Organization and Management

1
Introduction to the Different Functional Areas of Management

Introduction to the Different Functional Areas

of Management

There are five main functional areas of management viz., human resource,
marketing, operations, financial and information & communication
technology. These topics are discussed in this lesson.
Topic Outline:
• Human Resource Management
• Marketing Management
• Operations Management
• Financial management
• Information and Communication technology management

Human Resource Management

What is Human resource Management (HRM)?
The process of acquiring, training, appraising, and compensating employees,
and of attending to their labor relations, health and safety, and fairness
concerns.
Human resource is the most important asset in the business. The heart of an
organization lies on its people. Without people, the day-to-day operation of a
business would cease to function. The success of a business relies fully on the
hands of the employees working in the company. In order to achieve the
company’s goals and objectives, the company’s Human Resource Department
is responsible in recruiting the right people with the required skills,
qualifications and experience. They’re responsible for determining the salary
and wages of different job positions in the company. They’re also involved in
training employees for their development.

HRM Discipline
• The discipline of HRM is based on a unique integration of: psychology,
economic, and system theories, and has undergone a change since the
early days of the Hawthorne experiment.

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HR Departments' Organization Charts and Structures
Organization historically divided into two groups, line management and staff
management, and HRM was traditionally considered to be a staff function.
Line Managers were directly responsible for the production of goods and
services.
Staff Managers were responsible for an indirect or support function that
would have cost but whose bottom line contributions where less direct.
Centralization
Some organizations centralize HR. A centralized strategy locates design and
administration responsibility in a single organizational unit. Administration
generally will fall to those working in various units, who often HR generalist.
Generalist handle all HR activities rather than specializing in a single
area, such as: compensation or recruiting.
Decentralization
Decentralization gives each organization unit the responsibility to design and
administer each own personnel system.
Organization Chart
Organization can use chart for a number of purposes. For example, HR
administrator, as well as Chief Executive Officers, Corporate Planners,
Marketing Representative, and others, can use such organization charts to:
1. Design their department or division charts.
2. Monitor reporting relationships.
3. Gain access to information about newly created job titles, staff duties,
and reporting relationships.
4. Find out how leading agencies organize their management teams and
work forces.
5. Assess industry patterns.
6. Examine the competition.
7. Use in business presentations and to facilitates placement decisions.
Human Resource and Information Technology
 The advent of "computer age" has greatly altered, not only the
availability of information but also the manner in which it is identified
and acquired.
 Information technology deals with how information is accessed,
gathered, analyzed, and communicated.
The Beginning
the Philippines has all the potential to be an active player in the digital
domain At present, join government and private sector groups such as the
Information Technology and Electronic Commerce Council (ITECC) are
unified in pushing for the development of E-commerce in the Philippines. It
is seen as an important driving force that could fuel the country's economic
growth and development.
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Introduction to the Different Functional Areas of Management

IT Application in HR
1. Use of job boards and other similar recruitment web-based
application to provide accessibility to applications for the job usually
communicate job vacancies and applicant processing.
2. Employee kiosks provide updates in employee status and other
pertinent information initiated and made by the employee themselves
via theses kiosks.
3. E-learning facilitate the learning process by providing a just-in-time
learning opportunities. the use of a learning management system (LMS)
will allow the HRD manager to focus on the more important aspects of his
job rather than being concerned with course registration and following
up attendance to training programs.
4. Electronic Performance Support System (EPSS) will provide on-line
coaching and mentoring services. managers and employees can access
organizational knowledge through an EPSS application.
5. Salary and Payroll Administration for some companies this is now a
link to performance management systems, time and attendance, and
other employee benefits to the pay systems. This ensures timely pay-out
of salaries, wages, bonuses, and other similar compensation. An example
of this is the timesheets.
6. Telecommuting/Teleworking - Teleworking is any form of substitution
of information technologies (such as: telecommunications and/or
computers) for normal work related travel moving the work to the
workers instead of moving the workers to work.
7. HR and the Internet the Internet is an excellent source for finding many
types of information related to HRM and for keeping up with new
development in the field. Cyberspace and the Internet are changing the
way many Human Resource managers operate. Today, a growing number
of HR managers are using the internet to recruit personnel, conduct
research, access electronic databases, send email, conduct training and
network with colleagues. The real value of Internet to manager is the
information that is makes available.
8. e-Enterprise Human Resources provides a comprehensive solution for
managing applicant and employee information, paying employees, and
tracking payroll information that is as easy to implement and to use as it
is powerful.
9. Intranets this is a private computer network that uses internet products
and technologies to provide multimedia applications within the
organizations. (Paul, Barker, Telecommunications, December, 1997). An
internet connect people to people and people to information and
knowledge within the organization.
10. Client/Server Networks this is a new system that uses personal
computers linked together to process information in a very efficient
manner (Samuel, Greengard. "The Netxt generation". Personnel Journal,
March 1994.) At the hub of each network is a computer that controls the
traffic on the network and stores data in a rational database. This central
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 computer, called the server, maybe anything from a large main frame to a
powerful PC. The clients are desktop PCs used by individuals to enter or
extract data or to do analysis.
Implementing an HRIS (Human Resource Information System): Albert
Leaderer, Information Technology: Planning and Developing a Human
Resource Information System, Personnel Journal. May 1994).
As with any major change, proper planning and communications are absolute
necessities for the successful implementation or major upgrade of an HRIS.
The steps outlined below described the specific procedures when attempting
to implement or upgrade an HRIS.
1. Inception of idea prepare a preliminary report showing the need for an
HRIS and what it can do for the organization. This must illustrate how an
HRIS can assist management in making certain decisions.
2. Feasibility study evaluate the present system and details the benefits of
an HRIS, with comparison of the costs and benefits.
3. Top management support once the FS recommends going ahead with
an HRIS, it is essential to obtain the support of top management.
4. Selecting a project team should consist of an HR representative who is
knowledgeable about the organization's HR functions and activities.
5. Defining the requirements specify in details exactly what the HRIS will
do including the reports that will be produced by the system.
6. Software/Hardware selection when evaluating available systems, used
the same cost benefit analysis that would be used for any significant
purchase.
7. Training all the personnel that will make use the system.
8. Tailoring the system involves making changes to the system to best fit
the specific needs of the organization.
9. Collecting the data - data must collected and entered into the system.
10. Testing the system
11. Starting-up
12. Running in parallel even with the new HRIS comma it is desirable it is
desirable to run the new system in parallel with the old system for a
period of time to be compared and examined for any accuracies.
13. Maintenance
14. Evaluation should be done to find out if it is right for the organization
and if it is being properly used.
All of the above mentioned continue to dramatically change the human
resource profession.
Human Resource Management Activities
The central focus for HR management must be on contributing to
organizational success. Key to enhancing organizational performance is
ensuring that human resources activities support organizational efforts
focusing on productivity, service, and quality.
 Productivity: As measured by the amount of output per employee,
continuous improvement of productivity has become even more
important as global competition has increased. The productivity of the
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Introduction to the Different Functional Areas of Management

human resources in an organization is affected significantly by

management efforts, programs, and systems.
 Quality: The quality of products and services delivered significantly
affects organizational success over the long term. If an organization gains
a reputation for providing poor-quality products and services, it reduces
its organizational growth and performance. An emphasis on quality
requires continuous changes aimed at improving work processes. That
need opens the door for reengineering the organizational work done by
people. Customer value received and satisfaction become the bases for
judging success, along with more traditional HR measures of performance
and efficiency.
 Service: Because people frequently produce the products or services
offered by an organization, HR management considerations must be
included when identifying service blockages and redesigning operational
processes.
Involving all employees, not just managers, in problem solving often requires
changes in corporate culture, leadership styles, and HR policies and practices.
To accomplish these goals, HR management is composed of several groups
of interlinked activities. However, the performance of the HR activities must
be done in the context of the organization. Additionally, all managers with HR
responsibilities must consider external environmental forces—such as legal,
political, economic, social, cultural, and technological ones—when
addressing these activities. These external considerations are especia lly
important when HR activities must be managed internationally.
The HR activities for which a brief overview follows are:
 HR Planning and Analysis
 Equal Employment Opportunity
 Staffing
 HR Development
 Compensation and Benefits
 Health, Safety, and Security
 Employee and Labor/Management Relations
1. HR Planning and Analysis
HR planning and analysis activities have several facets. Through HR planning,
managers attempt to anticipate forces that will influence the future supply of
and demand for employees. Having adequate human resource information
systems (HRIS) to provide accurate and timely information for HR planning
is crucial. The importance of human resources in organizational
competitiveness must be addressed as well. As part of maintaining
organizational competitiveness, HR analysis and assessment of HR
effectiveness must occur. The internationalization of organizations has
resulted in greater emphasis on global HR management.
2. Equal Employment Opportunity

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Compliance with equal employment opportunity (EEO) laws and regulations
affects all other HR activities and is integral to HR management. For
instance, strategic HR plans must ensure sufficient availability of a diversity
of individuals to meet affirmative action requirements. In addition, when
recruiting, selecting, and training individuals, all managers must be aware of
EEO requirements.
3. Staffing
The aim of staffing is to provide an adequate supply of qualified individuals
to fill the jobs in an organization. By studying what workers do, job analysis
is the foundation for the staffing function. From this, job descriptions and job
specifications can be prepared to recruit applicants for job openings. The
selection process is concerned with choosing the most qualified individuals
to fill jobs in the organization.
4. HR Development
Beginning with the orientation of new employees, HR training and
development also includes job-skill training. As jobs evolve and change,
ongoing retraining is necessary to accommodate technological changes.
Encouraging development of all employees, including supervisors and
managers, is necessary to prepare organizations for future challenges. Career
planning identifies paths and activities for individual employees as they
develop within the organization. Assessing how employees perfor m their
jobs is the focus of performance management.
5. Compensation and Benefits
Compensation rewards people for performing organizational work through
pay, incentives, and benefits. Employers must develop and refine their basic
wage and salary systems. Also, incentive programs such as gain sharing and
productivity rewards are growing in usage. The rapid increase in the costs of
benefits, especially health-care benefits, will continue to be a major issue.
6. Health, Safety, and Security
The physical and mental health and safety of employees are vital concerns.
The traditional concern for safety has focused on eliminating accidents and
injuries at work. Additional concerns are health issues arising from
hazardous work with certain chemicals and newer technologies.
Through a broader focus on health, HR management can assist employees
with substance abuse and other problems through employee assistance
programs (EAP) in order to retain otherwise satisfactory employees.
Employee wellness programs to promote good health and exercise are
becoming more widespread.
Workplace security has grown in importance, in response to the increasing
number of acts of workplace violence. HR management must ensure that
managers and employees can work in a safe environment.
7. Employee and Labor/Management Relations
The relationship between managers and their employees must be handled
effectively if both the employees and the organization are to prosper
together. Whether or not some of the employees are represented by a union,
employee rights must be addressed.
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Introduction to the Different Functional Areas of Management

It is important to develop, communicate, and update HR policies and rules so

that managers and employees alike know what is expected. In some
organizations, union/management relations must be addressed as well.

Major Functions of Human Resource Management

Human resource management is all about increasing employee performance
to their highest level corresponding to their role in the organization. In short,
HRM is concerned with the management of employees from recruitment to
retirement. Although there are many functions of human resource
management, following is the list of five major functions.
1. Recruitment and selection
Recruitment is the process of captivating, screening, and selecting potential
and qualified candidates based on objective criteria for a particular job. The
goal of this process is to attract the qualified applicants and to encourage the
unqualified applicants to opt themselves out.
Recruitment and selection process is very important to every organization
because it reduces the costs of mistakes such as engaging incompetent,
unmotivated, and under qualified employees. Firing the unqualified
candidate and hiring the new employee is again an expensive process.
2. Orientation
This is the fundamental step to help a new employee to adjust himself with
the employer and with his new job. Employee orientation program should
include the objectives and goals of the organization and how the employee
can help to achieve the long-term and short-term goals of the organization.
3. Maintaining good working conditions
It is the responsibility of the human resource management to provide good
working conditions to the employee so that they may like the workplace and
the work environment. It is the fundamental duty of the HR department to
motivate the employees. Human resource management should come up with
a system to provide financial and non-financial benefits to the employee from
the various departments. Employee welfare is another concept which should
be managed by HR team. Employee welfare promotes job satisfaction.
4. Managing Employee relations
Employees are the pillars of any organization. Employee relationship is a
very broad concept and it is one of the crucial functions of human resource
management. It also helps to foster good employee relations. They have the
ability to influence behaviors and work outputs.
Management should organize activities which will help to know an employee
at the personal and professional level. Well-planned employee relations will

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 promote a healthy and balanced relation between the employee and the
employer. It is the key for the organization to be successful.
5. Training and development
Training and development are the indispensable functions of human
resource management. It is the attempt to improve the current or future
performance of an employee by increasing the ability of an employee
through educating and increasing one’s skills or knowledge in the particular
subject.

Marketing Management
According to Philip Kotler,
“Marketing Management is the process of planning and executing the
conception, pricing and promotion and distribution of goods, services and
ideas to create exchanges with target groups that satisfy customer and
organizational objectives.”
Promotional activities and advertising are the best ways to communicate
with your target customers for them to be able to know the company’s
products and services. Effective marketing and promotional activities will
drive long-term success, profitability and growth in market shares. This
department is responsible for promoting the business to generate sales and
help the company grow. Its function involves creating various marketing
strategy and planning promotional campaigns. They are also responsible for
monitoring competitor’s activities.
Objectives of Marketing Management
• Creating New Customers.
• Satisfying the Needs of Customers.
• Enhancing the Profitability of Business.
• Raising the standards of living People.
• Determining the Marketing Mix.
Steps in Marketing Management Process
• Setting the Marketing Objectives.
• Analyzing Marketing Opportunities.
• Researching and selecting Targets Markets.
• Designing Marketing Strategies.
• Planning Marketing Programs.
• Organizing, Implementing and Controlling the Marketing Efforts.

Functions of Marketing Management

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Introduction to the Different Functional Areas of Management

Selling

Market Buying &

information assembling

Risk taking Transportation

Financing Storage

Grading Grading

Figure 13. 1 – Functions of Marketing Management

The following are some of the major functions of marketing management:
Selling
Selling is the crux of marketing. It involves convincing the prospective buyers
to actually complete the purchase of an article. It includes transfer of
ownership of products to the buyer.
Selling plays a very vital part in realizing the ultimate aim of earning profit.
Selling is groomed by means of personal selling, advertising, publicity and
sales promotion. Effectiveness and efficiency in selling determines the
volume of the firm’s profits and profitability.
Buying and Assembling
It deals with what to buy, of what quality, how much from whom, when and
at what price. People in business purchase to increase sales or to decrease
costs. Purchasing agents are much tempted by quality, service and price. The
products that the retailers buy for resale are selected as per the
requirements and preferences of their customers.
Assembling means buying necessary component parts and to fit them
together to make a product. ‘Assembly line’ marks a production line made up
of purely assembly functions. The assembly operation includes the arrival of
individual component parts at the work place and issuing of these parts for
assembling.
Assembly line is an arrangement of employees and machines in which each
individual has a particular job and the work is passed directly from one
employee to the next until the product is complete.
Transportation

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Transportation is the physical means through which products are moved
from the places where they are produced to those places where they are
needed for consumption. It creates location utility.
Transportation is very important from the procurement of raw material to
the delivery of finished products to the customer’s places. Transportation
depends mainly on railroads, trucks, waterways, pipelines and airways.
Storage
It includes holding of products in proper, i.e., usable or saleable, condition
from the time they are produced until they are required by customers in case
of finished products or by the production department in case of raw
materials and stores.
Storing protects the products from deterioration and helps in carrying over
surplus for future consumption or usage in production.
Standardization and Grading
Standardization means setting up of certain standards or specifications for
products based on the intrinsic physical qualities of any item. This may
include quantity like weight and size or quality like color, shape, appearance,
material, taste, sweetness etc. A standard gives rise to uniformity of products.
Grading means classification of standardized items into certain well defined
classes or groups. It includes the division of products into classes made of
units possessing similar features of size and quality.
Grading is very essential for raw materials; agricultural products like fruits
and cereals; mining products like coal, iron and manganese and forest
products like timber.
Financing
Financing involves the application of the capital to meet the financial
requirements of agencies dealing with various activities of marketing. The
services to ensure the credit and money needed and the costs of getting
merchandise into the hands of the final user are mostly referred to as the
finance function in marketing.
Financing is required for the working capital and fixed capital, which may be
secured from three sources — owned capital, bank loans and advance &
trade credit. In other words, different kinds of finances are short-term,
medium-term, and long-term finance.
Risk Taking
Risk means loss due to some unforeseen situations. Risk bearing in
marketing means the financial risk invested in the ownership of goods held
for an anticipated demand, including the possible losses because of fall in
prices and the losses from spoilage, depreciation, obsolescence, fire and
floods or any other loss that may occur with the passage of time.
They may also be due to decay, deterioration and accidents or due to
fluctuation in the prices induced by changes in supply and demand. The
different risks are usually termed as place risk, time risk, physical risk, etc.
Market Information
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The importance of this facilitating function of marketing has been recently

marked. The only sound foundation on which marketing decisions depend is
timely and correct market information.

Operations Management
Operations Management
OM is the process which combines and transforms various resources used in
the production of the organization into value added products/services in a
controlled manner as per the policies of the organization
Operations Management affects:
 Companies’ ability to compete
 Nation’s ability to compete internationally
The Operations department is held responsible for overseeing, designing and
controlling the process of production and redesigning business operations if
necessary. In a manufacturing company, operations department designs
processes to produce the product efficiently. They also have to acquire
materials and maintenance of equipment, supplies and more.
Operations function: The operations function includes many interrelated
activities, such as forecasting, capacity planning, scheduling, managing
inventories, assuring quality, motivating employees, deciding where
to locate facilities, and more. The operations function consists of all activities
directly related to producing goods or services.
Objectives of production management may be amplified as under:
• Producing the right kind of goods and services that satisfy customers’
needs (effectiveness objective).
• Maximizing output of goods and services with minimum resource inputs
(efficiency objective).
• Ensuring that goods and services produced conform to pre-set quality
specifications (quality objective).
• Minimizing throughput-time- the time that elapses in the conversion
process- by reducing delays, waiting time and idle time (lead time
objective).
• Maximizing utilization of manpower, machines, etc. (Capacity utilization
objective).
• Minimizing cost of producing goods or rendering a service (Cost
objective).

Financial Management
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Financial management is generally defined as those activities that create or
preserve the economic value of the assets of an individual, small business, or
corporation.
• Financial management comes down to making sound financial decisions.
Financial management is primarily concerned with investment and
financing decisions.
Investment decision making involves the preparation of long-range plans
and budgets for major investment such as plant expansion and replacement
of existing production facilities. The investment decision determines the total
amount of assets held by the firm, the composition of these assets and the
business risk complexion of the firm as perceived by suppliers of capital. The
capital budgeting process is one example of investment decisio n making. In
the financing decision, the finance manager determines the financing mix and
sources appropriate for the requirements of the firm. This involves decisions
on when to issue common stocks, preferred stocks or bonds or when to
borrow long-term or short-term.
Capital budgeting is an important financial policy area of concern in all
businesses. It is primarily a top-level management concern because it
involves the allocation of funds. The capital budgeting process involves the
choice of capital projects to the undertaken by the firm. It aids business firms
in evaluating capital investments in relation to future benefits.
The critical steps in capital budgeting are the identification and the
prioritization of various capital expenditure proposals given specific
acceptance criteria. Several tools of analysis are available in the final
selection of projects that should be undertaken by the firm. All these tools for
analysis attempt to find the difference between the net benefits that accrue
for each project and the financial burden incurred to secure the benefits.
In the performance of day-to-day finance activities, the chief finance officer
and other managers of the department are concerned with employee
motivation in order to influence employee behavior toward the attainment of
department, the ultimately, company goals. This is why directing aspect of
the management process is integrated with planning, organizing, staffing and
controlling.
Finance
It is a body of facts, principles and theories relating to raising and using
money by individuals, business and government.
It can be divided to:
• Corporate form
• Individuals/government
Goals of Financial Management
• Profit-oriented businesses: Make money and value for the owners
• Financial manager acts in the owners or shareholder’s “best interest”.
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Types of Financial Decisions

3 Major Decision:
Investment decisions
• Which determine how scarce or limited resources are committed to
projects
• It should consider profitability that will lead to the creation of wealth
Financing decisions
• Assets the mix of debt and equity or capital structure decision
• Principle of financial leverage must be consider when selecting debt-
equity mix.
• Financial leverage refers to the use of debt to acquire additional assets.
Financial leverage is also known as trading on equity.
Dividend decisions
• Concerned with the determination of quantum of profits to be distributed
to owners, the frequency and the amount to be retained.

Information and Communication Technology Management

Information and Communication Technology (ICT) definition:
The efficient management of hardware and software. ICT highlights the use
of devices and media to achieve optimum and efficient communication of
information.
• ICT is generally defined as technology functioning to support the process
of conveying information and communication.
• With the development of ICT, the communicator and communicant can
communicate through telephone, internet, email, satellite, television,
video conference and the like.
Impact of ICT:
• Reduced need for movement of people
• Fast communication around the organization
• Reduced need to accommodate people in specific areas
• Fewer layers of management
• Reduced amount of lost/misplaced documents
• Less time wasted
• Reduced costs

Course Module
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