Management: Planning, Organizing, Leading, and Controlling

Posted on Aug 1, 2024 in Economy

Planning

Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives. Planning requires that managers be aware of environmental conditions facing their organization and forecast future conditions. It also requires that managers be good decision makers.

Planning is a process consisting of several steps. The process begins with environmental scanning which simply means that planners must be aware of the critical contingencies facing their organization in terms of economic conditions, their competitors, and their customers. Planners must then attempt to forecast future conditions. These forecasts form the basis for planning.

Planners must establish objectives, which are statements of what needs to be achieved and when. Planners must then identify alternative courses of action for achieving objectives. After evaluating the various alternatives, planners must make decisions about the best courses of action for achieving objectives. They must then formulate necessary steps and ensure effective implementation of plans. Finally, planners must constantly evaluate the success of their plans and take corrective action when necessary.

There are many different types of plans and planning.

Strategic planninginvolves analyzing competitive opportunities and threats, as well as the strengths and weaknesses of the organization, and then determining how to position the organization to compete effectively in their environment. Strategic planning has a long time frame, often three years or more. Strategic planning generally includes the entire organization and includes formulation of objectives. Strategic planning is often based on the organization’s mission, which is its fundamental reason for existence. An organization’s top management most often conducts strategic planning.

Tactical planningis intermediate-range (one to three years) planning that is designed to develop relatively concrete and specific means to implement the strategic plan. Middle-level managers often engage in tactical planning.

Operational planninggenerally assumes the existence of organization-wide or subunit goals and objectives and specifies ways to achieve them. Operational planning is short-range (less than a year) planning that is designed to develop specific action steps that support the strategic and tactical plans.

Organizing

Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework within which effort is coordinated. The structure is usually represented by an organization chart, which provides a graphic representation of the chain of command within an organization. Decisions made about the structure of an organization are generally referred to asorganizational design decisions.

Organizing also involves the design of individual jobs within the organization. Decisions must be made about the duties and responsibilities of individual jobs, as well as the manner in which the duties should be carried out. Decisions made about the nature of jobs within the organization are generally called “job design” decisions.

Organizing at the level of the organization involves deciding how best to departmentalize, or cluster, jobs into departments to coordinate effort effectively. There are many different ways to departmentalize, including organizing by function, product, geography, or customer. Many larger organizations use multiple methods of departmentalization.

Organizing at the level of a particular job involves how best to design individual jobs to most effectively use human resources. Traditionally, job design was based on principles of division of labor and specialization, which assumed that the more narrow the job content, the more proficient the individual performing the job could become. However, experience has shown that it is possible for jobs to become too narrow and specialized. For example, how would you like to screw lids on jars one day after another, as you might have done many decades ago if you worked in company that made and sold jellies and jams? When this happens, negative outcomes result, including decreased job satisfaction and organizational commitment, increased absenteeism, and turnover.

Leading

Leading involves the social and informal sources of influence that you use to inspire action taken by others. If managers are effective leaders, their subordinates will be enthusiastic about exerting effort to attain organizational objectives.

The behavioral sciences have made many contributions to understanding this function of management. Personality research and studies of job attitudes provide important information as to how managers can most effectively lead subordinates. For example, this research tells us that to become effective at leading, managers must first understand their subordinates’ personalities, values, attitudes, and emotions.

Controlling

Controlling involves ensuring that performance does not deviate from standards. Controlling consists of three steps, which include (1) establishing performance standards, (2) comparing actual performance against standards, and (3) taking corrective action when necessary. Performance standards are often stated in monetary terms such as revenue, costs, or profits but may also be stated in other terms, such as units produced, number of defective products, or levels of quality or customer service.

The measurement of performance can be done in several ways, depending on the performance standards, including financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree.

The managerial function of controlling should not be confused with control in the behavioral or manipulative sense. This function does not imply that managers should attempt to control or to manipulate the personalities, values, attitudes, or emotions of their subordinates. Instead, this function of management concerns the manager’s role in taking necessary actions to ensure that the work-related activities of subordinates are consistent with and contributing toward the accomplishment of organizational and departmental objectives.

Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives. Controlling also requires a clear understanding of where responsibility for deviations from standards lies. Two traditional control techniques are budget and performance audits. An audit involves an examination and verification of records and supporting documents. A budget audit provides information about where the organization is with respect to what was planned or budgeted for, whereas a performance audit might try to determine whether the figures reported are a reflection of actual performance. Although controlling is often thought of in terms of financial criteria, managers must also control production and operations processes, procedures for delivery of services, compliance with company policies, and many other activities within the organization.

The management functions of planning, organizing, leading, and controlling are widely considered to be the best means of describing the manager’s job, as well as the best way to classify accumulated knowledge about the study of management. Although there have been tremendous changes in the environment faced by managers and the tools used by managers to perform their roles, managers still perform these essential functions.

1.The Traditional Viewpoint of Management focuses on what managers do. It is generally accepted that they perform the following four functions:-Planning: This involves defining organizational goals and proposing ways to reach them.Organizing: This is the process of creating a structure of relationships within the organization that will enable employees to interact with one another, to interact with managers and to carry out management’s plans and meet its goals.Leading: This involves communicating with and motivating others to perform the tasks necessary to achieve the organization’s goals.Controlling: This is the process by which a person consciously monitors performance and takes corrective action. In the control process, managers: set standards of performance measure current performance against those standards take action to correct any deviations, and adjust the standards if necessary.
a) Bureaucratic Management

Administrative Characteristics :                   

Rules ,Impersonality, Division of Labor, Hierarchy, Authority Structure, Lifelong Career Commitment, Rationality

Focus :  Whole Organization

Benefits : Consistency, Efficiency

Drawbacks : Rigidity, Slowness

b) Traditional Management :

Administrative Characteristics

• Training in routines and rules
• “One Best Way”
• Financial Motivation

Focus : Employee

Benefits : Productivity & Efficiency

Drawbacks : Overlooks social needs

c) Scientific Management :

Administrative Characteristics

• Defining of management functions
• Division of Labor
• Hierarchy
• Authority
• Equity

Focus : Manager

Benefits

• Clear structure
• Professionalization of managerial roles

Drawbacks

• Internal focus
• Overemphasizes rational behavior of managers

2.The Behavioural Viewpoint of Management emphasized the importance of understanding human behaviour and of motivating employees toward achievement 
This perspective was developed over three phases: early behaviourism, the human relations movement, and behavioural science 

3.The Systems Viewpoint of Management recognises that an organisation is an association of interrelated and interdependent parts or sub-systems. A business organisation is what might be called a “system” made up of many “sub-systems” such as employees, teams, departments, divisions, subsidiaries, who all need to work together to achieve the organisation’s goals. The organisation also has to interact with various external “systems” such as suppliers, customers, shareholders and government agencies, for example. A manager with a systems view of management will only make decisions after identifying and analysing how other managers, departments, or customers might be affected by the decisions.

4.The Contingency Viewpoint of Management is illustrated in Figure 1. It evolved as a result of managers finding that applying either the traditional viewpoint of management, or the behavioural viewpoint of management, or the systems viewpoint of management in all situations on their own, did not work. The underlying principle of the Contingency Viewpoint of Management is that different situations require different practices. The Contingency Viewpoint really means “it all depends”. The Contingency Viewpoint recommends using the other three management viewpoints, namely the Traditional, the Behavioural and the Systems Viewpoints, independently or in combination, as necessary and appropriate, to deal with various situations. Managers are required to determine which of these three approaches is likely to be more effective than the others in a given situation.

Henri Fayol’s 14 Principles Of Management :

1. Division Of Work

Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive.

2. Authority

The right to issue commands, along with which must go the balanced responsibility for its function.

3. Discipline 

Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership.

4. Unity Of Command

Each worker should have only one boss with no other conflicting lines of command.

5. Unity of Direction

People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it.

6. Subordination of individual interest

Management must see that the goals of the firms are always paramount.

7. Remuneration

Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system

8. Centralization (Or Decentralization)

This is a matter of degree depending on the condition of the business and the quality of its personnel.

9. Scalar chain (Line of Authority)

A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels

10. Order

Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection.

11. Equity

In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is important to achieve equity.

12. Stability of Tenure of Personnel

Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.

13. Initiative

Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers.

14. Esprit de Corps

Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations.”

Types of Managers :

• First-line Managers : Are at the lowest level of management and manage the work of non-managerial employees
• Middle Managers : Manage the work of first-line managers
• Top Managers : Are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization
• Formal organisational structures are categorised as:
• (i) Line organisational structure.
• (ii) Staff or functional authority organisational structure.
• (iii) Line and staff organisational structure.
• (iv) Committee organisational structure.
• (v) Divisional organisational structure.
• (vi) Project organisational structure.
• (vii) Matrix organisational structure and
• (viii) Hybrid organisational structure.
• These organisational structures are briefly described in the following paragraphs:

• 1. Line Organisational Structure:

• A line organisation has only direct, vertical relationships between different levels in the firm. There are only line departments-departments directly involved in accomplishing the primary goal of the organisation. For example, in a typical firm, line departments include production and marketing. In a line organisation authority follows the chain of command.
• Exhibit 10.3 illustrates a single line organisational structure.

• 

• Features:
• Has only direct vertical relationships between different levels in the firm.
• Advantages:
• 1. Tends to simplify and clarify authority, responsibility and accountability relationships
• 2. Promotes fast decision making
• 3. Simple to understand.
• Disadvantages:
• 1. Neglects specialists in planning
• 2. Overloads key persons.
• Some of the advantages of a pure line organisation are:
• (i) A line structure tends to simplify and clarify responsibility, authority and accountability relationships. The levels of responsibility and authority are likely to be precise and understandable.
• (ii) A line structure promotes fast decision making and flexibility.
• (iii) Because line organisations are usually small, managements and employees have greater closeness.
• However, there are some disadvantages also. They are:
• (i) As the firm grows larger, line organisation becomes more ineffective.
• (ii) Improved speed and flexibility may not offset the lack of specialized knowledge.
• (iii) Managers may have to become experts in too many fields.
• (iv) There is a tendency to become overly dependent on the few key people who an perform numerous jobs.

• 2. Staff or Functional Authority Organisational Structure

• The jobs or positions in an organisation can be categorized as:
• (i) Line position:
• a position in the direct chain of command that is responsible for the achievement of an organisation’s goals and
• (ii) Staff position:
• A position intended to provide expertise, advice and support for the line positions.
• The line officers or managers have the direct authority (known as line authority) to be exercised by them to achieve the organisational goals. The staff officers or managers have staff authority (i.e., authority to advice the line) over the line. This is also known as functional authority.
• An organisation where staff departments have authority over line personnel in narrow areas of specialization is known as functional authority organisation. Exhibit 10.4 illustrates a staff or functional authority organisational structure.

• 

• In the line organisation, the line managers cannot be experts in all the functions they are required to perform. But in the functional authority organisation, staff personnel who are specialists in some fields are given functional authority (The right of staff specialists to issue orders in their own names in designated areas).
• The principle of unity of command is violated when functional authority exists i.e., a worker or a group of workers may have to receive instructions or orders from the line supervisor as well as the staff specialist which may result in confusion and the conflicting orders from multiple sources may lead to increased ineffectiveness. Some staff specialists may exert direct authority over the line personnel, rather than exert advice authority (for example, quality control inspector may direct the worker as well as advise in matters related to quality).
• While this type of organisational structure overcomes the disadvantages of a pure line organisaional structure, it has some major disadvantages:
• They are: (i) the potential conflicts resulting from violation of principle of unity of command and (ii) the tendency to keep authority centralized at higher levels in the organisation.

• 3. Line and Staff Organisational Structure:

• Most large organisations belong to this type of organisational structure. These organisations have direct, vertical relationships between different levels and also specialists responsible for advising and assisting line managers. Such organisations have both line and staff departments. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department).

• 

• Exhibit 10.5 illustrates the line and staff organisational chart. The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc. The staff authority of functional authority organisational structure is replaced by staff responsibility so that the principle of unity of command is not violated.
• Three types of specialized staffs can be identified:
• (i) Advising,
• (ii) Service and
• (iii) Control.
• Some staffs perform only one of these functions but some may perform two or all the three functions. The primary advantage is the use of expertise of staff specialists by the line personnel. The span of control of line managers can be increased because they are relieved of many functions which the staff people perform to assist the line.
• Some advantages are:
• (i) Even through a line and staff structure allows higher flexibility and specialization it may create conflict between line and staff personnel.
• (ii) Line managers may not like staff personnel telling them what to do and how to do it even though they recognize the specialists’ knowledge and expertise.
• (iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to accept advice.
• (iv) Staff people may resent their lack of authority and this may cause line and staff conflict.
• Features:
• 1. Line and staff have direct vertical relationship between different levels.
• 2. Staff specialists are responsible for advising and assisting line managers/officers in specialized areas.
• 3. These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,
• (a) Advisory:
• Management information system, Operation Research and Quantitative Techniques, Industrial Engineering, Planning etc
• (b) Service:
• Maintenance, Purchase, Stores, Finance, Marketing.
• (c) Control:
• Quality control, Cost control, Auditing etc. Advantages’
• (i) Use of expertise of staff specialists.
• (ii) Span of control can be increased
• (iii) Relieves line authorities of routine and specialized decisions.
• (iv) No need for all round executives.
• Disadvantages:
• (i) Conflict between line and staff may still arise.
• (ii) Staff officers may resent their lack of authority.
• (iii) Co-ordination between line and staff may become difficult.
• Committee Organisational Structure Features:
• (a) Formed for managing certain problems/situations
• (b) Are temporary decisions.
• Advantages:
• 1. Committee decisions are better than individual decisions
• 2. Better interaction between committee members leads to better co-ordination of activities
• 3. Committee members can be motivated to participate in group decision making.
• 4. Group discussion may lead to creative thinking.
• Disadvantages:
• 1. Committees may delay decisions, consume more time and hence more expensive.
• 2. Group action may lead to compromise and indecision.
• 3. ‘Buck passing’ may result.

• 4. Divisional Organisational Structure:

• In this type of structure, the organisation can have different basis on which departments are formed. They are:
• (i) Function,
• (ii) Product,
• (iii) Geographic territory,
• (iv) Project and
• (iv) Combination approach.
• Exhibit 10.6 illustrates organisational structures formed based on the above basis of departmentation.

• 

• 5. Project Organisational Structure:

• The line, line and staff and functional authority organisational structures facilitate establishment and distribution of authority for vertical coordination and control rather than horizontal relationships. In some projects (complex activity consisting of a number of interdependent and independent activities) work process may flow horizontally, diagonally, upwards and downwards. The direction of work flow depends on the distribution of talents and abilities in the organisation and the need to apply them to the problem that exists. The cope up with such situations, project organisations and matrix organisations have emerged.
• A project organisation is a temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. The project team focuses all its energies, resources and results on the assigned project. Once the project has been completed, the team members from various cross functional departments may go back to their previous positions or may be assigned to a new project. Some of the examples of projects are: research and development projects, product development, construction of a new plant, housing complex, shopping complex, bridge etc.
• Exhibit 10.7 illustrates a project organisational structure.

• 

• Feature:
• Temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation.
• Importance of Project Organisational Structure:
• Project organisational structure is most valuable when:
• (i) Work is defined by a specific goal and target date for completion.
• (ii) Work is unique and unfamiliar to the organisation.
• (iii) Work is complex having independent activities and specialized skills are necessary for accomplishment.
• (iv) Work is critical in terms of possible gains or losses.
• (v) Work is not repetitive in nature.
• Characteristics of project organisation:
• 1. Personnel are assigned to a project from the existing permanent organisation and are under the direction and control of the project manager.
• 2. The project manager specifies what effort is needed and when work will be performed whereas the concerned department manager executes the work using his resources.
• 3. The project manager gets the needed support from production, quality control, engineering etc. for completion of the project.
• 4. The authority over the project team members is shared by project manager and the respective functional managers in the permanent organisation.
• 5. The services of the specialists (project team members) are temporarily loaned to the project manager till the completion of the project.
• 6. There may be conflict between the project manager and the departmental manager on the issue of exercising authority over team members.
• 7. Since authority relationships are overlapping with possibilities of conflicts, informal relationships between project manager and departmental managers (functional managers) become more important than formal prescription of authority.
• 8. Full and free communication is essential among those working on the project.

• 6. Matrix Organisational Structure:

• It is a permanent organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. The matrix organisation is illustrated in Exhibit 10.8.
• Feature:
• Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure
• Advantages:
• 1. Decentralised decision making.
• 2. Strong product/project co-ordination.
• 3. Improved environmental monitoring.
• 4. Fast response to change.
• 5. Flexible use of resources.
• 6. Efficient use of support systems.

• 

• Disadvantages:
• 1. High administration cost.
• 2. Potential confusion over authority and responsibility.
• 3. High prospects of conflict.
• 4. Overemphasis on group decision making.
• 5. Excessive focus on internal relations.
• This type of organisation is often used when the firm has to be highly responsive to a rapidly changing external environment.
• In matrix structures, there are functional managers and product (or project or business group) managers. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Product or business group managers are incharge of one or more products and are authorized to prepare product strategies or business group strategies and call on the various functional managers for the necessary resources.
• The problem with this structure is the negative effects of dual authority similar to that of project organisation. The functional managers may lose some of their authority because product managers are given the budgets to purchase internal resources. In a matrix organisation, the product or business group managers and functional managers have somewhat equal power. There is possibility of conflict and frustration but the opportunity for prompt and efficient accomplishment is quite high.

• 7. Hybrid Organisational Structure:

• Exhibit 10.9 (a) illustrates the hybrid organisational structure.

• 

• Exhibit 10.9 (b) illustrates a combination structure

• 

• Advantages:
• 1. Alignment of corporate and divisional goals.
• 2. Functional expertise and efficiency.
• 3. Adaptability and flexibility in divisions.
• Disadvantages:
• 1. Conflicts between corporate departments and units.
• 2. Excessive administration overhead.
• 3. Slow response to exceptional situations.
• Uses:
• Used in organisations that face considerable environmental uncertainty that can be met through a divisional structure and that also required functional expertise or efficiency
• This type of structure is used by multinational companies operating in the global environment, for example, International Business Machines USA. This kind of structure depends on factors such as degree of international orientation and commitment. Multinational corporations may have their corporate offices in the country of origin and their international divisions established in various countries reporting to the CEO or president at the headquarters. The international divisions or foreign subsidiaries may be grouped into regions such as North America, Asia, Europe etc. and again each region may be subdivided into countries within each region.
• While the focus is on international geographic structures, companies may also choose functional or process or product departmentation in addition to geographic pattern while at the head quarter’s the departmentation may be based on function.
• The Informal Organisation:
• An informal organisation is the set of evolving relationships and patterns of human interaction within an organisation which are not officially presented. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organisational members at every level. Since managers cannot avoid these informal relationships, they must be trained to cope with it
• The informal organisation has the following characteristics
• (i) Its members are joined together to satisfy their personal needs (needs for affiliation, friendship etc.)
• (ii) It is continuously changing:
• The informal organisation is dynamic.
• (iii) It involves members from various organisational levels.
• (iv) It is affected by relationship outside the firm.
• (v) It has a pecking order: certain people are assigned greater importance than others by the informal group.
• Even though an informal organisational structure does not have its own formal organisational chart, it has its own chain of command:
• Benefits of Informal Organisation:
• (i) Assists in accomplishing the work faster.
• (ii) Helps to remove weakness in the formal structure.
• (iii) Lengthens the effective span of control.
• (iv) Compensation for violations of formal organisational principles.
• (v) Provides an additional channel of communication.
• (vi) Provides emotional support for employees.
• (vii) Encourages better management.
• Disadvantages of informal organisation:
• (i) May work against the purpose of formal organisation.

(ii) Reduces the degree of predictability and control.

(iii) Reduces the number of practical alternatives.

(iv) Increases the time required to complete activities.

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