PRINCIPLES OF CORPORATE MANAGEMENT

1
 CHAPTERS

Introduction: Definitions
Chapter 1: Development of Management Thoughts
Chapter 2: The Business Environment
Chapter 3: Nature of Management
Chapter 4: Functions of a Manager
Chapter 5: Planning & Decision Making
Chapter 6: Organization
Chapter 7: Controls
Chapter 8: Managing Communication
Chapter 9: Leadership

2
 INTRODUCTION

What are the Principles of Corporate Management?

The Principles of Corporate Management are the

essential, underlying factors that form the foundations
of successful management.

According to Henri Fayol in his book General and

Industrial Management (1917), there are 14 'Principles
of Management'. (Refer Chapter 1)

3
Definition: Principle
noun
1) an accepted or professed rule of action or conduct:
a person of good moral principles.

2) a fundamental, primary, or general law or truth from which others are

derived:
the principles of modern physics.

3) a fundamental doctrine or tenet; a distinctive ruling opinion:

the principles of the economy.

4) principles, a personal or specific basis of conduct or management:

to adhere to one's principles; a kindergarten run on modern principles.

5) guiding sense of the requirements and obligations of right conduct:

a person of principle.

6) an adopted rule or method for application in action:

a working principle for general use.

4
Definition: Corporate
noun
1) a corporate company or group

2) formed into an association and endowed by law with the rights and
liabilities of an individual : incorporated or relating to a corporation a plan
to reorganize the corporate structure.
Definition: Management
Word Origin & History

1560s, probably from Italian maneggiare "to handle," especially "to

control a horse," ultimately from Latin noun manus "hand" (see manual
(adj.)).

Influenced by French manège "horsemanship" (earliest English sense

was of handling horses), which also was from Italian.

Extended to other objects or business from 1570s.

Slang sense of "get by" first recorded 1650s.

Related: Managed; managing.

Managed economy was used by 1933.

6
Definition: Management

noun

1. the act or manner of managing; handling, direction, or

control.

2. skill in managing; executive ability:

great management and tact.

3. the person or persons controlling and directing the

affairs of a business, institution, etc.:
the store is under new management.

4. executives collectively, considered as a class

(distinguished from labor).

7
 CHAPTER 1

THE DEVELOPMENT OF
MANAGEMENT THOUGHTS

8
 Introduction
The study of the development of management
thought helps us better understand the basic
roles of a manager.

9
DEVELOPMENT OF MANAGEMENT THOUGHTS
Five Major Schools of Management Thoughts

MANAGEMENT SCHOOL Beginning Date Emphasis

CLASSICAL SCHOOL
1890s
Scientific Management 1940s Managing workers and
Administrative Management 1920s organization more efficiently
Bureaucratic Management
BEHAVIORIAL SCHOOL
Human Relation 1930s Understanding Human
Behavioral Science 1950s Behavior in the Organization

QUANTITATIVE SCHOOL Increasing Quality of

Management Science 1940s managerial decision-making
Operation Management 1940s through the applications of
Mgmt Information System 1950s-1970s Maths & statistical methods
SYSTEMS SCHOOL Understanding the organization
1950s
systems that transform input
into outputs.
CONTINGENCY SCHOOL 1950s Applying management principles

10
 CLASSICAL SCHOOL

The classical school of thought generally concerns

ways to manage work and organizations more
efficiently.

Three areas of study that can be grouped under

the classical school are:

1. Scientific management
2. Administrative management
3. Bureaucratic management

11
 SCIENTIFIC MANAGEMENT

Frederick W. Taylor was its main proponent.

Scientific management focuses on ways to

improve the performance of individual workers

Grew out of the industrial revolution’s labor

shortage at the beginning of the twentieth century.
12
 SCIENTIFIC MANAGEMENT

Taylor stressed the importance of:

The need to examine and analyze the different

elements of a task

The selection and training of staff

Communication and co-operation between

management and staff

Equitable division of labor and responsibility

13
 Steps in Scientific
Management
Develop a science
for each element of
the job to replace
old rule of thumb
Scientifically select
employees and train
them to do the job as
described in Step 1

Supervise employees to
make sure they follow
the prescribed methods
in performing their jobs Continue to plan the
work but use the
employees to get the
work done 14
 ADMINISTRATIVE MANAGEMENT

Focuses on managing the total organization.

Henri Fayol is the major contributor to this

school of management thought.

15
 ADMINISTRATIVE MANAGEMENT

He argued that management was a universal

process consisting of functions, which he termed
planning, organizing, commanding, coordinating,
and controlling.

16
 ADMINISTRATIVE MANAGEMENT

Fayol picked out fourteen management

principles that he used frequently :

1. Division of Labor
2) Authority
3) Discipline
4) Unity of Command
5) Unity of Direction
6) Subordination of Individual Interest
to the Common Good
7) Remuneration
8) Centralization

17
 ADMINISTRATIVE MANAGEMENT

9) The Hierarchy
10) Order
11) Equity
12) Stability of Staff
13) Initiative
14) Esprit de Corps

18
 BUREAUCRATIC MANAGEMENT

Bureaucratic management focuses on the ideal form of

organization.

Max Weber (1864-1920), known as the Father of

Modern
Sociology was the major contributor to bureaucratic
management.

Bureaucracies are founded on legal or rational authority,

which is based on law, procedures, rules, and so on.
19
 BUREAUCRATIC MANAGEMENT

Efficiency in bureaucracies comes from

1) Clearly defined and specialized functions

2) Use of legal authority
3) Hierarchical form
4) Written rules and procedures
5) Technically trained bureaucrats
6) Appointment to positions
based on technical expertise
7) Promotions based on competence
8) Clearly defined career paths

20
 BEHAVIORIAL SCHOOL

Elton Mayo( 1880 –1949) and his Harvard associates

conducted a famous study of human behavior in work
situations.

His conclusion was that special attention frequently

causes people to increases their efforts.

The phenomenon has become Hawthorne Effects

21
 BEHAVIORIAL SCHOOL
Human Relations Contributors

Grew out of the Hawthorne studies.

Proposed that workers respond primarily to the social

context of work, including social conditioning, group
norms, and interpersonal dynamics.

Assumed that the manager’s concern for workers

would lead to increased worker satisfaction and
improved worker performance.

22
The Hawthorne Studies (1927–1932)
Conducted by Elton Mayo and associates at
Western Electric

◦ Illumination study - workplace lighting adjustments

affected both the control and the experimental
groups of production employees.

◦ Group study - implementation of piecework

incentive plan caused production workers to
establish informal levels of acceptable individual
output.

◦ Interview program - confirmed the importance of

human behavior in the workplace.

23
 BEHAVIORIAL SCHOOL

Summary of Hawthorne Studies

Condition Result
Experiment
Increased Lighting Higher
for Employees Productivity

Reduced Lighting Higher

for Employees Productivity

Any Adjustment in
Conditions That Reflects Higher
Conclusion Increased Attention Productivity
Toward Employees

24
 THE QUANTITATIVE SCHOOL
Management Science School

Management science (also called Operations

Research) uses mathematical and statistical
approaches to solve management problems.

25
 CONTINGENCY APPROACH
 Universal Perspectives

◦ Include the classical, behavioral, and quantitative

approaches.
◦ An attempt to identify the “one best way” to manage
organizations.

OR

 The Contingency Perspective

◦ Suggests that each organization is unique.
◦ The appropriate managerial behavior for
managing an organization depends
(is contingent) on the current
situation in the organization.

26
CHAPTER 2
THE BUSINESS ENVIRONMENT
Business Environment is the social elements that
affects organizational decisions, strategies,
processes and performance.

27
 The Business Environment Scenario
The business environment of an organization
refers to the elements that affect the
achievement of its aims.

A firm is in continual interaction with its

environment.

Changes in the environment affect the inputs to

the firm and hence, its output.
 The Business Environment Scenario
Organizations must continuously monitor and
adapt to the environment if it is to survive and
prosper.

Disturbances in the environment may spell

profound threats or new opportunities for the firm.

The successful firm will identify, appraise, and

respond to the various opportunities and threats in
its environment.
Elements of the Business Environment

External
Environment
Internal
Environment

Business

30
Elements of Internal Business Environment

Shareholders
Customers

Trade
Unions
Business Vendors

Government
Agencies
Financial Competitors
Institutions
 Elements of External Business Environment

Politics

Legal Economy

Business

Environment Social

Technology
 ETHICAL RESPONSIBILITY

Ethics is defined as the study of moral obligation

involving right versus wrong.

Business ethics are sometimes referred to as

management ethics or organizational ethics. It
narrows the frame of reference to productive
organizations.
 Ethical Hot Spots
Top ten workplace hot spots
responsible for triggering
unethical and illegal conduct

• Balancing work and family

• Poor internal communications
• Poor leadership
• Work hours, workload
• Lack of management support
 Ethical Hot Spots

• Need to meet sales,

budget, or profit goals
• Little or no recognition of
achievements
• Company politics
• Personal financial
worries
• Insufficient resources
 SOCIAL RESPONSIBILITY

The awareness that business

activities have an impact on
society, and the consideration of
that impact by firms in decision
making
 SOCIAL RESPONSIBILITY OF BUSINESS

According to Milton Friedman,” There are one and only one

social responsibilities of business, that is to use its
resources and energy in activities designed to increase its
profit so long as it stays within the rules of the game, and
engages in open and free competition without deception or
fraud.”

Before a firm can undertake socially desirable objectives, it

must first generate enough profits to maintain the
confidence and support of its shareholders.

Funds allocated to social programs can be derived from the

higher prices, lower wages, reduced profits or increased
productivity.
BARRIERS TO INCREASED SOCIAL RESPONSIBILITY

Individual responsible for implementing social

programs.

A branch that is a profit center is not likely to

implement socially desirable programs.

Implementation of social programs can be

counter-productive in economic terms. Here
it has to balance the short-term demands of
the firm, its shareholder and employees
against the long-term welfare of the firm in an
unpredictable environment and ambiguous
standards of right and wrong.
BARRIERS TO INCREASED SOCIAL RESPONSIBILITY

Firms need to be constantly aware

of the different elements of the
external and internal business
environment.

Management must concentrate its

efforts on the key aspects of the
environment that are relevant to its
firm.

Fear of the unknown acts as

another barriers.
 SOCIAL RESPONSIBILITY TO STAKEHOLDERS

Responsibility to Consumers

1. Consumerism

- the protection or promotion of the interests of

consumers.

- refers to the theory that spending money and

consuming goods is good for the economy.
Opponents
of consumerism suggest simple living is a
more sustainable lifestyle and better for the
environment.
 SOCIAL RESPONSIBILITY TO STAKEHOLDERS

Responsibility to Consumers
2. Kennedy’s Consumer
Bill of Rights
a) The right to safety.
b) The right to be informed.
c) The right to choose.
d) The right to be heard.
e) The right to satisfaction of basic needs.
f) The right to redress.
g) The right to consumer education.
h) The right to a healthy environment.
SOCIAL RESPONSIBILITY TO STAKEHOLDERS

Responsibility to Employees

1. Safety in the workplace

(OSHA)
2. Equality in the workplace
3. Sexual harassment
4. Managing cultural diversity
SOCIAL RESPONSIBILITY TO STAKEHOLDERS

Responsibility to the environment

1. Water pollution
2. Air pollution
3. Land pollution
4. Noise pollution
5. Green marketing
 SOCIAL RESPONSIBILITY TO STAKEHOLDERS

Responsibility to investors

1. Proper management of
funds

2. Access to information

3. Executive Compensation
 The New Diversified Workforce

Generally speaking, the term “Workforce Diversity” refers to

policies and practices that seek to include people within a
workforce who are considered to be, in some way, different from
those in the prevailing constituency.

Managing Workforce Diversity

• Embracing diversity
• Changing demographics
• Implications for managers
Recognizing and responding to differences
Placement of workers according to knowledge & skills
Abstaining from discriminations
7 factors why companies
diversify their workforces:

1. As a Social Responsibility
2. As an Economic Payback
3. As a Resource Imperative
4. As a Legal Requirement
5. As a Marketing Strategy
6. As a Business
Communications Strategy
7. As a Capacity-building
Strategy
 CHAPTER 3
NATURE OF MANAGEMENT

47
 What is Management?
A set of activities
planning and decision making, organizing, leading,
and controlling

directed at an organization’s resources

human, financial, physical, and information

with the aim of achieving organizational goals

in an efficient and effective manner.

48
Basic Purpose of Management

EFFICIENCY
Using resources wisely and
in a cost-effective way

And

EFFECTIVENESS
Making the right decisions and
successfully implementing them

49
 Efficiency: Operating in
such a way that resources
are not wasted.

Efficiency
Successful Management versus
Effectiveness

Effectiveness: Doing the right

thing in the right way at
the right time.

50
 Who/what is a Manager?

Someone whose primary responsibility is to

carry out the management process.

Someone who plans and makes decisions,

organizes, leads, and controls human,
financial, physical, and information
resources.

51
 Functions of Management

Planning &
Decision Making Organizing
Setting the organization’s Determining how best to
goals and deciding organize group activities
how best to and resources
achieve them

Controlling
& Monitoring
Correcting ongoing activities
to facilitate goal attainment
Leading
Motivating members of the
organization to work in
the best interest of the
organization

52
 The Management Process
INPUT + PROCESS = OUTPUT
Inputs
Inputsfrom
fromthe
the
environment
environment

Manpower
Manpower--
Human
HumanResources
Resources Planning & Organizing/
Decision Coordinating Goals
Goals
Money
Money--Financial
Financial
Making Attained
Attained::
Resources
Resources
Efficiently
Efficiently
Machinery,
Machinery,Tools
Tools&& &&
Methods
Methods–– Effectively
Physical
Effectively
Physicalresources
resources
Leading/
Materials Controlling Mobilizing
Materials
Resources
Resources

Information
Information
Resources
Resources
53
 OTHER ROLES OF MANAGER
A diplomat and public relations officers

A politician, negotiator and arbitrator

An entrepreneur

A communicator

A teacher and trainer

Other roles deemed

fit and necessary

54
 TYPES OF MANAGERS
DIFFERENTIATION BY LEVELS OF MANAGEMENT

Top Managers - Strategic

Top managers are a small number of executives

who control the organization by setting its goals,
overall strategy, and operating policies.

Middle Managers - Executive

They primarily take the goals and strategies

designed by top managers and put them into effect

First-line Managers - Supervisory

They supervise and coordinate the activities of

operating employees.
55
 TYPES OF MANAGERS
DIFFERENTIATION BY LEVELS OF MANAGEMENT

President

Vice President Vice President Vice President

Top Level Marketing Finance Production

Marketing Finance Manager Production

Middle Level Manager Manager

First Level Supervisor Supervisor Supervisor

Level of Management
56
DIFFERENTIATION BY AREAS OF MANAGEMENT

Levels of Management

Top managers

Middle managers

First-line managers

s
ns

n
g

ce
e

s
io
in

nc

er
io

ur

at
t

th
ke

at
na

tr
so

O
r
ar

is
pe
Fi

re

in
M

dm
an
um

Areas of Management
H

57
57
Skills and
Technical Skills
the Manager
Interpersonal Skills

Conceptual Skills
Fundamental
Fundamental Diagnostic & Analytic
of
of
Management Skills
ManagementSkills
Skills
Communication Skills

Decision-Making
Skills

Management Skills
58
 Skills at Different
Management Level
Technical skills
Refers to the manager’s ability to use the expertise,
tools and procedures in his area of specialty

Interpersonal skills (Human)

The ability to communicate with, understands, and
motivates individuals and groups

Conceptual skills
Ability to think in abstract terms and the mental capacity

Diagnostic and analytic skills

Ability to recognize the symptoms of a problem
and then determine an action plan to fix it

59
Communication
The manager’s abilities both to convey and
receive ideas and information effectively from
others.

Decision-Making
The manager’s ability to recognize and define
problems and opportunities correctly and then to
select an appropriate course of action to solve the
problems and capitalize on opportunities.

Management
The manager’s ability to prioritize work, to work
efficiently, and to delegate appropriately using
POLC.
Management Skills Distribution
Skills

Top
Management
Conceptual
Levels

Middle
Human
Management

Technical
Supervision

Skill Distribution at Various

Management Level
61
Other Management Skills

62
MANAGEMENT

ART,

SCIENCE

OR

PROFESSION?

63
 The Science Of Management

Assumes that problems can be approached

using rational, logical, objective, and
systematic ways.

Requires technical, diagnostic, and

decision-making skills and techniques
to solve problems.
Left Brain Activities

64
 The Art Of Management

Decisions are made and problems solved using a

blend of intuition, experience, instinct, and
personal insights.

Requires conceptual, communication,

Interpersonal and time management skills to
accomplish the tasks associated with managerial
activities.
Right Brain Activities

65
 Management - Profession

1. There is a body of general principles,

specialized knowledge and skills for
members of the profession.

2. Professionals get their status from job-

related performance

3. Professionals are governed by a strict code

of conduct and ethics

66
 CHAPTER 4
FUNCTIONS OF A MANAGER:
SUPERVISORS: THE FIRST-LINE MANAGER

67
 The Role of Supervisors
The supervisor’s role is special in that in the
hierarchy of the organization, he is the most
junior manager yet he is the same time the
highest-ranking worker.

68
69
The Role of Supervisors

Upward Responsibilities
to Higher Management

Parallel Responsibilities to
other Supervisors
of Equal Rank.

Downward Responsibilities
to Subordinates

70
 Upward Responsibilities to Higher Management
1. Ascertain and carry out what senior managers want done.

2. Keep his immediate supervisors aware

3. Refers maters requiring the superior’s attention

immediately, at the same time avoid bothering the superior
unnecessarily.

4. Interpret the employee’s need in conceptual terms to

management, take the message of, management to the
worker and explain how it is to be incorporated in practical
day to day activities.

5. The superior must learn to develop a certain amount of

dignity and diplomacy so that the relationship with
management is harmonious.
71
 Parallel Responsibilities to Other Supervisors
of Equal Rank and To Staff Specialists.

1. Cooperate with his associates

2. Help co-ordinate the work of his unit/section

3. Encourage the free movement and promotion of

good work within the organization

4. Accept full responsibility for the performance of

his unit/section

5. Try to understand particular problems facing

individual units/sections and their supervisors.

72
Downward Responsibilities to Subordinates
1. Help in the selection of new employees

2. Help to orientate new worker

3. Help new worker meet and work with their

work group.

4. Always be on hand to assist employees so

they know what to do and how to do it.

5. Evaluate the employee periodically so that

the employee can be trained to assume
greater responsibility

73
Downward Responsibilities to Subordinates

6. Recommend junior for transfers, salary

adjustments, promotions or if all avenues for
improvement have been exhausted, for dismissal.

7. Commend, encourage and give credit for work

well done.

8. Delegate responsibility and develop understudies

so that when he eventually gets promoted, there
are people ready to do his job.

9. Develop harmony, cooperation and teamwork in

the work environment.

74
Downward Responsibilities to Subordinates

10. Help to build and maintain employee morale by

handling grievances promptly and fairly.

11. Help to maintain discipline and respects for rules and

regulations by personal example and by controlling
absenteeism. Promote the development of
punctuality and a healthy respect for the work of the
organization.

12. Take a personal interest in each one of his workers.

75
 Responsibilities to the Trade Union

a) Promote good industrial relations

b) Improve working conditions
c) Improve the economic and social status
of workers
d) Promote increased productivity

76
 CHAPTER 5
PLANNING & DECISION MAKING

77
 Planning
 What is planning?
◦ preparing a sequence of action steps to achieve
some specific goals

◦ It’s like a map whereby we can always see the

progress towards achieving the goals

79
 Planning
 Why we plan?
◦ Helps management to clarify, focus and research
their business’s or project’s development and
prospects
◦ Provides a considered and logical framework within
which a business can develop and pursue business
strategies over the next three to five years
◦ Offers a benchmark against which actual
performance measured and reviewed

80
 What is Planning?
Planning means looking ahead and chalking
out future courses of action to be followed. It
is a preparatory step.

It is a systematic activity which determines

when, how and who is going to perform a
specific job.

Planning is a detailed programme regarding

future courses of action. It is rightly said
“Well plan is half done”.
 What is Planning?
Therefore planning takes into consideration
available & prospective human and physical
resources of the organization so as to get
effective co-ordination, contribution &
perfect adjustment.

It is the basic management function which

includes formulation of one or more detailed
plans to achieve optimum balance of needs
or demands with the available resources.
 What is Planning?
“Planning is a mental predisposition to do
things in orderly way, to think before
acting and to act in the light of facts
rather than guesses”.

Planning is deciding best alternative

among others to perform different
managerial functions in order to achieve
predetermined goals.
 Decision Making
The word DECIDE originated from
Latin i.e.:
decis(us) or decidere which means
“to cut from”.
The concept of making decision is ‘cut
from’ reverting to the beginning or
original. Hence once a decision is
made, be it good or bad, it must be
accepted.

88
 Decision Making

Decision Making
The act of choosing one alternative from among a
set of alternatives.

Decision-Making Process
Recognizing and defining the nature of a decision
situation, identifying alternatives, choosing the
‘best’ alternative, and putting it into practice.

89
 Decision Making
Decision is a choice or a judgment of what we
need to do to achieve a certain objectives.

Decision making therefore involve planning a

course of action and setting controls to check if
the plan is proceeding towards the objectives.

The quality of decisions made has a direct effect

on the success o failure of a business.

It requires information of past experience and

predictions of future events.

90
 Types of Decisions
Organization vs. Personal Decisions
Organizational Decisions are made by managers
whereby the interests of the organization must be
of the highest priority.

whereas Personal Decision are those personal

choice or preference which do not affect the
organization.

91
 Programmed vs. Unprogrammed Decisions

Programmed Decisions are low risk, often made and can be

standardized into procedures. These decisions are easy to
make and do not take a long time to be decided.

Unprogrammed Decisions are non-routine and carry high

risks. These type of decisions must be thoroughly studied
and analyzed in terms of the cost vs. benefits before a
decision is reached. The level of difficulty is a key reason
why it takes longer to make the decision.

92
 Strategic vs. Tactical Decisions

Strategic decisions affect the long-term survival,

development, growth, competitiveness and
endurance of the organization. They are top-level
decisions and carry great risks on the organization.

Tactical decisions are operational decisions and can

be made by low-level executives. Even though these
decisions still carry certain risks, they do not give
great impact to the organization.

93
 Recognize the problem and
The Decision the need for a decision
Making
Process
Identify the objective of
the decision

Gather and evaluate data

and diagnose the situation

List and evaluate

alternatives
94
 Select the best
The Decision
course of action
Making
Process
Implement
the decision

Gather feedback

Follow up

95
 Approaches to Decision Making

 Rational (Logical
Approach)
 Intuitive Approach
 Unable to decide

(Indecisive
Approach)
 Impulsive Approach
 Kinds of Decisions a Supervisor Makes

 Routine data based

decisions
 Serious decisions having
important consequences
 Emergency decisions
requiring distinctiveness
(uniqueness)
 Problem- Solving
 Decisions beyond your
authority

* It is essential to recognize which decisions need to be

made now and are most important
A Simple Version of Decision Making
(The Logical Approach)
 Define the problem
(conditions and limitations)
and the set of objectives
 Analyze the problem: fact

finding
 Develop alternative solutions:

brainstorming
 Decide on the best solution
 Convert the decision into action
 Follow up
 CHAPTER 6
ORGANIZATION

99
 Introduction
Organizations are formed so that people who shares a
common set of values or interests can work together
towards achieving that common objectives.

Organizations are characterized by:

(1.) The people or members of the organization

(2.) Their common objectives / goals
(3.) The structures they develop to help them achieve

these objectives.

10
0
 Principles Of Organization
by Lyndall Urwicks

The Principle of the Objectives

The Principles of Specialization
The Principles of Coordination
The Principle of Authority
The Principle of Responsibility
The Principles of Definitions
The Principles of Correspondence
The Span of Control
The Principles of Balance
The Principles of Continuity

10
1
 The Organization Process
Detailing of works
The task of an organization must first be
determined to achieve specific sets of goal.

Divisions of works
Works carefully assign on the basis of the
qualifications of members and on a fair
distribution of work

Departmentalization
Process of grouping the related task, activities
or units of an organization.

10
2
 The Organization Process

Coordination of work
Coordination unifies the members to work
harmoniously.

Monitoring and reorganizing

Managers must take periodic assessments of
what the organization is doing .

10
3
 Authority, Responsibility & Accountability

AUTHORITY

Forms of Authority

Line Authority

Main form of authority in organization, is

direct supervisory authority from superior to
subordinate

10
4
 AUTHORITY
Staff Authority

Staff authority is given to those who are responsible for

assisting the line executives.

Staff authority is more limited authority to advise.

It is authority that is based on expertise and which

usually involves advising line managers.

10
5
 AUTHORITY

Functional Authority

Delegated to those who have the right to

prescribe policies, schedules and procedures
for personnel who are not their own
subordinates.

Exist to make the best use of specialized

knowledge and skills and to ensure a uniform
application of the company policy.

10
6
 Responsibility
Responsibility is the obligation to use the authority
delegated to carry out tasks assigned.

Responsibilities fall into two categories:

Individual
Responsible for their actions. Nobody gives or
delegates individual responsibilities.

Organizational.
Collective organizational accountability and include
how well departments perform their work.

10
7
 Accountability
Accountability is answering for the result of
one's actions or omissions. It is the
reckoning, wherein one answers for his or
her actions and accepts the consequences,
good or bad.

10
8
 Organization Structure
What is organization structure?
• Is mainly hierarchical concept of subordination
of entities that collaborate and contribute to
serve one common aim
• Defines the organizational units and the work
flows to align the behaviour of the units to the
higher-level goals of the system

10
9
How they organize the structure?

 By Departmentalization
◦ Is the basis on which work or individuals are grouped
into manageable units.

11
0
 Type of Departmentalization

Functional Departmentalization

The grouping of jobs involving the same or similar

activities.

11
1
 Functional Departmentalization
 Advantages  Disadvantages
◦ Each department can be ◦ Decision making
staffed by functional- becomes slow and
area experts. bureaucratic.
◦ Supervision is ◦ Employees narrow their
facilitated in that focus to the department
managers only need be and lose sight of
familiar with a narrow organizational goals/
set of skills. issues.
◦ Coordination inside
each department is
easier.

11
2
 Product Departmentalization

The grouping of activities around products

(and/or services) or product groups.

11
3
 Product Departmentalization

 Advantages  Disadvantages
◦ All activities associated ◦ Managers may focus
with one product can be on their product to
integrated and the exclusion of the
coordinated. rest of the
◦ Speed and effectiveness of organization.
decision making are ◦ Administrative costs
enhanced. may increase due to
◦ Performance of individual each department
products or product having its own
groups can be assessed. functional-area
experts.

11
4
 Customer Departmentalization
◦ Grouping activities to respond to and interact with
specific customers and customer groups.

 Advantage
◦ Skilled specialists can deal with unique customers
or customer groups
◦ .
 Disadvantage
◦ A large administrative staff is needed to integrate
activities of various departments.

11
5
 Location Departmentalization
 Location Departmentalization
◦ The grouping of jobs on the basis of defined
geographic sites or areas.
 Advantage
◦ Enables the organization to respond easily to unique
customer and environmental characteristics.
 Disadvantage
◦ Large administrative staff may be needed to keep track
of units in scattered locations.

11
6
 Matrix Departmentalization
A hybrid structure in which two or more
forms of departmentalization are used together

◦most common forms combine product and functional

◦employees report to more than one boss

◦increased cross-functional interaction

◦significant interaction between functional and project

managers required

117
 Matrix Departmentalization
Advantages
◦ efficiently manage large,
complex tasks
Disadvantages
◦ requires high levels of
coordination
◦ increased conflict levels
◦ requires high level of
management skills
11
8 11
Common Bases of Departmentalization
By Functions By Products

CEO CEO

Finance Marketing Operation Computers Printers Software

By Customers By Locations

CEO CEO

Home Business Educational U.S European Japanese

users users users Region Region Region

Barney, Jay B. and Ricky W. Griffin, The Management of Organizations.

11
9 11
 ORGANIZATIONAL CHART

Diagrams that depict the hierarchy of the formal

relationships, lines of the communication, authority and
responsibility of the major executives of an
organization.

Organizational charts show:

(1.) How the organization divides work.

(2.) The role of each position
(3.) The reporting status of each position
(4.) The span of control
(5.) The chain of command

12
0
 TYPES OF ORGANIZATION

The Vertical Chart

The traditional way of presenting an
organization’s structure.
The Horizontal Chart
Similar to vertical chart except that it reads from
left to right.
The Concentric Chart
Consist number of concentric circles emanating
from the centre cycle which holds the Managing
Director

12
1
 INFORMAL ORGANIZATION

Informal structures

Relationships between any people in the

organization that develop naturally based on
common interests or activities

12
2
 INFORMAL STRUCTURE
Possible positive effects from the informal structure

 Help employees to communicate and cooperate

 Give support and encouragement to employees

12
3
Possible negative effects from the informal structure

Can spread harmful and incorrect rumors

Can cause conflict among employees

Can create resistance to change and reduced

management conflicts.

When people work together, they establish social

relationships and informal organization develops.

12
4
 Coordination
Defined as the process of integrating the
objectives and activities of the separate units
(departments) of an organization so that
organization goals can be achieved efficiently.

12
5
 Ways of achieving coordination

Rules and procedures

Organizational rules and procedures are
management decision made to handle
routine events and can thus be efficient tools
for routine coordination and control.

Vertical information systems

Means by which data is transmitted down the
levels of the organization and this may take
place inside or outside the chain of
command.

12
6
 Ways of achieving coordination

Lateral relationships

Information is exchanged and decisions are

made because lateral relationship cut across
the chain of command.

Direct contact between individuals who must

deal with the same situation or problem, can be
highly effective.

127
 Ways of achieving coordination

Self-contained tasks
 Managements prepare self-sufficient units

with access to their own resources.

 Enjoy the advantage of not having to go in

search of the resources that they need.

Chain of command
 A clear and distinct line of authority among
the positions in an organization
 Provides the traditional methods of
coordination and resolving conflicts
.
128
 Chain of Command

◦ Unity of Command
 Each person within an organization must have a
clear reporting relationship to one and only one
boss.

◦ Scalar Principle
 A clear and unbroken line of authority
must extend from the bottom to the top of the
organization.

129
Span of Control

◦ The number of people who report to a particular

manager.
◦ There is no ideal or optimal span of management.
However the recommended no is between 5-7 staff.

130
 Tall Versus Flat Organizations
 Tall Organizations  Flat Organizations

◦ Are more expensive ◦ Lead to higher levels of

because of the number
of managers involved.
◦ Foster more
communication
problems because of the
number of people
through whom
information must pass.
employee morale and
productivity.
◦ Create more
administrative
responsibility for the
relatively few managers.
◦ Create more supervisory
responsibility for
managers due to wider
spans of control.

131
13
1
 Tall Versus Flat Organizations
Tall Organization
President

Flat Organization
President

132
13
2
Three factors to consider when management
is choosing the appropriate span of controls

Personality of the managers

Preference of the people being supervised

The peculiarities of the place or work situation.

133
 The manager can be successful with
broad span of management when:

 He is highly trained and capable

 He is helped in his supervisory duties
 Personally he prefers a loose style of

supervision

13
4
The span of management can be broad when:

The people being supervised prefer loose

supervision

The people being supervised are well trained

and able to handle a variety of work situation.

135
The managers can adopt a broad span of management
when:

 The work is being done is repetitive

 The operation are stable and there are no unusual
events to disrupts the routine
 The methods of work have been well-entrenched
and formalized
 Subordinates generally work independently of one
another
 The work of subordinates can easily be supervised.

136
 DELEGATION
 Delegation is the assignment of responsibilities
together with appropriate authority to carry out a job.

 It is a process of empowering employees to carry out

assigned tasks.

 In effects some part of management is entrusted to

subordinates.

◦ The process by which managers assign a portion of

their total workload to others.

137
 Reasons for Delegation

◦ To enable the manager to get more work done by

utilizing the skills and talents of subordinates.

◦ To foster the development of subordinates by

having them participate in decision making and
problem solving that allows them to learn about
overall operations and improve their managerial
skills

138
 Needs for Delegation
There is not enough time to handle personally all the
tasks that are allocated to a managerial portfolio

Some rules and new techniques are so complicated that

managers needs to delegate the work to specialist who
are familiar with the new technology or new techniques.

A third reason for delegation is to train subordinates

who have proved themselves in their areas of
responsibility, for greater work loads and higher levels of
responsibility.

139
Steps in the Delegation Process

Step 1 Step 2 Step 3

Assigning Granting Creating
responsibility authority accountability

Manager Manager
Manager Manager
Manager

Subordinate Subordinate Subordinate

140
14
0
 Three steps to proper delegation
1) Granting Authority
Sufficient authority should be delegated to
meet the responsibilities and complete the
assignment
2) Assigning Responsibility
Obligation by an employee to perform certain
duties or to make sure that they are
completed.
3) Requiring Accountability
Obligation created by accepting duties and
responsibilities from higher management.

141
 Problems in Delegation
 Manager  Subordinate
◦ Reluctant to delegate.
◦ Disorganization
prevents planning
work in advance.
◦ Subordinate’s success
threatens superior’s
advancement.
◦ Lack of trust in the
subordinate to do well.
◦ Reluctant to accept
delegation for fear of
failure.
◦ Perceives no rewards
for accepting
additional
responsibility.
◦ Prefers to avoid any
risk and responsibility.

142
14
2
 Principles of effective delegation
First principle
Authority to perform specified tasks must be assigned to
the lowest organizational level at which sufficient ability
and information to carry them out completely.

Second principle
Individuals must be granted sufficient authority to carry
out their tasks effectively

Third principle
Managers are ultimately responsible and accountable
for the performance of their subordinates.

14
3
 Principles of effective delegation

Fourth principle
Members of the organization must know to whom they
are responsible and who is responsible to them

Fifth principle
Unity of command, refers to the need for each person
in the organization to have one superior.

144
 Advantage of effective delegation

Subordinates are able to take more responsibilities

from higher level managers.

Delegation helps build up the confidence of

subordinated in their abilities and in time gives them
the necessary experience to take on more responsible.

Delays are reduced.

Better quality decisions

145
 Barriers to effective delegation
 Failure to provide employees with sufficient
training to carry out the task.

 Poor planning by some managers.

 Some managers feel that only they can do a

job properly.

 Fear that employees will make mistakes

 Fear that employees will do well and be

promoted ahead of the manager.

146
 CENTRALIZATION & DECENTRALIZATION

 Centralization is the degree to which decision-

making is concentrated in top management's
hands

 Decentralization is the extent to which

decision-making authority is pushed down the
organization structure and shared with many
lower-level employees.

147
Factors determine decentralization

 The external business environment.

 Characteristics of the organization.

 The rate of growth of the organization.

148
CHAPTER 7
CONTROL

149
 Controls
The regulation of organizational activities so that some
targeted element of performance remains within
acceptable limits.

 Provides organizations with indications of how well

they are performing in relation to their goals.

 Provides a mechanism for adjusting performance to

keep organizations moving in the right direction.

150
 Importance of Control
CHANGE
Helps managers detect changes in the external and
internal environments.
COMPLEXITY
Monitor the diversified product lines to ensure that
quality and profitable are maintained.
MISTAKES
Allows a manager to detect mistakes before they
become crucial.
DELEGATION
Managers will delegate part of their work to subordinate.

151
 Importance of Control

Adapt to environmental change Limit the accumulation of error

Control helps the organization

Cope with organizational complexity Minimize costs

152
Levels of Control

Strategic
control

Structural
control

Operations
control

153
 Types of Controls
Physical resources - inventory management, quality control, and
equipment control.

Human resources - selection and placement, training and

development, performance appraisal, and compensation.

Information resources - sales and marketing forecasts,

environmental analysis, public relations, production
scheduling, and economic forecasting.

Financial resources - managing capital funds and cash

flow, collection and payment of debts.

154
 Design of the Control Process
The steps in the design of the control process:

1. Define the desired results

2. Establish the predictors of results
3. Set standards of performance for the predictors
4. Establish the information and feedback systems
5. Measure actual work performance
6. Compare actual performance to standards
7. Take corrective actions where necessary.

155
 Problems in setting effective controls

Very often the easily measured factors receive too

much weights while the difficult to-measure items
are not given enough priority.

Sometimes management may emphasize short-run

conditions at the expense of long run factors.

Failure to adjust the control systems to reflect

shift in the importance of various activities and
goals over time.

156
 Control Tools
Breakeven Analysis
Study of how costs and profits vary with the
volume of production.

Network Analysis
A generic term, which includes those
techniques, used to plan schedules and control
the progress of complex projects consisting of
set of interrelated activities.

157
 Responsibilities for Control

Controller a position in organizations that

helps line managers with their control
activities.

15
8
 Steps in the Control Process

1 2 3 4
Compare Determine need
Establish Measure
performance for corrective
standards performance against standards action

Maintain the Correct the Change

status quo deviation standards

159
 Overcoming Resistance to Control
◦ Designing effective controls that are properly
integrated with organizational planning and aligned
with organizational goals and standards.

◦ Creating controls that are flexible, accurate, timely,

and objective.

◦ Avoiding over-control in the implementation of

controls.

◦ Guarding against creating controls that reward

inefficiencies.

160
◦ Encouraging employee participation in the planning and
implementing of control systems.

◦ Developing a system of checks and balances in the control

systems through the use of multiple standards and
information systems that allow the organization to verify the
accuracy of performance indicators.

161
CHAPTER 8 – MANAGING COMMUNICATION

162
WHAT IS COMMUNICATION?

Communication defined as a process of giving,

receiving, or exchanging information, opinions or
ideas by writing, speech or visual means, so that the
message communicated is completely understood by
recipients.

16
164
METHODS OF COMMUNICATION

Internal communication refers to the exchange

of information and ideas within an organization
communication

External communication network link the

organization with the organization with the
outside world of customers, suppliers,
competitors and investors.

1
International Communications
 International communication (also referred to as the
study of global communication or transnational
communication) is the communication practice that occurs
across international borders. The need for international
communication was due to the increasing effects and
influences of globalization. As a field of study, international
communication is a branch of communication studies,
concerned with the scope of "government-to-government",
"business-to-business", and "people-to-people" interactions
at a global level. Due to the increasingly globalized market,
employees who possess the ability to effectively communicate
across cultures are in high demand. International
communication "encompasses political, economic, social,
cultural and military concerns".

16
6
 BARRIERS TO COMMUNICATION

Non-verbal signals
Referred as “body language” , can provide valuable feedback where verbal
communication is concerned.

Language
Our backgrounds knowledge and experience affect our understanding .

Foreign languages, dialects, regional accents and the use of technical/

specialist language should always be considered

Listening
Careful concentration is demanded if a communication is to be understood.

Success at gaining attention may be depend on the word used, the way the
communication is expressed, our interest in the speaker, our interest in the
communication and various other factors.
 FORMAL MEETINGS
Annual General Meeting (AGM)
 Held once a year to assess the trading of the organization
over the year.
 Shareholders are invited to attend the AGM must be
given 21 days notice.

Statutory Meetings
 Directors and shareholders can communicate and consider
special report. Companies are required by law to hold
these statutory meetings.

Boards Meetings
 They are attended by all directors and chaired by the
chairman of the boards.
168
 INFORMAL MEETINGS

Management meetings
 These meetings are attended by a group of managers who may
need to discuss a specific matter, report on progress or receive
progress reports.

Departmental meetings
 These meetings are called by the head of department or manager
of a certain section .All staff will be invited to attend.

Working parties
 Working parties may be set up o work together on a specific
project or problem .

1
Team Communications
What is team communication?

A team is not any group of people. “A team is a

collection of people who must work
interdependently to achieve a common goal or
output.” - Baden Eunson (from Communicating
in the 21st Century)

17
0
 CHAPTER 9
LEADERSHIP

171
 The Nature of Leadership
Leadership
The ability to influence a group toward the achievement of goals.

The Meaning of Leadership

◦ Leaders
 People who can influence the behaviors of others
without having to rely on force.
 People who are accepted
as leaders by others.

172
17
3
 Leadership Styles

 Autocratic leadership
 Bureaucratic leadership
 Charismatic leadership
 Democratic leadership or
Participative leadership
 Laissez-faire leadership
 People-oriented leadership or
Relations- oriented leadership
 Servant leadership
 Task-oriented leadership
 Transactional leadership
 Transformational leadership

174
 Authoritarian or Autocratic

Get others to do things for him through the

use of fear, threats, and punishments.

Using the authority for decision-making,

determining policies and procedures.

Described in McGregor’s Theory X

175
 Bureaucratic Leadership
Bureaucratic leaders work “by the
book”, ensuring that their staff follow
procedures exactly. Very rigid and
uncompromising in discipline.

This is a very appropriate style for

work involving serious safety risks
(such as working with machinery, with
toxic substances or at heights) or
where large sums of money are
involved (such as cash-handling).

176
 Charismatic Leadership
A charismatic leadership style can appear similar to a
transformational leadership style, in that the leader
injects huge doses of enthusiasm into his or her team,
and is very energetic in driving others forward.

In the eyes of their followers, success is tied up with the

presence of the charismatic leader. As such,
charismatic leadership carries great responsibility, and
needs long term commitment from the leader.

177
 Democratic or Participative Leadership
Encourage the subordinate participation in
decision making, determination of policies and
implementation of procedures.

Invites other members of the team to contribute

to the decision-making process.

Employees and team members feel in control

of their own destiny

Reflects McGregor’s Theory Y

178
 Laissez-faire Leadership

This French phrase means “leave it be” and is

used to describe a leader who leaves his or her
colleagues to get on with their work.

Most often, laissez-faire leadership works for

teams in which the individuals are very
experienced and skilled self-starters.

179
 People-Oriented Leadership

The leader is totally focused on organizing,

supporting and developing the people in the
leader’s team.

A participative style, it tends to lead to good

teamwork and creative collaboration.

180
 Servant Leadership

This term, coined by Robert Greenleaf in the 1970s,

describes a leader who is often not formally recognized as
such.

When someone, at any level within an organization, leads

simply by virtue of meeting the needs of his or her team,
he or she is described as a “servant leader”.

181
 Task-oriented
A highly task-oriented
leader focuses only on
getting the job done, and
can be quite autocratic.

He or she will actively

define the work and the
roles required, put
structures in place, plan,
organize and monitor in
great detail.
 Transactional
This style of leadership starts
with the idea that team members
agree to obey their leader totally
when they take on a job
The “transaction” is (usually) that
the organization pays the team
members in return for their effort
and compliance.
You have a right to “punish” the
team members if their work
doesn’t meet the pre -determined
standard.

183
 Transformational Leadership

A person with this leadership

style is a true leader who
inspires his or her team
constantly with a shared
vision of the future.

Highly visible, and spend a lot

of time communicating.

Delegate responsibility
amongst their team.

184
 Path-Goal Theory Leadership
The theory that it is the leader’s job to assist followers in
attaining their goals and to provide them the necessary
direction and/or support to ensure that their goals are
compatible with the overall objectives of the group or
organization.

185
Formal and Informal Leadership
Formal leaders
Delegate authority and thus, exerts
considerable influence.

Informal leader
Though not having
delegated authority, can initiate action.

186
 Approaches to study of Leadership
The qualities or traits approach

Traits Theories of Leadership Leadership

LeadershipTraits:
Traits:
Theories that consider •• Ambition
Ambitionand
andenergy
energy
personality, social, physical, •• The
Thedesire
desireto
tolead
lead
or intellectual traits to •• Honest
Honestand
andintegrity
integrity
differentiate leaders from •• Self-confidence
Self-confidence
•• Intelligence
Intelligence
non-leaders.
•• High
Highself-monitoring
self-monitoring
•• Job-relevant
Job-relevant
knowledge
knowledge

187
 The Behavior Approach
Behavioral Theories of Leadership
Theories proposing that specific behaviors differentiate
leaders from non-leaders.

• Trait theory:
Leaders are born, not made.
• Behavioral theory:
Leadership traits can be taught.

188
 The Contingency Approach
This approach examines the work situations and
then seeks a manager whose style is suitable for
that situation.

189
 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.

190
191
There is no one right leadership style.

Each style is unique in its own way.

A great leader must know how to adjust

and adapt his/her style to fit the people,
structure and organization in order to
lead his followers to achieve the goals
of the organization.
192
193