to reward
iii. rewards must be equitable
iv. rewards must be linked to performance
b. Intrinsic rewards – are internally experienced payoffs and which are
self-granted. Examples are a sense of accomplishment, self-esteem,
and self-actualization.

No Single type of reward is generally applicable to all employees. This is

because individuals have needs different from others. As much as possible,
the particular needs of an individual must be matched with the
corresponding reward if motivation is the objective. Although the
administrative constraints inherent to such systems could be a hindrance to
their adoption, they must be used whenever feasible.

Employees must believe that efforts will lead to reward. Otherwise, they will
not strive to turn in more efforts in their particular job assignments.

Rewards that are not equitable will not produce the desired motivation.
When employees know that reward is tied up with individual performance,
management may expect extra efforts from them. a negative example is the
practice in some government offices where every employee, regardless of
performance, is given a productivity bonus. As a result, the majority is not
motivated to exert extra efforts.
3. MOTIVATION THROUGH EMPLOYEES PARTICIPATION. When
employees participate in deciding on various aspects of their jobs, their
personal involvement is often carried up to the point where the tasks are
completed.
The specific activities identified where employees may participate are as
follows: setting goals, making decisions, solving problems, and
designing and implementing organizational changes.

The more popular approaches to participation included the

following:
a. Quality Control Circle. A method of direct employee participation
where the objective is to produce ideas for improving productivity and
working condition.
The circle consists of three to ten employees, usually doing related
work, who meet at regular intervals (once a week for an hour, for
example) to identify problems and discuss their solutions. The circle
includes a leader such as a foreman, but relies on democratic
processes. The members are trained in various analytical techniques
by a coordinator. The circle forwards its recommendations to
management, which in turn, makes decisions on its adoption.

b. Self-managed Teams. When workers have reached a certain

degree of discipline, they may ripe for forming self-managed teams.
Also known as autonomous work group, or high-performance teams,
self-managed teams take on traditional managerial tasks as part of
their normal work routine.

The self-managed team works on their own, turning out a complete

product or service and receiving minimal supervision from managers
who act more as facilitators then supervisors. When a product or
service is produced by a group of professionals or specialists, they
might as well be formed as a self-managed team to save on
supervisory costs.

Requisites to Successful Employee Participation Programs. To

succeed, an employee participation program will require the
following:
i. a profit-sharing or gain-sharing plan;
ii. a long-term employment relationship with good job security;
iii. a concerted effort to build and maintain group cohesiveness;
and
iv. protection of the individual employee’s rights.

4. OTHER MOTIVATION TECHNIQUES. The advent of theories of

individual differences and the biological clock of human being has
challenged managers to adapt other motivation techniques such as:
 a. Flexible Work Schedules. There is an arrangement, called flextime,
which allows employee to determine their own arrival and departure
times within specified limits.
b. Family Support Services. Employees are oftentimes burdened by
family obligations like caring for children. Progressive companies
provide day care facilities for children of employees.
c. Sabbaticals. Is given to an employee after a certain number of years
of service. The employee is allowed to go on leave for two months to
one year with pay to give him time for family, recreation, and travel.
It is expected that when the employee returns for work, his motivation
is improved.

APPROACHES TO MOTIVATION: CONTENT AND PROCESS

THEORIES

A. CONTENT THEORIES - focus on human wants and needs or desires

that are internalized and give impetus to individual behavior

1. FREDERICK W. TAYLOR TRADITIONAL MOTIVATION THEORY.

An incentive system that paid workers more money for meeting the
new standard. Taylor believe that existing reward system were not
designed to reward individuals for high production. He felt that when
highly productive people discover that they are being compensated
basically the same as less productive people, then the output of
highly productive people will decrease. This theory is based on
assumption that money is the primary motivator. Financial rewards
are directly related to performance in the belief that if the reward is
great enough, employees will produce more.

2. ABRAHAM MASLOW’S HIERARCHY OF NEEDS THEORY

Abraham Maslow’s hierarchy of five needs—physiological, safety,
social, esteem, and self-actualization—in which, as each need is
substantially satisfied, the next need becomes dominant.
An individual’s needs form a staircase. At any stage of his/her life,
the individual has specific needs. The needs progress until he/she is
able to achieve the highest need. It is important for a manager to
determine the kind of need the employee has at a certain point of
his/her career so that the manager can effectively motivate the
employees. Once the need is satisfied, it ceases to become a
motivator.
Maslow’s theory is based on the following two principles:
a. Deficit Principle: a satisfied need no longer motivates behavior
because people act to satisfy deprived needs
 b. Progressive Principle: the five needs identified existed in a
hierarchy, which means that a need at any level only comes into
play after a lower-level need has been satisfied.

Maslow’s Hierarchy of Human Needs

Level Needs To Satisfy, Offer:
Self-actualization Creative and challenging work
Needs Participation in decision making
Job flexibility and autonomy
Esteem Needs Responsibility of an important job
Promotion to higher status job
Praise and recognition from boss
Social Needs Friendly co-workers
Interaction with customers
Pleasant supervisor
Safety Needs Safe working
conditions
Job security
Base compensation and
benefits Physiological needs Rest and
refreshment breaks
Physical comfort on the job
Reasonable work hours

3. FREDERICK HERZBERG’S TWO-FACTOR THEORY

A theory that relates intrinsic factors to job satisfaction and
associates extrinsic factors with dissatisfaction. Also called
motivation-hygiene theory.

Herzberg identified two classes of factors associated with employee

satisfaction and dissatisfaction. In this research, Herzberg found out
that satisfied employees consider the following factors (satisfiers or
motivation factors) as responsible for job satisfaction: achievement,
recognition, the work itself, responsibility, advancement and growth.
Dissatisfied employees consider the following factors (dissatisfiers or
hygiene factors) as responsible for job dissatisfaction: company
 policy and administration, supervision, relationship with supervisor,
work conditions, salary, relationships with peers, personal life,
relationship with subordinates, status and security.

If the manager considers Herzberg’s theory in motivating employees,

he must do something to eliminate the dissatisfiers and install
satisfiers. Even if the dissatisfiers are eliminated, the employee is still
not motivated to work hard.

4. CLAYTON ALDERFER’S ERG THEORY

Clayton Alderfer’s ERG (Existence, Relatedness, Growth) theory is
built upon Maslow’s hierarchy of needs theory. To begin his theory,
Alderfer collapses Maslow’s five levels of needs into three
categories:
1. Existence needs are desires for physiological and material well-
being.
2. Relatedness needs are desires for satisfying interpersonal
relationships.
3. Growth Needs are desires for continued psychological growth
and development.

This approach proposes that unsatisfied needs motivates behavior,

and that as lower level needs are satisfied, they become less
important. Higher level needs though, become more important as
they are satisfied, and if these needs are not met, a person may
move down the hierarchy, which Alderfer calls the frustration-
regression principle. What he means by this term is that an already
satisfied lower level need can become reactivated and influence
behavior when a higher-level need cannot be satisfied. As a result,
managers should provide opportunities for workers to capitalize on
the importance of higher-level needs.

5. DAVID MCCLELLAND’S ACQUIRED NEEDS THEORY

A theory that states achievement, power, and affiliation are three
important needs that help explain motivation.
This theory recognizes that everyone prioritizes needs differently.
McClelland believes that individuals are not born with these needs,
but that they are actually learned through life experiences.
McClelland associates each need with a distinct set of work
preferences, and managers can help tailor the environment to meet
these needs. He identifies three specific needs:

1. Need for Achievement (nACh) - The drive to excel, to achieve

in relationship to a set of standards, and to strive to succeed.
 High achievers differentiate themselves from others by their desires
to do things better. These individuals are strongly motivated by job
situations with personal responsibility, feedback, and an intermediate
degree of risk. In addition, high achievers often exhibit the following
behaviors:
❑ Seek personal responsibility for finding solutions to problems
❑ Want rapid feedback on their performance so that they can
tell easily whether they are improving or not
❑ Set moderately challenging goals and perform best when they
perceive their probability of success as 50-50

2. Need for Power (nPow) - The need to make others behave in a

way in which they would not have behaved otherwise.

An individual with a high need of power is likely to follow a path of

continued promotion over time. Individuals with a high need of power
often demonstrate the following behaviors:
❑ Enjoy being in charge
❑ Want to influence others
❑ Prefer to be placed into competitive and status-oriented
situations
❑ Tend to be more concerned with prestige and gaining
influence over others than with effective performance

3. Need for Affiliation (nAff) - The desire for friendly and close
interpersonal relationships.

People with the need for affiliation seek companionship, social

approval, and satisfying interpersonal relationships. People needing
affiliation display the following behaviors:
❑ Take a special interest in work that provides companionship
and social approval
❑ Strive for friendship
❑ Prefer cooperative situations rather than competitiveness
❑ Desire relationships involving a high degree of mutual
understanding
❑ May not make the best managers because their desire for
social approval and friendship may complicate managerial
decision making

B. PROCESS THEORIES - examine individual behavior in terms of job

satisfaction related to perceived rewards (or lack of rewards) that
instigate behavior. these emphasize the decision-making dimension to
work performance.

6. SELF-DETERMINATION THEORY
 A theory of motivation that is concerned with the beneficial effects of
intrinsic motivation and the harmful effects of extrinsic motivation.
❑ This theory proposes that people prefer to feel they have
control over their actions, so anything that makes a previously
enjoyed task feel more like an obligation than a freely chosen
activity will undermine motivation.

7. COGNITIVE EVALUATION THEORY

A version of self-determination theory which holds that allocating
extrinsic rewards for behavior that had been previously intrinsically
rewarding tends to decrease the overall level of motivation if the
rewards are seen as controlling.
❑ This theory hypothesizes that extrinsic rewards will reduce
intrinsic interest in a task. When people are paid for work, it
feels less like something they want to do and more like
something they have to do.
❑ Self-determination theory also proposes that in addition to
being driven by a need for autonomy, people seek ways to
achieve competence and positive connections to others.
❑ When organizations use extrinsic rewards as payoffs for
superior performance, employees feel they are doing a good
job less because of their own intrinsic desire to excel than
because that’s what the organization wants. Eliminating
extrinsic rewards can also shift an individual’s perception of
why she works on a task from an external to an internal
explanation.

8. EDWARD LEE THORNDIKE’S REINFORCEMENT THEORY

Based on E.L. Thorndike’s law of effect, looks at the relationship
between behavior and its consequences. This theory focuses on
modifying an employee’s on-the-job behavior through the
appropriate use of one of the following four techniques:
a. Positive Reinforcement rewards desirable behavior. Pay
raise or promotion is provided as reward for positive behavior
with the intention of increasing the probability that the desired
behavior will be repeated.
b. Avoidance is an attempt to show an employee what the
consequences of improper behavior will be. If an employee
does not engage in improper behavior, he or she will not
experience the consequences.
c. Extinction is basically ignoring the behavior of a subordinate
and not providing either positive or negative reinforcement.
This technique should only be used when the supervisor
perceives the behavior as temporary, not typical, and not
serious.
 d. Punishment (threats, docking pay, suspension) is an attempt
to decrease the likelihood of a behavior recurring by applying
negative consequences.

Reinforcement Theory’s Implications for Management

❑ Learning what is acceptable to the organization influences
motivated behavior
❑ Managers who are trying to motivate their employees should
be sure to tell what they are doing wrong and be careful not
to reward all employees at the same time
❑ Managers must tell to the employees what they can do to
receive positive reinforcement
❑ Managers must be sure to administer the reinforcement as
closely as possible to the occurrence of the behavior
❑ Managers must recognize that failure to reward can also
modify behavior. Employees who believe that they deserve a
reward and do not receive it will often become disenchanted
with both their manager and company.

9. BURRHUS FREDERIC SKINNER’S REINFORCEMENT THEORY

Theory that says that behavior is a function of its consequences.
❑ Reinforcement theory ignores the inner state of the individual
and concentrates solely on what happens when he or she
takes some action.
❑ B. F. Skinner argued that creating pleasing consequences to
follow specific forms of behavior would increase the
frequency of that behavior.
❑ He demonstrated that people will most likely engage in
desired behaviors if they are positively reinforced for doing
so; that rewards are most effective if they immediately follow
the desired response; and that behavior that is not rewarded,
or is punished, is less likely to be repeated.

The components of motivated behavior according to B.F.

Skinner are:
❑ Stimulus. The environment setting in which behavior occurs
(performance)
❑ Response. The behavior level itself.
❑ Reinforcement. The reward given for good performance
only.

10.EDWIN LOCKE’S GOAL-SETTING THEORY

Theory that says that specific and difficult goals, with feedback, lead
to higher performance.
❑ Goal setting 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.

How Goals Motivate and Facilitate Performance?

The goal setting model consists of the following

components:
a. Goal Content. To be sufficient in content, goals must
be challenging, attainable, specific and measurable,
time-limited and relevant.
b. Goal Commitment. When individual or groups are
committed to the goals they supposed to achieve, there
is a chance that they will be able to achieve them.
c. Work Behavior. Goals influence behavior in terms of
direction, effort, persistence, and planning. When an
individual is provided with direction, performance is
facilitated. In trying to attain goals that are already
indicated, the individual is provided a reason to persist
in his efforts until the goal is attained. Once goals are
set, the first important input to planning is already in
place.
d. Feedback Aspects. Feedbacks provide the
individuals with a way of knowing how far they have
gone in achieving objectives. Feedback also facilitate
the introduction of corrective measures whenever
necessary.

❑ Edwin Locke proposed that intentions to work toward a goal

are a major source of work motivation. That is, goals tell an
employee what needs to be done and how much effort is
needed. Evidence strongly suggests that specific goals
increase performance; that difficult goals, when accepted,
result in higher performance than do easy goals; and that
 feedback leads to higher performance than does non-
feedback.

Factors that influence the goals-performance

relationship are:
❑ goal specificity – the degree of goal an individual wants
to achieve.
❑ goal difficulty – the amount of effort required to achieve
the goal.
❑ goal intensity – the process of determining how to
achieve the goal.
❑ goal commitment – the amount of effort used to achieve
the goal.

Management by Objectives (MBO). A program that encompasses

specific goals, participatively set, for an explicit time period, with
feedback on goal progress.
❑ corporate goals are broken down into smaller, more specific
goals at each level of organization
❑ goals must be: tangible, verifiable and measurable

11.ALBERT BANDURA’S SELF-EFFICACY THEORY

Self-efficacy (also known as social cognitive theory or social learning
theory) refers to an individual’s belief that he or she is capable of
performing a task.
❑ The higher your self-efficacy, the more confidence you have
in your ability to succeed. So, in difficult situations, people with
low self-efficacy are more likely to lessen their effort or give
up altogether, while those with high self-efficacy will try harder
to master the challenge.
❑ Self-efficacy can create a positive spiral in which those with
high efficacy become more engaged in their tasks and then,
in turn, increase performance, which increases efficacy
further. Changes in self-efficacy over time are related to
changes in creative performance as well.
❑ Individuals high in self-efficacy also seem to respond to
negative feedback with increased effort and motivation, while
those low in self-efficacy are likely to lessen their effort after
negative feedback.

Four ways self-efficacy can be increased according to Bandura

are:
1. Enactive mastery. Gaining relevant experience with the task
or job. If you’ve been able to do the job successfully in the
past, you’re more confident you’ll be able to do it in the future.
 2. Vicarious modeling. Becoming more confident because you
see someone else doing the task. It is most effective when
you see yourself as similar to the person you are observing.
3. Verbal persuasion. Becoming more confident because
someone convinces you that you have the skills necessary to
be successful. Motivational speakers use this tactic.
4. Arousal. It leads to an energized state, so the person gets
“psyched up” and performs better. But if the task requires a
steady, lower-key perspective (say, carefully editing a
manuscript), arousal may in fact hurt performance.

Implications of Self-Efficacy Theory

Training programs often make use of enactive mastery by having people
practice and build their skills. In fact, one reason training works is that it
increases self-efficacy. Individuals with higher levels of self-efficacy also
appear to reap more benefits from training programs and are more likely to
use their training on the job.

The best way for a manager to use verbal persuasion is through the
Pygmalion effect or the Galatea effect. The Pygmalion effect is a form of
self-fulfilling prophecy in which believing something can make it true. This
strategy has been used in the workplace. Sailors who were told convincingly
that they would not get seasick were in fact much less likely to do so.
Intelligence and personality are absent from Bandura’s list, but they can
increase self-efficacy. People who are intelligent, conscientiousness, and
emotionally stable are so much more likely to have high self-efficacy that
some researchers argue self-efficacy is less important than prior research
would suggest. They believe it is partially a by-product in a smart person
with a confident personality. Although Bandura strongly disagrees with this
conclusion, more research is needed.

❑ Goal-setting theory and self-efficacy theory don’t compete; they

complement each other. Employees whose manager sets difficult
goals for them will have a higher level of self-efficacy and set
 higher goals for their own performance. Why? Setting difficult
goals for people communicates your confidence in them. Imagine
you learn your boss sets a higher goal for you than for your co-
workers. How would you interpret this? As long as you didn’t feel
you were being picked on, you would probably think, “Well, I
guess my boss thinks I’m capable of performing better than
others.” This sets in motion a psychological process in which
you’re more confident in yourself (higher self-efficacy) and you
set higher personal goals, performing better both inside and
outside the workplace.

12.VICTOR VROOM’S EXPECTANCY THEORY

A theory that says that the strength of a tendency to act in a certain
way depends on the strength of an expectation that the act will be
followed by a given outcome and on the attractiveness of that
outcome to the individual.
❑ In more practical terms, employees will be motivated to exert
a high level of effort when they believe it will lead to a good
performance appraisal; that a good appraisal will lead to
organizational rewards such as bonuses, salary increases, or
promotions; and that the rewards will satisfy the employees’
personal goals. the theory, therefore, focuses on three
relationships.
1. effort–performance relationship. the probability
perceived by the individual that exerting a given amount of
effort will lead to performance.
2. performance–reward relationship. the degree to which
the individual believes performing at a particular level will
lead to the attainment of a desired outcome.
3. rewards–personal goals relationship. the degree to
which organizational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those
potential rewards for the individual.
Expectancy theory helps explain why a lot of workers aren’t motivated
on their jobs and do only the minimum necessary to get by. Let’s frame
the theory’s three relationships as questions employees need to answer
in the affirmative if their motivation is to be maximized.

First, if I give a maximum effort, will it be recognized in my

performance appraisal? For many employees, the answer is “no.”
Why? Their skill level may be deficient, which means no matter how hard
they try, they’re not likely to be high performers. The organization’s
performance appraisal system may be designed to assess
nonperformance factors such as loyalty, initiative, or courage, which
means more effort won’t necessarily result in a higher evaluation.
Another possibility is that employees, rightly or wrongly, perceive the
boss doesn’t like them. As a result, they expect a poor appraisal,
regardless of effort. These examples suggest one possible source of low
motivation is employees’ belief that, no matter how hard they work, the
likelihood of getting a good performance appraisal is low.

Second, if I get a good performance appraisal, will it lead to

organizational rewards? Many organizations reward things besides
performance. When pay is based on factors such as having seniority,
being cooperative, or “kissing up” to the boss, employees are likely to
see the performance–reward relationship as weak and
demotivating.

Finally, if I’m rewarded, are the rewards attractive to me? The

employee works hard in the hope of getting a promotion but gets a pay
raise instead. Or the employee wants a more interesting and challenging
job but receives only a few words of praise. Unfortunately, many
managers are limited in the rewards they can distribute, which makes it
difficult to tailor rewards to individual employee needs. Some incorrectly
assume all employees want the same thing, thus overlooking the
motivational effects of differentiating rewards. In either case, employee
motivation is sub maximized.

13.JOHN STACY ADAM’S EQUITY MODEL

A theory that says that individuals compare their job inputs and
outcomes with those of others and then respond to eliminate any
inequities.
❑ Employees perceive what they get from a job situation (salary
levels, raises, recognition) in relationship to what they put into
it (effort, experience, education, competence), and then they
compare their outcome–input ratio with that of relevant others.
If we perceive our ratio to be equal to that of the relevant
others with whom we compare ourselves, a state of equity
exists; we perceive that our situation is fair and justice
prevails. When we see the ratio as unequal and we feel
underrewarded, we experience equity tension that creates
anger. When we see ourselves as overrewarded, tension
creates guilt. J. Stacy Adams proposed that this negative
state of tension provides the motivation to do something to
correct it.
❑ The referent an employee selects adds to the complexity of
equity theory. There are four referent comparisons:
1. Self–inside. An employee’s experiences in a different
position inside the employee’s current organization.
2. Self–outside. An employee’s experiences in a situation
or position outside the employee’s current organization.
 3. Other–inside. Another individual or group of individuals
inside the employee’s organization.
4. Other–outside. Another individual or group of individuals
outside the employee’s organization.
Based on equity theory, employees who perceive inequity will make
one of six choices:
1. Change inputs (exert less effort if underpaid or more if overpaid).
2. Change outcomes (individuals paid on a piece-rate basis can
increase their pay by producing a higher quantity of units of lower
quality).
3. Distort perceptions of self (“I used to think I worked at a moderate
pace, but now I realize I work a lot harder than everyone else.”).
4. Distort perceptions of others (“Mike’s job isn’t as desirable as I
thought.”).
5. Choose a different referent (“I may not make as much as my brother-
in-law, but I’m doing a lot better than my Dad did when he was my
age.”).
6. Leave the field (quit the job).

14.BARNARD-SIMON’S THEORY OF EQUILIBRIUM

This theory states that the inducements provided by the organization
must be kept in equilibrium with the contributions made by the
employees.
❑ Equal wages must be paid for equal work
❑ If inducements (wages and benefits) are not kept in balance
with contributions of the workers, then their motivation will be
affected.
❑ This theory deals with sustaining motivation rather than
increasing it
❑ Individual evaluates not only his personal position but that of
others as well. People are motivated not only by what they get
but also by what they see or believe others are getting. They
make a social comparison of inputs (education, efforts, time
spent, etc.) and rewards (money, work conditions,
recognitions, etc.) for themselves and others in the
organization.

MANAGEMENT PHILOSOPHIES THAT AFFECT EMPLOYEE

MOTIVATION

15.DOUGLAS MCGREGOR THEORY X AND Y

Douglas McGregor proposed two distinct views of human beings:
one basically negative, labeled Theory X (the assumption that
employees dislike work, are lazy,
dislike responsibility, and must be coerced to perform), and the other
basically positive, labeled Theory Y (the assumption that employees
 like work, are creative, seek responsibility, and can exercise self-
direction).
❑ After studying managers’ dealings with employees, McGregor
concluded that their views of the nature of human beings are
based on certain assumptions that mold their behavior.
❑ Under Theory X, managers believe employees inherently
dislike work and must therefore be directed or even coerced
into performing it. Under Theory Y, in contrast, managers
assume employees can view work as being as natural as rest
or play, and therefore the average person can learn to accept,
and even seek, responsibility.
❑ To understand more fully, think in terms of Maslow’s
hierarchy. Theory Y assumes higher-order needs dominate
individuals. McGregor himself believed Theory Y assumptions
were more valid than Theory X. Therefore, he proposed such
ideas as participative decision making, responsible and
challenging jobs, and good group relations to maximize an
employee’s job motivation.
Unfortunately, no evidence confirms that either set of assumptions is
valid or that acting on Theory Y assumptions will lead to more
motivated workers.

16.CHRIS ARGYRIS MATURITY THEORY

A theory that centers on the mature worker. It contrasts the
management practices found in traditional organizations with the
needs and capabilities of the mature adult personality.
❑ For example, the concept of work specialization is supposed
to make people work more efficiently because the tasks are
very defined. Argyris believes that the concept may actually
be counterproductive because it will limit an employee from
reaching self-actualization.
❑ He believes that if managers treat their employees in a
positive manner-as responsible adult – their employees will
be more productive.

❑ He believes that mature workers want additional

responsibilities, a variety of tasks, and the ability to
participate in decisions. If not, he believes that the result will
be employee abseentism, apathy, and even alienation.

8.4 Leadership
Leading people is different from managing them. Leading is establishing
direction and influencing others to follow that direction. The distinction
between leading and managing is important. The word leader is often used
interchangeably with the word manager to describe those individuals in an
organization who have positions of formal authority, regardless of how they
actually act in those jobs. But just because a manager is supposed to be a
formal leader in an organization doesn’t mean that he exercises leadership.
 Harvard’s John Kotter says that management is about coping with
complexity, and leadership is about coping with change. He also states that
leadership is an important part of management, but only a part;
management also requires planning, organizing, staffing, and controlling.
Management produces a degree of predictability and order. Leadership
produces change. Kotter believes that most organizations are underled and
overmanaged. He sees both strong leadership and strong management as
necessary for optimal organizational effectiveness.

We need leaders today to challenge the status quo, create visions of the
future, and inspire organizational members to want to achieve the visions.
We also need managers to formulate detailed plans, create efficient
organizational structures, and oversee day-to-day operations.

Leadership Defined
The ability to influence a group toward the achievement of a vision or set of goals.
Traits of an Effective Leader
1. Personal Drive. Persons with drive are those identified as willing to
accept responsibility, possess vigor, initiative, persistence, and health.
Drive is a very important leadership trait because of the possibility of
failure in every attempt to achieve certain goals. If the chosen way to
reach a goal is not successful, a leader finds another way to reach it,
even if it is preceded by a succession of failed attempts. This will require
a high level of personal drive from the leaders.
2. Desire to Lead. There are persons who appear to have all the
qualifications for leadership, yet they cannot become leaders because
they lack one special requirement-the desire to lead. Indeed, how may
one lead others when he does not have that desire? Persons who do
not have the desire to lead but are forced to act as leaders will not be
effective because their efforts will be half-hearted. Leaders with desire
to lead will always have a reservoir of extra efforts, which can be useful
especially during critical moments.
3. Personal Integrity. Integrity includes honesty, honor, incorruptibility,
rectitude, righteousness, uprightness, and other similar virtues. Integrity
is an important leadership trait because a person who possesses it is
well-regarded by others. On the other hand, one who does not have
personal integrity will have a hard time convincing his subordinates
about the necessity of competing various tasks. When this happens, a
leader may resort to using his authority to get things done, invoking
coercive power vested in him by virtue of his rank and position in the
hierarchy. This practice cannot be maintained for a long period without
exacting a high emotional and economic toll on the organization.
4. Self-confidence. The activities of leaders require moves that will
produce the needed outputs. For the moves to be continuous and
precise, self-confidence is necessary in leadership functions such as
conceptualizing, organizing, and implementing activities.
subordinates and even peers are known to follow someone who displays
an air of self-confidence. The benefits derived from this leadership trait
become even more evident during crisis situation.
5. Flexibility. People differ in the way they do their work. One will adapt a
method different from another person’s method. A leader, who allows
this situation as long as the required outputs are produced, is said to be
flexible. There is wisdom in being flexible. It allows the use of other
means of achieving goals when the prescribed manner is not
appropriate.
6. Creativity. This term refers to the ability of the manager to find new and
better ways of accomplishing his work. This trait allows him to see
relationships among existing data, which can lead him to devise new
solutions to problems. As problems are becoming more complex and
challenging, the leader will need all the creative abilities he has.
7. Charisma. When a person has sufficient personal magnetism that
motivates people to follow his directives, this person is said to have
charisma. Great personalities in history are believed to have charisma.
This trait was said to be greatly responsible for whatever
accomplishments they achieved. When used properly, charisma will
help the leader in achieving his goals. With some adjustments,
subordinates may be expected to do their tasks willingly.
8. Knowledge of the company, industry and technology. A leader who
is well-informed about his company, the industry where the company
belongs, and the technology utilized by the industry, will be in a better
position to provide directions to his unit.
9. Analytical Ability. Leaders are oftentimes faced with difficulties that
prevent the completion of assigned tasks. A subordinate, for instance,
may have a record of continuously failing to produce the needed outputs.
A leader with sufficient skill to determine the root cause of the problem
may be able to help the subordinate to improve his production. The
ability to analyze is one desirable trait that a leader can use to tide him
over many challenging aspects of leadership.

APPROACHES TO LEADERSHIP

1. BEHAVIORAL APPROACHES TO LEADERSHIP STYLE

Theories proposing that specific behaviors differentiate leaders from
non-leaders.
a. According to ways leaders approach people to motivate them.
In motivating people, leaders use a positive or negative approach.
Sometimes, leaders alternately use positive and negative leadership
depending on the characteristic of the individual subordinates.
i. Positive Leadership. When the leader’s approach emphasizes
rewards. The reward may be economic, like an increase in
monthly salary, or it may be noneconomic like membership in an
advisory committee.
ii. Negative Leadership. When the leader emphasizes punishment.
The punishment may take the form of reprimand, suspension, or
dismissal.

b. According to the way the leader uses power. Leadership styles

also vary according to how power is used.
i. Autocratic Leadership. Leaders who make decisions without
consulting subordinates. Motivation takes the form of threats,
punishment, and intimidation of all kinds. The autocratic style is
effective in emergencies and when absolute followership is
needed. The disadvantage is that the leader receives little, in any,
information, ideas, and suggestions from his subordinates as
inputs into his decision making.
ii. Participative Leadership. When a leader openly invites his
subordinates to participate or share in decision making, policy-
making, and operation methods. The advantage is that it
generates a lot of good ideas, an increase in support for decisions
made and the reduction of the chance that they will be
unexpectedly undermined. The disadvantage is that it is time-
consuming and frustrating to people who prefer to see a quick
decision made.
iii. Free-rein Leadership. Leaders who set objective and allow
employees or subordinates’ relative freedom to do whatever it
takes to accomplish those objectives. They are also referred to
as laissez faire leaders. This is most applicable to certain
organizations manned by professionals like doctors and
engineers.
If free-rein leadership fits the situation, there is a full managerial
delegation resulting in optimum utilization of time and resources.
This happens because many people are motivated to full effort
only if allowed to work under the free-rein leadership style. The
weakness of free-rein leadership is that there is a very little
managerial control and a higher degree of risk. If the leader does
not know well the competence and integrity of his people, as well
as their ability to handle this kind of freedom, the result could be
disastrous.
 c. According to the leader’s orientation towards tasks and people.
Leadership may be classified according to how leaders view tasks
and people.
i. Employee Orientation. When a leader considers employees as
human beings of intrinsic importance and with individuals and
personal needs to satisfy.
ii. Task Orientation. When a leader places stress on production
and the technical aspects of the job and the employees are
viewed as the means of getting the work done.

2. CONTINGENCY THEORIES TO LEADERSHIP STYLE

Refers to that effort to determine through research which managerial
practices and techniques are appropriate in specific situations.

a. FRED FIEDLER’S CONTINGENCY MODEL

The theory that effective groups depend on a proper match between
a leader’s style of interacting with subordinates and the degree to
which the situation gives control and influence to the leader.

Dimensions that dictate a leader’s situational control are:

1. leader-member relations - the degree of confidence, trust, and
respect members have in their leader.
2. task structure - the degree to which the job assignments are
procedurized (that is, structured or unstructured).
3. position power - the degree of influence a leader has over power
variables such as hiring, firing, discipline, promotions, and salary
increases.
The situational characteristics very from organization to organization.
To be effective, the situation must fit the leader. If this is not so, any
of the following may be tried:
1. change the leader’s traits or behavior
2. select leaders who have traits or behavior fitting the situation
3. move leaders around in the organization until they are in positions
that fit them
4. change the situation

b. PAUL HERSEY & KENNETH BLANCHARD SITUATIONAL

LEADERSHIP MODEL
A contingency theory that focuses on followers’ readiness.
❑ It says successful leadership depends on selecting the right
leadership style contingent on the followers’ readiness, or the
extent to which they are willing and able to accomplish a
specific task. A leader should choose one of four
behaviors depending on follower readiness.
 1. If followers are unable and unwilling to do a task, the
leader needs to give clear and specific directions;
(directing)
2. If they are unable and willing, the leader needs to display
high task orientation to compensate for followers’ lack of
ability and high relationship orientation to get them to “buy
into” the leader’s desires. (coaching)
3. If followers are able and unwilling, the leader needs to
use a supportive and participative style; (supporting)
4. If they are both able and willing, the leader doesn’t need
to do much. (delegating)

c. ROBERT J. HOUSE & TERENCE R. MITCHELL PATH-GOAL

MODEL OF LEADERSHIP
A theory that states that it is the leader’s job to assist followers in
attaining their goals and to provide the necessary direction and/or
support to ensure that their goals are compatible with the overall
objectives of the group or organization.
By using the path-goal model, it is assumed that effective
leaders can enhance subordinate motivation by:
1. Clarifying the subordinate’s perception of work goals
2. Linking meaningful rewards with goal attainment
3. Explaining how goals and desired rewards can be achieved

The Path-Goal Process

The leadership styles, which may be used by path-goal
proponents, are as follows:
1. directive leadership – when the leader focuses on clear task
assignments, standards of successful performance, and work
schedules
2. supportive leadership – when subordinates are treated as
equals in a friendly manner while striving to improve their well-
being
3. participative leadership – when the leader consults with
subordinates to seek their suggestions and then seriously
consider those suggestions when making decisions
4. achievement-oriented leadership – when the leader sets
challenging goals, emphasizes excellence, and seeks continuous
improvement while maintaining a high degree of confidence that subordinates will meet
challenges in a responsible manner.
d. VICTOR VROOM’S DECISION MAKING MODEL
Vroom’s model of leadership is one that prescribes the proper
leadership style for various situations, focusing on the appropriate
degrees of delegation of decision making authority.
Five distinct decision making styles are identified under the Vroom
model. Two of them are autocratic, two others are consultative, and
one is group-directed.
 THE CONCEPT OF CONTROLLING

Every manager in every organization today faces the dilemma of finding ways to
administer and coordinate various processes-to control the activities under his
jurisdiction. Managers continually look for ways to improve customer satisfaction,
maintain relationships with suppliers, cut inventory costs, and develop the right
products. As a result, every organization needs basic systems for allocating
financial resources, developing human resources, analyzing financial
performance, and evaluating overall profitability. Controlling is the management
function in which managers establish and communicate performance standards
forpeople, processes and devices.

9.1 CONTROLLING DEFINED

A managerial function that ascertains whether organizational objectives
have been achieved; if not, to determine why not; and determining what
activities should be taken to achieve objectives better in the future.
Controlling completes the cycle of management functions. Objectives and
goals at any given point in the organizing and implementing stage are
verified as to achievement or completion. When expectations are not met
at scheduled dates, corrective measures are usually undertaken.

The six major purposes of controls are as follows:

✓ Controls make plans effective. Managers need to measure
progress, offer feedback, and direct their teams if they want to
succeed.
✓ Controls make sure that organizational activities are consistent.
Policies and procedures help ensure that efforts are integrated.
✓ Controls make organizations effective. Organizations need
controls in place if they want to achieve and accomplish their
objectives.
✓ Controls make organizations efficient. Efficiency probably
depends more on controls than any other management function.
✓ Controls provide feedback on project status. Not only do they
measure progress, but controls also provide feedback to participants
as well. Feedback influences behavior and is an essential ingredient
in the control process.
✓ Controls aid in decision making. The ultimate purpose of controls
is to help managers make better decisions. Controls make managers
aware of problems and give them information that is necessary for
decision making.
9.2 THE CONTROL PROCESS

Steps in the Control Process

1. Establishing Performance Objectives and Standards. For effective

controlling, what has to be achieved must first be determined. Examples
of objectives and standards are sales target, production target, worker
attendance, safety records, supplies used.
Once objectives and standards are established, the measurement of
performance will be facilitated. Standards differ among various
organizations. After the performance objectives and standards are
established, the methods for measuring performance must be designed.
Every standard established must be provided with its own method of
measurement.
2. Measuring Actual Performance. There is a need to measure actual
performance so that when shortcomings occur, adjustments could be
made. The adjustments will depend on the actual findings.
The measuring tools will differ from organization to organization, as each
have its own unique objectives. Some firms, for instance, will use annual
growth rate as standard basis, while other firms will use some other tools
like the market share approach and position in the industry.
3. Comparing Actual Performance to Objectives and Standards. Once
actual performance has been determined, this will be compared with
what the organization seeks to achieve. Actual production output, for
instance, will be compared with the target output.
4. Taking Necessary Action. The purpose of comparing actual
performance with the desired result is to provide management with the
opportunity to take corrective action when necessary.

9.3 TYPES OF CONTROL

Control can focus on events before, during or after a process. The following
are the three distinct types of controls:
1. Feedforward Control. Sometimes called preliminary or preventive
controls, attempts to identify and prevent deviations in the standards
before they occur. It focuses on human, material and financial resources
within an organization.
 2. Concurrent Controls. Monitors ongoing employee activity to ensure
consistency with quality standards. These controls rely on performance
standards, rules, and regulations for guiding employees’ tasks and
behaviors. Its purpose is to ensure that work activities produce the
desired results.
3. Feedback Controls. Involves reviewing information to determine
whether performance meets established standards. It is used when
information is gathered on a completed activity for purposes of
evaluating and deriving steps for improving the activity. Corrective
actions aimed at improving future activities are features of feedback
control. It also validates objectives and standards. If accomplishments
consist only of a percentage of standard requirements, the standard may
be too high or inappropriate.

11.4 CONTROL METHODS

To effectively control activities, organizations adapt control systems
consisting of the following components:
1. Strategic Plan. Provides the basic control mechanism for the
organization. When there are indications that activities undertaken do not
facilitate the accomplishments of strategic goals, these activities are set
aside, modified or expanded. These corrective measures are made
possible with the adoption of strategic plans.
2. Long-Range Financial Plan. The direction for financial activities. If the
goal does not appear to be where the firm is headed, the control
mechanism should be made to work.
3. The Operating Budget. This indicates the expenditures, revenues, or
profits planned for some future period regarding operations. The figures
appearing in the budget are used as standard requirements for
performance.
4. Performance Appraisal. This measures employee performance. As
such, it provides employees with a guide on how they could do their jobs
better in the future. Performance appraisals also function as effective
checks on new policies and programs.
5. Statistical Reports. These are those that contain data on various
developments within the firm. Among the information which may be found
in a statistical report are the following: labor efficiency rates, quality
control rejects, accounts receivable, accounts payable, sales reports,
accident reports, and power consumption reports.
6. Policies and Procedures. Policies refer to the framework within which
the objectives of the organization must be pursued. Procedure is a plan
that describes the exact series of action or steps to be taken in a given
situation. It is expected that policies and procedures laid down by
management are followed. When they are breached once in a while,
management must have some means to directly inquire on the
deviations. Occasional breaches notwithstanding, policies and
procedures provide a good way of controlling activities.
 CHARACTERISTICS OF EFFECTIVE CONTROL SYSTEM
The management of any organization must develop a control system
tailored to its goals and resources. Effective control systems share several
common characteristics. These are follows:
✓ A focus on critical points. For example, controls are applied where
failure cannot be tolerated or where costs cannot exceed a certain
amount. The critical points include all the areas of an organization’s
operations that directly affect the success of its key operations.
✓ Integration into established processes. Controls must function
harmoniously within these processes and should not bottleneck
operations.
✓ Acceptance by employees. Employee involvement in the design of
controls can increase acceptance.
✓ Availability of information when needed. Deadlines, time needed to
complete the project, costs associated with the project, and priority needs
are apparent in these criteria. Costs are frequently attributed to time
shortcomings or failures.
✓ Economic feasibility. Effective control systems answer questions such
as, “How much does it cost?” “What will it save?” or “What are the returns
on the investment?” in short, comparison of the costs to the benefits
ensures that the benefits of controls outweigh the costs.
✓ Accuracy. Effective control systems provide factual information that’s
useful, reliable, valid and consistent.
✓ Comprehensibility. Controls must be simple and easy to understand.

11.5 QUALITY, PRODUCTION AND INVENTORY CONTROL

QUALITY CONTROL TECHNIQUES

Control techniques that deals with setting up of quality standards. A process
that evaluates output relative to a standard and takes corrective action when
output doesn’t meet standards.
❑ Inspection - appraisal activity that compares goods or services to a
standard.
❑ Statistical Process Control - Statistical evaluation of the output of a
process.
❑ Control Charts - A statistical chart of time-ordered values of a sample
statistic.
❑ Quality Tools - tools that an organization can use for problem solving
and process improvement.
❑ Six Sigma - A business process for improving quality, reducing costs,
and increasing customer satisfaction.
❑ TQM (Total Quality Management) - A philosophy that involves
everyone in an organization in a continual effort to improve quality
and achieve customer satisfaction.
PRODUCTION CONTROL TECHNIQUES
Techniques to control production that aims to produce the right product in
the proper quantity and quality, at the right time, and by the best and least
costly methods.
❑ Gantt Chart – graphical illustration of production scheduling and
controlling the work of various production department and machines.
❑ CPM (Critical Path Method) – deterministic model that uses only
one time estimate for controlling time and cost.
❑ PERT (Program Evaluation Review Technique) – probabilistic
model that uses three time estimates for planning and controlling
time in an activity
❑ EDP (Electronic Data Processing) – computer and information
systems used in production scheduling and controlling
❑ TOYOTA PRODUCTION SYSTEM – a production system used by
Toyota
❑ Muda: Waste and inefficiency. Perhaps the driving
philosophy. Waste and inefficiency can be minimized by using
the following tactics.
❑ Kanban: A manual system used for controlling the movement
of parts and materials that responds to signals of the need
(i.e., demand) for delivery of parts or materials. This applies
both to delivery to the factory and delivery to each workstation.
The result is the delivery of a steady stream of containers of
parts throughout the workday. Each container holds a small
supply of parts or materials. New containers are delivered to
replace empty containers.
❑ Heijunka: Variations in production volume lead to waste. The
workload must be leveled; volume and variety must be
averaged to achieve a steady flow of work.
❑ Kaizen: Continuous improvement of the system. There is
always room for improvement, so this effort must be ongoing.
❑ Jidoka: Quality at the source. A machine automatically stops
when it detects a bad part. A worker then stops the line. Also
known as autonomation.

INVENTORY CONTROL TECHNIQUES

Techniques used to minimize the cost in keeping inventory. Inventory
management is a core operations management activity. Good inventory
management is often the mark of a well-run organization. Inventory levels
must be planned carefully in order to balance the cost of holding inventory
and the cost of providing reasonable levels of customer service. Successful
inventory management requires a system to keep track of inventory
transactions, accurate information about demand and lead times, realistic
estimates of certain inventory-related costs, and a priority system for
classifying the items in inventory and allocating control efforts.
 ❑ economic order quantity - the order size that minimizes total
annual cost.
❑ economic production capacity – the production size that
minimizes annual cost.
❑ quantity discounts - are price reductions for larger orders offered
to customers to induce them to buy in large quantities.
❑ reorder point ordering – when the quantity on hand of an item
drops to this amount, the item is reordered.

Introduction to the Different Areas of Management

1. HUMAN RESOURCE MANAGEMENT
The entire spectrum of management of people that serves to maximize their
performance in order to meet the organization’s strategic objectives.
2. PRODUCTION/OPERATIONS MANAGEMENT
The process of overseeing, designing, controlling the process of production,
and redesigning business operations in the production of goods and
services.
3. MARKETING MANAGEMENT
The management process responsible for identifying, anticipating, and
satisfying consumer requirements profitability.
4. MATERIALS AND PROCUREMENT MANAGEMENT
The responsibility of the firm to ensure that it manages the procurement
process and the supply base effectively and efficiently. this includes buying
high quality products and services at the right price from the right, reliable
source, based on the specifications, in the right quality for delivery, at the
right time to the right customers.
5. FINANCIAL MANAGEMENT
Also called corporate finance, it focuses on decisions relating to how much
and what types of assets to acquire, how to raise the capital needed to buy
assets, and how to run the firm so as to maximize its
value.
6. MANAGEMENT INFORMATION SYSTEM
The organized means of providing past, present and projected information
on the company’s internal operations and external intelligence for use in
decision making. the responsibility of the firm to provide necessary
information and communication facilities to all its business units.

7. OFFICE MANAGEMENT
It involves the design, implementation, evaluation, and maintenance of the
process of work within an organization, in order to maintain and improve
efficiency and productivity.