Management Functions

Instructor: Dr. Warren B. Batac, MAEd, LPT

Management is a process to achieve organizational goals.

A process is a set of activities that are ongoing and interrelated.

Ongoing means that the activities are not done in a linear, step-by-step fashion
where responsibility is passed from one activity to the next. Instead, the
activities are continued as new activities are started.

Interrelated means that the results of each activity influence the other activities
and tasks. It is the responsibility of management to see that essential activities
are done efficiently (in the best possible way) and effectively (doing the right
thing).

1
Regardless of the type of company, all managers perform the same four basic
functions of planning, organizing, leading and controlling. If you take on a managerial
role, it may be helpful to familiarize yourself with the fundamentals of management.

Different experts have classified functions of management. According to George &

Jerry, “There are four fundamental functions of management i.e. planning,
organizing, actuating and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to

command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’
where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for
Co-ordination, R for reporting & B for Budgeting.

But the most widely accepted are functions of

management given by KOONTZ and O’DONNEL i.e.
Planning, Organizing, Staffing, Directing and
Controlling.

For theoretical purposes, it may be convenient to

separate the function of management but practically
these functions are overlapping in nature i.e. they are
highly inseparable. Each function blends into the
other & each affects the performance of others.

2
I. Planning
It is the basic function of management. It deals with chalking out a
future course of action & deciding in advance the most
appropriate course of actions for achievement of pre-determined
goals.

According to KOONTZ, “Planning is deciding in advance - what to

do, when to do & how to do. It bridges the gap from where we are
& where we want to be”. A plan is a future course of actions. It is
an exercise in problem solving & decision making.

Planning is determination of courses of action to achieve desired

goals. Thus, planning is a systematic thinking about ways & means
for accomplishment of pre-determined goals.

Planning is necessary to ensure proper utilization of human &

non-human resources. It is all pervasive, it is an intellectual
activity and it also helps in avoiding confusion, uncertainties, risks,
wastages etc.

I. Planning (cont.)
There are several approaches to planning:

Strategic planning: This type of planning is often carried out by an

organization’s top management and usually creates goals for the entire
organization. It analyzes threats to the organization, evaluates the
organization’s strengths and weaknesses and creates a plan of how the
organization can best compete in its environment. Strategic planning
usually has a long timeframe of three years or more.

Tactical planning: Tactical planning is the shorter-term planning of an

objective that will take a year or less to achieve. It is usually carried out
by an organization’s middle management. Tactical planning is usually
aimed at a specific area or department of the organization such as its
facilities, production, finance, marketing or personnel.

Operational planning: Operational planning is the process of using

tactical planning to achieve strategic planning and goals. Operational
planning creates a timeframe for putting a portion of the strategic goal
into practice operationally.

3
I. Planning (cont.)
Effective planning involves a few important steps:

Identify challenges. Managers need to be aware of the

challenges facing their team or business and what potential
solutions are available to them.

Forecast future business. To determine the proper solution

to each challenge, managers must be able to forecast the
future impact of each particular solution on the business.

Formulate objectives and deadlines. Once a solution to a

problem is identified, a manager needs to create a game plan
to apply it.
This involves planning out individual steps and setting
appropriate deadlines and time frames.

I. Planning (cont.)

Reevaluation. Managers need to stay

constantly alert to changing situations. If a plan
requires adjustments or isn’t working at all, it’s
up to managers to identify the proper direction
to lead the team.

Maintain efficiency. Throughout the entire

planning process, effective managers should
also understand how to allocate resources and
reduce waste efficiently.

4
 According to Henry Fayol, “To organize a
business is to provide it with everything
II. Organizing useful or its functioning i.e. raw material,
tools, capital and personnel’s”.

To organize a business involves

It is the process of bringing determining & providing human and non-
together physical, financial and human resources to the organizational
human resources and structure. Organizing as a process
involves:
developing productive
relationship amongst them for  Identification of activities.
achievement of organizational  Classification of grouping of activities.
goals.  Assignment of duties.
 Delegation of authority and creation of
responsibility.
 Coordinating authority and
responsibility relationships.

III. Staffing
It is the function of manning the
organization structure and keeping it
manned.

Staffing has assumed greater importance in

the recent years due to advancement of
technology, increase in size of business,
complexity of human behavior etc.

5
 III. Staffing (cont.)
The main purpose of staffing is to put right man/woman on right
job.

According to Kootz & O’Donell, “Managerial function of staffing

involves manning the organization structure through proper and
effective selection, appraisal & development of personnel to fill
the roles designed un the structure.”

Staffing involves:

 Manpower Planning (estimating man power in terms of

searching, choose the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

IV. Directing/Leading
It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in
motion the action of people because planning, organizing and staffing are the mere preparations for
doing the work.

Direction is that inter-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:

 Supervision
 Motivation
 Leadership
 Communication

6
IV. Directing/Leading (cont.)
Supervision - implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.

Motivation - means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership - may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.

Communications - is the process of passing information, experience, opinion etc. from one
person to another. It is a bridge of understanding.

V. Controlling
It implies measurement of accomplishment against the
standards and correction of deviation if any to ensure
achievement of organizational goals. The purpose of controlling
is to ensure that everything occurs in conformities with the
standards. An efficient system of control helps to predict
deviations before they actually occur.

According to Theo Haimann, “Controlling is the process of

checking whether or not proper progress is being made towards
the objectives and goals and acting if necessary, to correct any
deviation."

7
 V. Controlling (cont.)

According to Koontz & O’Donell, “Controlling is the

measurement & correction of performance activities of
subordinates in order to make sure that the enterprise
objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

 Establishment of standard performance.

 Measurement of actual performance.
 Comparison of actual performance with the standards
and finding out deviation if any.
 Corrective action.

What is management accounting?

Managerial accounting, also called management
accounting, is a method of accounting that creates
statements, reports, and documents that help
management in making better decisions related to their
business’ performance. Managerial accounting is
primarily used for internal purposes.

Management accounting focuses on all accounting aimed

at informing management about operational business
metrics. It uses information relating to costs of products
or services purchased by the company. Budgets are often
used to quantify the decisions made in operational
planning. Management accountants use performance
reports to note variances between actual results from
budgets.

8
 What is management accounting?

The main difference between financial and managerial

accounting is whether there is an internal or external
focus. Financial accounting focuses on creating and
evaluating financial statements that will be reported
externally, like creditors and investors. In contrast,
managerial accounting analyses and results are kept in-
house for business leaders to use to drive decision-making
and run the company more effectively. Managerial
accountants handle many facets of accounting. These
include margins, constraints, capital budgeting, trends and
forecasting, valuation and product costing.

What is management accounting?

Example

Anderson is the CEO of a small consulting firm. He wants to hire a

management accountant and a financial accountant. He has come up
with a list of job tasks and he needs to break them up into those that
should be performed by the managerial accountant and those that
should be performed by the financial accountant. Here is the list of
tasks that Anderson has come up with:

1. Preparing cash flow statements

2. Income statement reporting
3. Budgeting
4. Calculating changes in stockholder equity
5. Preparing taxes for the organization

In this example, the only tasks that would be assigned to the

management accountant are budgeting and taxes. The financial
accountant would handle the other tasks.

9
 What Makes a Good Manager?
Briefly, a good manager helps an organization
succeed. Success means the following:

 An organization is effective: it is accomplishing

things that support the vision and mission.
 An organization is efficient: it is doing things in
the best possible manner.
 An organization is sustainable: it is generating
revenue to support its continued operation.
 In the definition of management, we
recognized that managers achieve results by
working with people to meet organizational
goals. This implies that a good manager
achieves effectiveness, efficiency, and
sustainability through the people in the
organization.

Thank you for listening!

10