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Functions of Management

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SAINt-Petersburg STATE Polytechnical University

Faculty of Economics and Management

Department of Economics and Management of Machine Production Enterprise

Course Paper

«Functions of Management»

St. Petersburg 2009

Introduction

Research and analysis of functions of management is urgent problem
indeed. Management combines characteristics of science and art. In the
first place management means direction of people, therefore it is
impossible to formalize it. But we can mark out some functions of
management. So accurate compliance with management functions allows your
organization with the best profit and efficiency. In this work you can
find description of each management function and some advices to improve
them.

The present paper is devoted to the problems of management. This work is
aimed at analysis of four functions of management. The following tasks
are to be solved in this paper:

– to decide how much functions management has;

– to review all functions of management;

– to discuss the main ways of improving functions of management;

The books and articles of the following authors constitute the
theoretical basis for this work: Bernard L. Erven, Henri Fayol, James
Higgins, Jayashree Pakhare and others. They discussed different
theoretical and practical problems of the matter of this course paper.

In this paper, I attempt to clarify the interdependence of management
functions. To do so, I first present all functions then described each
one in details.

The structure of this course paper is as follows. The first part reviews
all management functions. Part 2–5 dwells on each function of
management. The final part summarizes the whole work.

Functions of Management

To decide the first task how much functions management has I compared
some viewpoints of scientists. As Jayashree Pakhare consider, management
has only four functions: planning, organizing, directing and
controlling. At the same time according to Bernard L. Erven and Henri
Fayol, management has five functions: four previous plus staffing. I
think that staffing is not as much important as other functions and is
contained in organizing therefore in what follows I analyzed only four
functions.

«Any organization, whether new or old, whether small or big need to run
smoothly and achieve the goals and objectives which it has set forth.
For this they had developed and implemented their own management
concepts. There are basically four management concepts that allow any
organization to handle the tactical, planned and set decisions. The four
basic functions of the management are just to have a controlled plan
over the preventive measure». [4]

The four functions of management are: planning, organizing, directing,
controlling.

Planning is the foundation area of management. It is the base upon which
all the areas of management should be built. Planning requires
administration to assess, where the company is presently set, and where
it would be in the upcoming. From there an appropriate course of action
is determined and implemented to attain the company’s goals and
objectives.

Planning is unending course of action. There may be sudden strategies
where companies have to face. Sometimes they are uncontrollable. You can
say that they are external factors that constantly affect a company both
optimistically and pessimistically. Depending on the conditions, a
company may have to alter its course of action in accomplishing certain
goals. This kind of preparation, arrangement is known as strategic
planning. In strategic planning, management analyzes inside and outside
factors that may affect the company and so objectives and goals. Here
they should have a study of strengths and weaknesses, opportunities and
threats. For management to do this efficiently, it has to be very
practical and ample.

The second function of the management is getting prepared, getting
organized. Management must organize all its resources well before in
hand to put into practice the course of action to decide that has been
planned in the base function. Through this process, management will now
determine the inside directorial configuration; establish and maintain
relationships, and also assign required resources.

While determining the inside directorial configuration, management ought
to look at the different divisions or departments. They also should
think about harmonization of staff, and try to find out the best way to
handle the important tasks and expenditure of information within the
company. Management determines the division of work according to its
need. It also has to decide for suitable departments to hand over
authority and responsibilities.

Directing is the third function of the management. Working under this
function helps the management to control and supervise the actions of
the staff. This helps them to assist the staff in achieving the
company’s goals and also accomplishing their personal or career goals
which can be powered by motivation, communication, department dynamics,
and department leadership.

Employees those are highly provoked generally surpass in their job
performance and also play important role in achieving the company’s
goal. And here lies the reason why managers focus on motivating their
employees. They come about with prize and incentive programs based on
job performance and geared in the direction of the employees
requirements.

It is very important to maintain a productive working environment,
building positive interpersonal relationships, and problem solving. And
this can be done only with Effective communication. Understanding the
communication process and working on area that need improvement, help
managers to become more effective communicators. The finest technique of
finding the areas that requires improvement is to ask themselves and
others at regular intervals, how well they are doing. This leads to
better relationship and helps the managers for better directing plans.

Control, the last of four functions of management, includes establishing
performance standards which are, of course, based on the company’s
objectives. It also involves evaluating and reporting of actual job
performance. When these points are studied by the management then it is
necessary to compare both things. This study on comparison of both
decides further corrective and preventive actions.

Planning

Planning is concerned with the future impact of today’s decisions. It is
the fundamental function of management from which the other four stem.
The need for planning is often apparent after the fact. However,
planning is easy to postpone in the short-run. Postponement of planning
especially plagues labor oriented, hands on managers.

«The organizing, directing and controlling functions stem from the
planning function. The manager is ready to organize and staff only after
goals and plans to reach the goals is in place. Likewise, the leading
function, influencing the behavior of people in the organization,
depends on the goals to be achieved. Finally, in the controlling
function, the determination of whether or not goals are being
accomplished and standards met is based on the planning function. The
planning function provides the goals and standards that drive the
controlling function.» [3]

Planning is important at all levels of management. However, its
characteristics vary by level of management.

Planning Terminology

The order from general to specific is: vision-mission-objectives-goals.
The key terms are defined as follows:

– Vision is nonspecific directional and motivational guidance for the
entire organization. Top managers normally provide a vision for the
business. It is the most emotional of the four levels in the hierarchy
of purposes.

– Mission is an organization’s reason for being. It is concerned with
scope of the business and what distinguishes this business from similar
businesses. Mission reflects the culture and values of top management.

– Objectives refine the mission and address key issues within the
organization such as market standing, innovation, productivity, physical
and financial resources, profitability, management and worker
performance and efficiency. They are expected to be general, observable,
challenging, and untimed.

– Goals are specific statements of anticipated results that further
define the organization’s objectives. They are expected to be SMART:
Specific, Measurable, Attainable, Rewarding, and Timed.

Development of tactics is a fifth level of planning. Tactics, the most
specific and narrow plans, describe who, what, when, where and how
activities will take place to accomplish a goal.

Strategic Planning

«Strategic planning is one specific type of planning. Strategies are the
outcome of strategic planning. An organization’s strategies define the
business the firm is in, the criteria for entering the business, and the
basic actions the organization will follow in conducting its business».
[3, 229] Strategies are major plans that commit large amounts of the
organization’s resources to proposed actions, designed to achieve its
major objectives and goals. Strategic planning is the process by which
the organization’s strategies are determined. In the process, three
basic questions are answered:

1. Where are we now?

2. Where do we want to be?

3. How do we get there?

«The «where are we now?» question is answered through the first three
steps of the strategy formulation process: (1) perform internal and
external environmental analyses, (2) review vision, mission and
objectives, and (3) determine SWOT: Strengths, Weaknesses, Opportunities
and Threats. SWOT analysis requires managers to be honest,
self-disciplined and thorough. Going on to strategy choices without a
comprehensive SWOT analysis is risky.» [1]

Strengths and weaknesses come from the internal environment of the firm.
Strengths can be exploited, built upon and made key to accomplishment of
mission and objectives. Strengths reflect past accomplishments in
production, financial, marketing and human resource management.
Weaknesses are internal characteristics that have the potential to limit
accomplishment of mission and objectives. Weaknesses may be so important
that they need to be addressed before any further strategic planning
steps are taken.

Opportunities and threats are uncontrollable by management because they
are external to the firm. Opportunities provide the firm the possibility
of a major improvement. Threats may stand in the way of a firm reaching
its mission and objectives.

Organizing

Organizing is establishing the internal organizational structure of the
business. The focus is on division, coordination, and control of tasks
and the flow of information within the organization. Managers distribute
responsibility and authority to job holders in this function of
management.

Organizational Structure

Each organization has an organizational structure. By action and/or
inaction, managers structure businesses. Ideally, in developing an
organizational structure and distributing authority, managers’ decisions
reflect the mission, objectives, goals and tactics that grew out of the
planning function. Specifically, they decide:

1. Division of labor

2. Delegation of authority

3. Departmentation

4. Span of control

5. Coordination

Management must make these decisions in any organization that has more
than two people. Small may not be simple.

Organizational structure is particularly important in family businesses
where each family member has three hats (multiple roles): family,
business and personal. Confusion among these hats complicates
organizational structure decisions.

Division of Labor

Division of labor is captured in an organization chart, a pictorial
representation of an organization’s formal structure. An organization
chart is concerned with relationships among tasks and the authority to
do the tasks. Eight kinds of relationships can be captured in an
organization chart:

1. The division/specialization of labor

2. Relative authority

3. Departmentation

4. Span of control

5. The levels of management

6. Coordination centers

7. Formal communication channels

8. Decision responsibility

To improve organizing managers should listen to the opinion of Bernard
L. Erven. «Organization charts have important weaknesses that should be
of concern to managers developing and using them:

1. They may imply a formality that doesn’t exist.

2. They may be inconsistent with reality.

3. Their usual top down perspective often minimizes the role of
customers, front-line managers and employees without management
responsibilities.

4. They fail to capture the informal structure and informal
communication.

5. They often imply that a pyramidal structure is the best or only way
to organize.

6. They fail to address the potential power and authority of staff
positions compared with line positions.» [1]

Delegation of Authority

Authority is legitimized power. Power is the ability to influence
others. Delegation is distribution of authority. Delegation frees the
manager from the tyranny of urgency. Delegation frees the manager to use
his or her time on high priority activities. Note that delegation of
authority does not free the manager from accountability for the actions
and decisions of subordinates.

Delegation of authority is guided by several key principles and
concepts:

Exception principle – Someone must be in charge. A person higher in the
organization handles exceptions to the usual. The most exceptional,
rare, or unusual decisions end up at the top management level because no
one lower in the organization has the authority to handle them.

Scalar chain of command – The exception principle functions in concert
with the concept of scalar chain of command – formal distribution of
organizational authority is in a hierarchical fashion. The higher one is
in an organization, the more authority one has.

Decentralization – Decisions are to be pushed down to the lowest
feasible level in the organization. The organizational structure goal is
to have working managers rather than managed workers.

Parity principle – Delegated authority must equal responsibility. With
responsibility for a job must go the authority to accomplish the job.

Span of control – The span of control is the number of people a manager
supervises. The typical guideline is a span of control of no more than
5–6 people. However, a larger span of control is possible depending on
the complexity, variety and proximity of jobs.

Unity principle – Ideally, no one in an organization reports to more
than one supervisor. Employees should not have to decide which of their
supervisors to make unhappy because of the impossibility of following
all the instructions given them.

Line and staff authority – Line authority is authority within an
organization’s or unit’s chain of command. Staff authority is advisory
to line authority. Assume a crew leader reports to the garden store
manager who in turn reports to the president. Further assume that the
crew leader and store manager can hire and fire, and give raises to the
people they supervise. Both the crew leader and store manager have line
authority. To contrast, assume that the president has an accountant who
prepares monthly financial summaries with recommendations for corrective
action. The accountant has staff authority but not line authority.

«Departmentation is the grouping of jobs under the authority of a single
manager, according to some rational basis, for the purposes of planning,
coordination and control. The number of departments in an organization
depends on the number of different jobs, i.e., the size and complexity
of the business». [3]

Directing

Directing is influencing people’s behavior through motivation,
communication, group dynamics, leadership and discipline. The purpose of
directing is to channel the behavior of all personnel to accomplish the
organization’s mission and objectives while simultaneously helping them
accomplish their own career objectives.

Managers give this function a variety of names. Higgins calls it
leading. Other labels are: influencing, coaching, motivating,
interpersonal relations, and human relations.

The directing function gives the manager an active rather than a passive
role in employee performance, conduct and accomplishments. Managers
accomplish their objectives through people. In blaming others for her or
his human resource problems, a manager is denying the management
responsibilities inherent in the directing function.

The directing function gives managers a second responsibility: helping
people in the organization accomplish their individual career goals.
Organizations do not succeed while their people are failing. Helping
people in the organization with career planning and professional
development is an integral part of the directing function.

Motivation

Selection, training, evaluation and discipline cannot guarantee a high
level of employee performance. Motivation, the inner force that directs
employee behavior, also plays an important role. Highly motivated people
perform better than unmotivated people. Motivation covers up ability and
skill deficiencies in employees. Such truisms about motivation leave
employers wanting to be surrounded by highly motivated people but
unequipped to motivate their employees. Employers and supervisors want
easily applied motivation models but such models are unavailable.

Three ways of looking at motivation are: needs, rewards and effort. The
needs approach stems from the notion that peoples’ unsatisfied needs
drive their behavior. Figure out a person’s needs, satisfy the needs and
the person will be motivated. For example, a person with a high need to
satisfy goals is motivated by production targets. The rewards approach
is based on the expectation that rewarded behavior is repeated. Giving a
person a bonus for excellent performance during a difficult harvest
period encourages the person to make a special effort during the next
difficult harvest. The effort approach to motivation is based on the
expectation that effort brings the worker what he or she wants. The
thought that working hard leads to advancement and new career
opportunities is consistent with the effort approach. The effort
approach includes a presumption that the employer is fair, i.e., effort
is recognized and rewarded. Managers cannot reduce motivation to a
simple choice of one of these approaches. Each of the three approaches
contributes to an understanding of motivation and how motivation varies
person to person and over time.

«The most effective motivation for employees comes from within each
employee, i.e., self-motivation. Possible indicators of self-motivation
include: past accomplishments in school, sports, organizations and work;
stated career goals and other kinds of goals; expertise in one or more
areas that shows evidence of craftsmanship, pride in knowledge and
abilities, and self-confidence; an evident desire to continue to learn;
and a general enthusiasm for life.» [2]

Communication Model

The process starts with a sender who has a message for a receiver. Two
or more people are always involved in communication. The sender has the
responsibility for the message.

The sender’s message travels to the receiver through one or more
channels chosen by the sender. The channels may be verbal or nonverbal.
They may involve only one of the senses, hearing for example, or they
may involve all five of the senses: hearing, sight, touch, smell, and
taste. Nonverbal communication, popularly referred to as body language,
relies primarily on seeing rather than hearing.

The sending of a message by an appropriate channel to a receiver appears
to have completed the communication process or at least the sender’s
responsibility. Not so! After sending the message, the sender becomes a
receiver and the receiver becomes a sender through the process of
feedback. Feedback is the receiver’s response to the attempt by the
sender to send the message. Feedback is the key to determination by the
sender of whether or not the message has been received in the intended
form. Feedback involves choice of channel by the receiver of the
original message. The channel for feedback may be quite different from
the original channel chosen by the sender. A puzzled look may be the
feedback to what the sender considered a perfectly clear oral
instruction.

Problems with any one of the components of the communication model can
become a barrier to communication. These barriers suggest opportunities
for improving communication.

1. Muddled messages

2. Stereotyping

3. Wrong channel

4. Language

5. Lack of feedback

6. Poor listening skills

7. Interruptions

8. Physical distractions

The following general guidelines may help communication. This is a part
of the third goal.

1. Have a positive attitude about communication. Defensiveness
interferes with communication.

2. Work at improving communication skills. It takes knowledge and work.
The communication model and discussion of barriers to communication
provide the necessary knowledge.

3. Include communication as a skill evaluated along with all the other
skills in each person’s job description.

4. Make communication goal oriented. Relational goals come first and
pave the way for other goals.

5. Approach communication as a creative process rather than simply part
of the chore of working with people. Experiment with communication
alternatives.

6. Accept the reality of miscommunication. The best communicators fail
to have perfect communication.

Communication is at the heart of many interpersonal problems in family
businesses. Understanding the communication process and then working at
improvement provide managers a recipe for becoming more effective
communicators. Knowing the common barriers to communication is the first
step to minimizing their impact. Managers can reflect on how they are
doing and use the ideas presented in this paper. When taking stock of
how well you are doing as a manager and family member, first ask
yourself and others how well you are doing as a communicator.

Discipline

High quality farm worker performance requires implementation of
carefully made tactical plans. Deviations from the plans by employees
results in standards not being met and goals not being accomplished.
Managers must deal with employees’ deviation from rules, procedures and
expected behaviors. Employees coming late to work, not following safety
procedures when working alone, not properly cleaning equipment in their
rush to get home, and using wrong or wrong amounts of medication are
examples of unacceptable behavior that should be addressed rather than
ignored. A cautionary note is in order. Employers can easily confuse
discipline problems with selection, training and communication problems.
This discussion of discipline applies to those cases in which the
employee can reasonably be expected to perform or behave according to
established standards, norms or rules, i.e., they have been carefully
selected, well trained and are regularly evaluated.

A disciplined person exhibits the self-control, dedication and orderly
conduct consistent with successful performance of job responsibilities.
This discipline may come through self-discipline, co-workers or the
supervisor/employer. Self-discipline is best and most likely to come
from well selected, trained, and motivated people who regularly have
feedback on their performance.

An employee not performing up to the agreed upon standards or not
following the understood rules is object to punishment, i.e.,
disciplinary action. Punishing or disciplining employees falls among the
least pleasant activities in human resource management. In the
short-run, doing nothing or ignoring errant actions and behavior almost
always comes easier than taking the needed action. Not disciplining when
needed sends confusing messages to the errant employee, other employees
and other managers in the farm business. If starting work at 6:30 a.m.
rather than 6:00 a.m. draws no reaction from the employer, does this
mean the starting time has been changed to 6:30?

Several guidelines help to reduce the compounding of discipline problems
with problems in disciplining. Both employers and employees need to know
the rules and performance expectations. An employee handbook or other
form of written statement provided each employee is basic. Rules should
be uniformly enforced among all employees. If special rules apply to a
certain employee, e.g., use of the pickup truck without asking
permission, other employees need to be so informed. Punishment should be
based on facts. All parties should be heard rather than depending on one
person only for facts. Action should be taken promptly. «Saving up» a
series of minor problems and infractions for a grand explosion is poor
disciplinary practice. All discipline other than discharge should have
the objective of helping the employee. Permit the employee to maintain
self-respect by disciplining the employee’s behavior or act. Do not
berate the person.

Keeping punishment consistent with the severity of an offense challenges
all labor managers. Being thirty minutes tardy for work the fourth time
in two weeks has to be handled differently from being thirty minutes
tardy for the first time in two years. Theft of tools has to be handled
differently than tardiness for work. Progressive discipline provides a
formal structure within which errant employees can be handled. In
progressive discipline, the severity of punishment increases in relation
to the seriousness of the offense or the number of times an offense is
repeated. Typical levels in progressive discipline are: informal talk
and counseling, oral warning or reprimand, written warning, disciplinary
layoff and discharge.

Both employers and employees usually react negatively to the atmosphere
of conflict and parent disciplining child inherent to progressive
discipline. High priority placed on selection, training, informal
communication and performance appraisal reduces the need for punishment
of employees. Treating employees as adults, expecting them to rely on
self-assessment for correcting problems and relying on informal
counseling rather than formal reprimands provide an atmosphere of
positive discipline.

Controlling

«Controlling is a four-step process of establishing performance
standards based on the firm’s objectives, measuring and reporting actual
performance, comparing the two, and taking corrective or preventive
action as necessary.

Performance standards come from the planning function. No matter how
difficult, standards should be established for every important task.
Although the temptation may be great, lowering standards to what has
been attained is not a solution to performance problems. On the other
hand, a manager does need to lower standards when they are found to be
unattainable due to resource limitations and factors external to the
business.» [1]

Corrective action is necessary when performance is below standards. If
performance is anticipated to be below standards, preventive action must
be taken to ensure that the problem does not recur. If performance is
greater than or equal to standards, it is useful to reinforce behaviors
that led to the acceptable performance.

Characteristics of the Control Process

The control process is cyclical which means it is never finished.
Controlling leads to identification of new problems that in turn need to
be addressed through establishment of performance standards, measuring
performance etc.

Employees often view controlling negatively. By its very nature,
controlling often leads to management expecting employee behavior to
change. No matter how positive the changes may be for the organization,
employees may still view them negatively.

Control is both anticipatory and retrospective. The process anticipates
problems and takes preventive action. With corrective action, the
process also follows up on problems.

Ideally, each person in the business views control as his or her
responsibility. The organizational culture should prevent a person
walking away from a small, easily solvable problem because «that isn’t
my responsibility.» In customer driven businesses, each employee cares
about each customer. In quality driven dairy farms, for example, each
employee cares about the welfare of each animal and the wear and tear on
each piece of equipment.

Controlling is related to each of the other functions of management.
Controlling builds on planning, organizing and leading.

Management Control Strategies

Managers can use one or a combination of three control strategies or
styles: market, bureaucracy and clan. Each serves a different purpose.
External forces make up market control. Without external forces to bring
about needed control, managers can turn to internal bureaucratic or clan
control. The first relies primarily on budgets and rules. The second
relies on employees wanting to satisfy their social needs through
feeling a valued part of the business.

Self-control, sometimes called adhocracy control, is complementary to
market, bureaucratic and clan control. By training and encouraging
individuals to take initiative in addressing problems on their own,
there can be a resulting sense of individual empowerment. This
empowerment plays out as self-control. The self-control then benefits
the organization and increases the sense of worth to the business in the
individual.

Effective control systems have the following characteristics:

1. Control at all levels in the business

2. Acceptability to those who will enforce decisions

3. Flexibility

4. Accuracy

5. Timeliness

6. Cost effectiveness

7. Understandability

8. Balance between objectivity and subjectivity

9. Coordinated with planning, organizing and leading

Managers expect people in an organization to change their behavior in
response to control. However, employee resistance can easily make
control efforts dysfunctional. The following behaviors demonstrate means
by which the manager’s control efforts can be frustrated:

1. Game playing control is something to be beaten, a game between the
«boss and me and I want to win.»

2. Resisting control a «blue flu» reaction to too much control

3. Providing inaccurate information a lack of understanding of why the
information is needed and important leading to «you want numbers, we
will give you numbers.»

4. Following rules to the letter people following dumb and unprofitable
rules in reaction to «do as I say.»

5. Sabotaging stealing, discrediting other workers, chasing customers
away, gossiping about the firm to people in the community

6. Playing one manager off against another exploiting lack of
communication among managers, asking a second manager if don’t like the
answer from the first manager.

Conclusions

Summing up the results of the conducted analysis the following
conclusions can be made:

Management operates through various functions. To decide how much
functions management has I compared some viewpoints of scientists. I
think that management has only four functions:

«Planning: deciding what needs to happen in the future (today, next
week, next month, next year, over the next 5 years, etc.) and generating
plans for action.

Organizing: (implementation) making optimum use of the resources
required to enable the successful carrying out of plans.

Directing: determining what needs to be done in a situation and getting
people to do it.

Controlling: monitoring, checking progress against plans, which may need
modification based on feedback.» [5]

In addition, in the paper you can find general rules to improve
communication, which is the part of directing, and organizing.

As you can see competent performance of all management functions ensures
an organization stability of development, high profitability and
efficiency. Planning helps to work out strategy. Organizing is
responsible for creation the structure of company. Directing makes
people to follow strategy. Controlling checks running of the whole
company.

Bibliography

1. Bernard L. Erven (2003). The Five Functions of Management: The
Foundation of ManagementExcel. Retrieved March 29, 2009, from:
http://extension.osu.edu/~mgtexcel/Function.html

2. Henri Fayol (1916). Model: Five functions of management. Retrieved
March 30, 2009, from: http://www.provenmodels.com/3

3. James Higgins, The Management Challenge, Second edition, Macmillan,
1994.

4. Jayashree Pakhare (25.09.2007). Management Concepts – The Four
Functions of Management. Retrieved March 29, 2009, from:
http://www.buzzle.com/articles/management-concepts-the-four-functions-of
-management.html

5. Unknown author (2009). Wikipedia, the free encyclopedia: Management.
Retrieved March 29, 2009, from:
http://en.wikipedia.org/wiki/Management#Basic_functions_of_management

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