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1 Introduction to Management
The purpose of this chapter is to:
1) Give you a basic understanding of management and its importance
2) Provide a foundation of the managerial functions of planning, organizing, leading, and controlling
Introduction to Management
Management is not a hard science. Unlike chemistry or algebra where a right answer (often) exists, management is fluid, and subjective, and there are divergent perspectives on how to employ its principles. But what exactly is management? Most scholars have variations of the same definition that include a utilization of resources to achieve a goal. Lussier (2021) defines a manager as “the individual responsible for achieving organizational objectives through efficient and effective utilization of resources” (p. 3). The problem with this definition is that it implies that a manager has to be both efficient and effective, which eliminates the possibility of having a bad manager. Each of us can probably contradict this definition by providing an example from our personal past. However, this definition contains the basic elements of using resources to pursue goals.
An early management scholar, Mary P. Follett characterized management as “the art of getting things done through the efforts of other people” (Graham, 1995). This definition implies both pursuing goals (getting things done) and utilizing resources (predominantly through people). However, this too is missing an element, that of the organizational context. An important consideration for understanding management is that the term organization simply refers to “a collection of people working together to achieve a common purpose” (Shermerhorn, 2013, p. 11). This means an organization could be anything from your high school volleyball team to church or a corporation. Including the term “organization” in the definition leaves open the possibility that management can be practiced in each of these settings, and broadens our use of the term management. A comprehensive definition for management then, would be the pursuit of organizational goals through the use of organizational resources (Bateman & Snell, 2013). Pursuit implies a chance of failure and organizational gives us a context. This begs the question – how can we become effective at the pursuit of goals, or become more efficient in our use of organizational resources? Being good at management requires an immense focus on both of these ends, and we can achieve this through the process of the planning, organizing, leading, and controlling functions of management. These functions serve as the basis for the rest of the textbook because they are the essential tools we use to manage organizations. Most of the context and examples for this book focus on the corporate use of management. However, you should meet the concepts where you are in your professional or academic career – apply the principles to the context of your life, master the four functions for what you are doing now so that you can scale them to much bigger managerial endeavors later.
Management is not New
A broad understanding of management as resource utilization focused on a goal gives us a wide scope of situations and contexts in which to practice it. For example, the Crow Indians employed a complex strategy to harvest an entire herd of buffalo by driving them off a cliff. To funnel the herd to the lane leading up to the cliff they used a decoy (a hunter donned in a buffalo calf robe imitating a lost calf), incense to smoke them towards the lane, or rock piles to guide them to the lane (Nathan, 2018). If we apply the basic principles of management in this context we can see these hunters used resources (rocks, incense, knowledge and tradition) to pursue a goal (procurement of food, tools, and clothing the bison afforded them).
At its core, this imperial supply chain used the same approach to achieve success th at a teenager might use in a playing video games. If he rallys his friends after school in a game of Call of Duty to defeat their online opponents, he might also be considered a manager. He uses his experience and knowledge of gameplay as well as weaponry within the game to pursue his goal of competitive domination.
These examples demonstrate that management is multifarious, and not at all a recent phenomenon. Yet, when we hear the term management , most of us probably conjure an image something like that of a corporate vice president implementing a marketing strategy to meet quarterly sales goals. The irony is that the corporate manager is utilizing the same tools as those of the native hunter, Spanish fleet admiral, and sophomore gamer. Management is both universal and ubiquitous in that we all use variations of its elements.
The Four Functions of Management
The management process by which we pursue goals includes planning, organizing, leading, and controlling. These are “ the how ” a manager pursues organizational goals, and are universally known as the four functions of management. They stem from the work of a French mining administrator, Henri Fayol, who first identified management as a practice that could be improved through the use of five functions – planning, organizing, commanding, coordinating, and controlling. Since he published his work in 1916, we have decided that leading people through motivation and incentivization works much better than telling them what to do (e.g. commanding and coordinating). We use the term leading instead of these practices. Chapter 2 on the history of management will provide some insights regarding this change. Nonetheless, he gave us a place from which to start.
Even if you have never stepped foot in a corporate office, or held the title of manager at your local Dairy Queen, you have no less used the functions of management in your personal pursuits. A relevant example would be the process by which you manage your personal budget.
Reflection: Are you already a manager?
Think about your personal or family budget for a moment, and answer the following questions:
1) Do you have your budget written down somewhere, or in an excel spreadsheet?
2) What are your financial goals?
3) How much do you put in savings, charity, and monthly expenses?
4) Where does your money come from (a job, your parents, a hobby, your spouse)?
5) If you have a budget shortfall during the month, what do you do?
6) How do you keep track of expenses to ensure your bank account remains in the black?
If you answered yes to question #1, then you are already engaged in the management function of planning. You know where your money is being spent. The same holds true for your financial goals. If you want to leave college debt free, save for a down payment on a house, or go on an unforgettable spring break trip, you have defined your organizational objective! Where you put your money is a function of how you manage your resources. This organizing function is presumably in line with your financial goals. For example, if you want to save for a down payment, you need to actually allocate your resources (income) to a savings account. Moreover, where your money comes from is also the source of your organizational resources. A budget shortfall might require you to employ the leading function of management. The essence of leading is motivating other people to align with your plan. What do you do if you need to pay bills, but don’t have the money? Perhaps you ask your parents for a loan (need to sell this idea to them), or you might need to negotiate with a co-worker to let you take on extra shifts (show them what’s in it for them in return), or it might be the reality that you need to sell something to make ends meet by selling something (in which case selling requires you to inspire someone else to see value in what you are selling). Leading might also entail convincing someone else in your circle to get on board with your gameplan (like a spouse, or sibling). Finally, keeping track of your expenses to ensure solvency and pace with your goals is the core of the controlling function. Do you keep receipts and check them against your online account expenses? Do you update your spreadsheet after your bill automatically debits from your account? Do you get an email notifying you have a low balance and are in risk of overdraft charges? Each of these methods are ways to monitor your progress and decide if you need to make a change (short term or long term).
If you reflect on this example of your personal budget, or you worked to achieve a personal or team goal, you will likely conclude that you are already a manager. This wide application of managerial thinking means that if you can master its principles on your personal scale, you can then amplify its use when you need to use it on a large scale. Get good at leading your class project, organizing your club fundraiser, or helping your team win a conference championship, and you will later be able to magnify the scale to lead a marketing department, or corporate merger, and even diplomatic negotiations as a prime minister.
Mastering the four functions will allow you to apply the function of planning on a more complex stage such as evaluating the internal and external environments of your organization. Using this analysis you can create an effective game plan to formulate a sustainable competitive advantage. Developing an organizing skillset will allow you to propose a structure for your team that incorporates cross functional members and ways of thinking. It will allow you to identify and recommend resources needed to pursue your plan. Honing your leading skillset will afford you the capability to motivate your organizational stakeholders to partake in your strategy, and force you to consider the ethical implications of your actions. Finally, implementing effective controlling allows you to check progress towards your goals and to recommend changes if you need to get on track.
Planning is the systematic process of making decisions about goals and activities the organization will pursue (Bateman & Snell, 2013). To make a decision about the direction of an organization, the planning phase must begin with analyzing the environment. Without a solid understanding of the context, the manager would have no basis to provide future direction. The context gives a manager a point of reference for improvement, opportunity, and learning from past mistakes. For this reason, the planning function should begin with analysis. This analysis should consider both the internal factors such as culture, values, and performance of team members as well as the external factors such as competitive environment, legal regulations, economy, technology, social values, and demographics.
The second component of planning is to use this analysis of the environment to build goals, activities, and objectives. For a major organization this might be the vision and mission statement of the organization. For a smaller organization this could be a year end, or season end goal. Some consider planning that point in your day or month that you step away from your desk, and think about the direction of your organization. This requires you to reflect on your organization’s past, and determine how that impacts the direction going forward.
Organizing is the process of assembling and assigning the human, financial, physical, informational, and other resources needed to achieve goals (Bateman & Snell, 2013). The core of the organizing function is leveraging the resources to align with the determined goals. Organizing human resources means first of all attracting a labor force that can help you pursue your goal. Within the organization, managing the human element means assigning tasks, delegating authority, determining a structure and hierarchy. Organizing the financial resources equates to making sure your capital is being utilized to meet goals. If an organization decides they want to have a best-in-class customer service team, they better being willing to spend the money to attract people with the disposition towards serving others, and spend money on training, or a retreat to teach the agents the skillsets they need. Marshalling physical resources focuses on the effectiveness of where you place and how you use physical assets. An executive chef might re-arrange a kitchen to improve process flow, food quality, or mitigate safety risks for example. Informational resources implies a leveraging and disseminating the organization’s knowledge in meaningful ways to achieve goals. Connecting employees to how they contribute to the financial bottom line is a way of leveraging informational resources, as is using your company’s proprietary algorithm to predict stock prices or develop new products.
Leading is stimulating high performance by members of the organization (Bateman and Snell, 2013). This function is getting members of the organization on board with your plan.
Normally, this means connecting with direct reports or teammates on a personal level. Understanding what drives individuals within the team allows a manager to design strategies around motivating, incentivizing, mobilizing, and arousing a desire to contribute.
Imagine for a minute, that you analyzed the conditions of the organization, you determined a game plan to pursue and even directed resources to step in that direction. You have successfully implemented the planning and organizing functions. In this scenario, however, you did not give consideration to how your team or organization would be involved. Do they agree with your direction? Did they have input in the process? Do they feel valued as a team member? Do they understand their role in a successful outcome? All of these questions are answered by the degree to which a manager is engaged in the leading function.
Having personal conversations, designing a bonus structure, or giving a rousing speech might all be considered leading the organization.
Control is installing processes to guide the team towards goals and monitoring performance towards goals and making changes to the plan as needed (Batemen & Snell, 2013). Control does not always mean limited what the organization can do by having a hand in everything. We might call this micro-managing, which is control in its extreme form. Healthy control processes involve putting systems in place to make sure your organization is on track to meet the goals you established in the planning process. Planning sets standards to compare against, and the control process is the dashboard that tells whether or not you are meeting the standard. For example, a grocery store might set a goal of reducing shrink (that’s product lost to shoplifting, damage). They decide that they want to reduce their shrink loss by 50%. To achieve this plan, they will have to dedicate resources (more employees to monitor, rearrange loading dock). You already recognize that step as the organizing function. We then incentivize our employees by designing a bonus structure – i.e. if we collectively meet the goal, each employee shares in the savings. If we stop there, we would have no way of knowing if we met the goal. The control process solves this for us. The last step in the grocery store manager’s managerial approach is to have each department head report their shrink loss at the end of the shift, and aggregate those in an excel spreadsheet. In this way, the manager can see if the rearrangement of the loading dock has reduced the number of damaged canned goods that was happening under the old arrangement. The manager can make changes if they see that shrink is not improving even after hiring a greeter at the entrance.
Monitoring performance is the first step in control. After see the progress towards goals, the next step is to make changes. In this way, the control process always leads a manager back to the planning phase of management. There are only two outcomes to the control process. You are making progress towards your goal, or you are digressing in your performance. If you reach your goal, you will need to set new goals, which is the planning function. If you are not progressing towards your goal, you need to analyze the environment and determine why not. In this way the management functions are related and highly dependent upon each other, especially control and planning.
To illustrate the application of the four functions of manager, consider the various contexts in Figure 1.1. Under the personal budget, an engaged couple has decided to save for a house after getting married. The softball coach must determine how to win a conference championship, and the corporate manager is working on a strategy to improve waning sales figures.
Figure 1.1 – The Functions of Management Applied
On the Importance of Studying Management
The purpose of this textbook is to provide you with firstly, a broad exploration of what management is – its elements and origins. Secondly, the purpose of this textbook is to provide you with a managerial framework you can utilize to practice management at any level of complexity. This framework emphasizes the four basic functions – planning, organizing, leading, and controlling. Most management textbooks include a wide variety of academic terms and concepts that take focus away from these four functions. Other textbooks will inundate the reader with descriptions of heuristics, focus on layers of management, or extraneous terms like the Shamrock organization that do not advance a practical understanding of management. We have designed this textbook with the four functions of management at the forefront because these elements are so critical to the foundation of everything you will do in the managerial context. This textbook provides a history of management and a chapter on ethics, but then focuses exclusively on the functions of management as the subject matter. At the completion of this textbook, you should be able to understand, recognize, and apply these four functions of management.
The four functions of management (plan, organize, lead, and control) serve as the foundation for everything else you will study in your business education. Mastering these tools at the most basic level, as well as the more sophisticated levels in classes you will take later, will best prepare you as a business professional (Dolechek et al, 2019).
Figure 1.2 – Management as the Foundation
Upon completion of a management principles course, you will progress towards the applications of the four functions of management in the upper level courses. For this reason, management principles serves as a pre-requisite for most other management courses. In marketing principles you will develop an understanding of how to analyze external conditions, and a course in information systems will help you design ways to collect more information to analyze. This is the core of the planning function. In human resources and organizational behavior, you will learn the dynamics of your ever-important resource of human labor, the organizing function. In business ethics and applied management skills you work on understanding what drives people, and by association how to lead them based on that understanding. Grasping business law and production operations will give you a deeper understanding of how to monitor progress (to meet legal compliance and to test production quality for example). The entire discipline of accounting is a managerial function of control. Constructing financial statements is done for the sole purpose of determining the performance of you organization so that you can make future decisions. The capstone course of a business program is the business strategy class. In this course, students are given an opportunity to demonstrate mastery of the four functions by including all of the functional areas of business in their decision making.
A Whale of an Example
You are the city manager of a coastal Oregon city. On a quiet, rainy Tuesday, you walk into your office and put the coffee on. As you take your first sip, your administrative assistant forwards you a phone call from the parks and rec manager. “We’ve got a problem down here on the beach. The tide just left a dead humpback whale on our beach.” What do you do? What. Do. You. Do?? Now, there are several options to dealing with the dead whale. Consider the following questions:
- 1) What is your strategy for dealing with this problem? ( Plan )
- 2) What resources do you need to follow your strategy? ( Organize )
- 3) What stakeholders do you need to get on-board? ( Lead )
- 4) What steps can you take to make sure your plan is proceeding as you planned it? ( Contro l)
There are a handful of strategies we might naturally gravitate towards. The feasibility of each strategy depends on how well you employ the functions of management.
Tow the whale back to sea – A crane, tug boat, and tow cable are needed. Who might you need to include in this gameplan? The coast guard might need to be involved to discuss any pertinent regulations. A marine captain that can tell you about tides so that you can time your extraction, and insights about currents to indicate how far out you need to haul the whale once its buoyant. Should you allow a marine biologist to provide advice on what sort of ecological impact this might have (like bring in unwanted sharks or seals). How can you be sure the tow cable has enough tinsel strength to haul a bloated whale on a high friction surface like wet sand? Does the crane have the capacity to move the carcass into position to be hauled? If the whale is decaying, will the tow cable just pull through the rotten flesh?
Cut the whale up, haul it to the dump – You will need a forklift, semi-truck, and chainsaw. The first consideration here would be the logistics of pursuing this strategy. You will need to find a truck with the towing capacity to haul large chunks of the carcass off the beach. Can you ensure the weight of a loaded semi would not sink into the wet sand? How much does a semi-loaded with a whale carcass weight? You may also need to contact the county roads manager to determine if there are any bridges between the beach and the dump that have weight restrictions. What sort of protective equipment would you need for the men slicing through the whale with chainsaws? There are a few control processes that need to be put in place for this strategy to work.
Celebrate the whale – The objective of the city manager is to “deal with” the dead whale. For most, this would mean remove it somehow. For others, this might be a chance to celebrate the occasion, and establishing the experience in the culture and history of the town. To celebrate the whale, the city manager can hold a competition like car dealers do to promote their cars – have contestants place their hand on the whale and the last person to withstand touching the grotesque, slimy, and malodorous creature, somehow wins a major prize. This would require a sponsor to donate a prize (a car, a vacation) and the town can celebrate the occasion annually. If the goal is to appease the community from the existence of the whale and its stench, celebration is one strategy to pursue that end. You would need to include a biologist to determine if leaving the whale to decay after the festival would attract scavengers, and a water chemist to determine if a decaying whale creates toxicity problems for beach goers.
Blow it up! – The kid in most of us choose this option. Definitely. You might need to check with state officials to see what the protocols are on this approach. The biggest question would be how much dynamite do you need to blow up a whale, or blow it into the ocean? In Oregon, one stakeholder group you might contact is a mining company or the Oregon national guard. Both of those groups have a lot of experience calculating explosive requirements. What are the safety protocols you need in place to make sure that no one is injured? Where will you be able to source enough explosives to achieve this goal?
Use of the four functions
Each of these scenarios contain some far-fetched elements. But asking the right questions is paramount to turning any of these into a feasible strategy. You first need to decide a path, then determine your resources before getting stakeholder groups on board. For a high-risk situation like most of these solutions call for, you need to put control mechanisms in place to mitigate your risks. If you type “Oregon’s exploding whale” you can see what has become the most-watching news broadcast of all time. It shows you what happens when a city manager does not successfully navigate the situation using all four functions of management.
Critical Thinking Questions
How are the four functions of management related?
Which is the most important function of management?
Choose a historical event prior to the year 2000. Analyze the leader’s use of the four functions of management during that event.
How to Answer the Critical Thinking Questions
For each of these answers you should provide three elements.
- General Answer. Give a general response to what the question is asking, or make your argument to what the question is asking.
- Outside Resource. Provide a quotation from a source outside of this textbook. This can be an academic article, news story, or popular press. This should be something that supports your argument. Use the sandwich technique explained below and cite your source in APA in text and then a list of full text citations at the end of the homework assignment of all three sources used.
- Personal Story. Provide a personal story that illustrates the point as well. This should be a personal experience you had, and not a hypothetical. Talk about a time from your personal, professional, family, or school life. Use the sandwich technique for this as well, which is explained below.
Use the sandwich technique:
For the outside resource and the personal story you should use the sandwich technique. Good writing is not just about how to include these materials, but about how to make them flow into what you are saying and really support your argument. The sandwich technique allows us to do that. It goes like this:
Step 1: Provide a sentence that sets up your outside resource by answering who, what, when, or where this source is referring to.
Step 2: Provide the quoted material or story.
Step 3: Tell the reader why this is relevant to the argument you are making.
EXAMPLE : Let me provide an example of homework expectations using the type of question you might see in a critical thinking question at the end of the chapter. Each of the answers you provide should be this thorough.
Question: Explain why it is important to study management.
Management is important to study because it serves as the foundation for all other areas of business. The four functions can be used in other business areas such as accounting, marketing, operations management and human resources. All of the areas of business need people who know how to make a plan and allocate resources. All of the areas of business need people who know how to motivate others, and to make sure they are on track for their organization’s goals. For this reason, improving our mastery of management will make us more effective at whichever role we are in. A good example of this foundation comes from research conducted on accounting firms in Romania. Wang and Huynh (2014) found that accounting managers who embraced both managerial best practices and had the technical skills needed for accounting improved the organizational outcomes of their firms. These findings suggest that business professionals need managerial skills to supplement the day-to-day roles they have.
As I reflect on management as a foundational discipline, I remember how my high school baseball coach approached our team after a losing season. We were not a good team because we did not have fundamentals of how to grip a baseball, how to stand in the batter’s box, or how to field a ground ball. That next year, he taught us all of these fundamentals and we won a lot of games. It seems to me that learning fundamentals of management can have the same impact. Being able to execute the four functions of management allows us to get better at how we approach marketing a new product, or improving operations processes.
Wang, D., & Huynh, Q. (2014). Linkages among corporate governance, management accounting practice and organizational performance: Evidence from a Southeast Asian country. Romanian Economic and Business Review, 9(1), 63-81.
Aho O.W., Lloyd R.A. (2019) The Origins of Robust Supply Chain Management and Logistics in the Caribbean: Spanish Silver and Gold in the New World (1492–1700). In:
Bowden B., McMurray A. (eds) The Palgrave Handbook of Management History . Palgrave Macmillan: London, UK.
Bateman, T., & Snell, S. (2013). M: Management (3rd ed) . McGraw Hill / Irwin: New York, NY
Dolechek, R., Lippert, T., Vengrouskie, E. F., & Lloyd, R. A. (2019). Solving a whale of a problem: Introducing the four functions of management in a management principles course . International Forum of Teaching Studies, 15 (2), 29-35.
Fayol, H. (1949). General and Industrial Management . Sir Isaac Pitman & Sons Ltd: London, U.K.
Graham, P. (1995). Mary Parker Follett: Prophet of Management. Harvard Business School Press: Boston, MA.
Lussier, R. (2021). Management Fundamentals: Concepts, Applications, Skill Development. (9th Ed). Sage Publications: Thousand Oaks, CA.
Nathan, R. (2018). The Grapevine Creek Buffalo Jump Complex: Interdisciplinary Research on the Crow Reservation, Montana (Doctor of Anthropology, dissertation). Indiana University.
Shermerhorn, J. (2013). Management (12th Ed) . Wiley and Sons: Hoboken, NJ
The Four Functions of Management Copyright © 2020 by Dr. Robert Lloyd and Dr. Wayne Aho is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.
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Four Functions of Management
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Every organization, in spite of its enormity, has fully developed and implemented management concepts that enable smooth running of activities aimed at realising the projected vision, goals and objectives.
The functions of management break down into four areas that take care of strategic, tactical and operational pronouncements of an organization. Thus, management in an organization is a creative tool of solving problems through planning, organizing, leading and controlling. In essence, the functions of management solve a particular problem facing an organization.
Consequently, the results will provide an avenue of accomplishing the goals, objectives and mission of the organization. The functions of management in an organization is to provide a framework of focussing both short and long term views hence, foster it towards success.
Additionally, management as a decision-making process entails a premeditated vision, fixed goals, a crafted plan, all which if executed and implemented properly, will see an organization achieve its mission.
From in-house operations to industry, the functions of management serve to address issues affecting a certain organization for example, effective utilization of resources, appraisal of core competencies, evaluation of the present and prospect participants, and strategic control among others (Himanshu, 2009, p.1).
Nevertheless, the four function of management cannot bring success into an organization minus sound leadership from the mangers. In most cases, the manager’s style of leadership affects the operation of an organization, positively or negatively. Thus, good managers should exhibit certain traits and skills, which will enable an organization, achieve its mission, goals and objectives.
For example, an organization with highly skilled workers makes managers to be allowing, while an organization with less skilled workforce mandates the manager to take a closer look on production.
Thus, god managers are the ones who flex their style, train and inspire employees to work towards the realization of vision, goals and objectives. The paper will examine the four functions of management namely: planning, organizing, directing and controlling within an organization (Haridimos, 2004, pp. 289-301).
This is the first contrivance of the four function of an organization’s management process. Primarily, the success of an organization depends on the planning procedure. The planning procedure is the one that determines whether a manager is successful or not. Planning provides logical understanding on how to make decisions, which will drive an organization towards the path of attaining its objectives.
Good managers use a planning process to plan for expectations, and as a blueprint to predict quandaries, which might hinder an organization form achieving its objectives.
In addition, the planning process provides measures for prevaricating intricate issues and a framework of beating competition. Thus, planning is an essential tool of management in that it facilitates control, which is a valuable strategy in decision-making hence averting business ravage.
A good planned business example is GlaxoSmithKline. This is an international pharmaceutical company with a vision of providing superior healthcare services. Both the mangers and employees of this company commit themselves to excellence in line with its mission and vision statement.
The planning process of GlaxoSmithKline entails how to attain quality results, respecting others, and teamwork in order to achieve goals. Since the commencement of this plan, GlaxoSmithKline has grown into an international pharmaceutical company with branches all over the world and a healthcare leader (Bateman &Snell, 2007, p. 16).
Organizing helps managers to attain all objectives as delineated in the planning procedure. Primarily, organisation involves appointing of individuals to perform certain assignments, which are paramount in developing a uniform rationale of accomplishing goals.
Thus, this calls upon the manger to exercise personal traits and skills in order to choose competent subordinates who are capable of organising the valuable resources of the organisation to produce results.
A good organisation is the one characterised by management staffing, several trainings among employees, inflow of resources and a prolific workforce. Managers also ought to discuss the developed plans with the subordinates, and break the assignments into smaller segments manageable by one person. In so going, the organisation will have well-structured and manageable units working towards achieving objectives.
For example, the organisation of Microsoft presents one of the best business examples. Characterised by flexibility, changeability and new products, Microsoft has achieved its goals and objectives through its planning process and organisation. Moreover, the managers of Microsoft offers direction for staff that is paramount to personal success hence, organizational success.
Based on experience and personal traits, the managers use communication as a tool of solving any arising issues. In fact, Microsoft would not be a world leader in IT had it not been its exceptional organisation (Bretti, 2009, pp. 15-18).
The third function of management is direction or leading. This aspect of management helps managers to supervise the actions of the workforce and set the path of achieving goals and objectives of the company. Leading also promotes incentive, good communication, leadership and unit dynamics necessary in attaining goals and objectives.
Many people understand the role of leadership to an organisation as it is the one, which inspires actions in the direction of goals and objectives. Thus, good mangers are those who motivate employees to an eminent aspiration and assign them responsibilities as stated in the planning process. In addition, managers must also maintain a close contact with the employees in order to realise the vision, goals and objectives of the company.
For instance, managers at GlaxoSmithKline motivate employees to work towards achieving the goals and objectives of the corporation and surpass their market competitors. The managers have a daily contact with the staff either individually or as a team.
Thus, the management team plays an important role in the management process by unearthing innovative mechanisms, which solve problems that might hinder the process of achieving goals (Gomez, Luis, Balkin, & Robert, 2008, pp. 18-21).
The final stage of a management process is controlling, which involves the implementation of the developed plan. This process involves the establishment of recital standards pedestal to the company’s vision, goals and objectives. In addition, it engrosses evaluating and reporting of all actions within the company and gauging whether they lime with the goals and objectives.
A good control process within a management system is the one that eases the delegation of duties and holds each skilled worker responsible. For example, in GlaxoSmithKline, managers hold departmental meetings on a daily basis. Thus, they are in apposition to review the daily schedule, evaluate any emanating problem, and solve it before it becomes too late.
In GlaxoSmithKline, control sets the standards for performance of the workforce thus, mandating workers to work towards goals and objectives.
It also ensures that workers take and complete assignments within a given duration while following the laid guidelines. Otherwise, workers are liable for disciplinary measures should they fail to comply. In most cases, managers employ work performance evaluations as a form of control aimed at attaining the set goals (Blue, 2007, 135-136).
For any business to achieve its vision, goals and objectives, planning, organizing, leading and controlling are necessary. These four functions of management provide a framework of achieving the company’s objectives. Nevertheless, without guidance from the management team and individual contribution from employees, success is cannot be a reality.
Bateman, T. & Snell, S., 2007. Management: Leading and collaborating in a Competitive World. (7th ed.). New York: McGraw – Hill.
Blue, R., 2007. Functions of management. Journal of the American Society for Information Science, 40(2), 135-136.
Bretti, A., 2009. Four Functions of management, Journal of Physical Distribution & Logistics, 1(1), 15-18.
Gomez, M., Luis, R., Balkin, B. & Robert L., 2008. Management: People, Performance, Change . (3rd ed.). New York: McGraw-Hill.
Haridimos, T., 2004. What is Management? An Outline of a Metatheory. British Journal of Management, 5(9), 289-301.
Himanshu, J. 2009. Functions of Management Web.
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IvyPanda . (2023) 'Four Functions of Management'. 20 April.
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What Are the 4 Functions of Management?
How does an organization move the needle toward achieving its goals? Who’s in charge of steering employees in the right direction as they pursue those objectives?
Here’s the answer: management .
Yes, leaders and supervisors are the ones who not only set the finish line but also support their teams in crossing it. To do so, managers need to fulfill core responsibilities known as the four functions of management.
Introducing the four functions of management
Think of the four basic functions of management as the four core responsibilities every leader needs to fulfill.
They were initially identified as five functions by Henri Fayol in the early 1900s. Over the years, Fayol’s functions were combined and reduced to the following four main functions of management: planning, organizing, leading, and controlling.
No matter which industry you work in, the functions of management are consistent and applicable across all sectors.
Below, we’ll give some clarity and define four functions of management. But first, it’s important to understand that each function isn’t exclusive. Instead, each one builds upon the function before it — when they’re all in place, the most effective management happens.
Managers first need to develop a detailed action plan. In the planning phase, management should identify the goals and create a reasonable course of action to attain them. There may be multiple ways to achieve the goal, but it’s management’s responsibility to determine the best course of action.
Drafting a successful plan includes aligning the goal with the organizational vision, considering factors that may impact the project internally and externally, and establishing a realistic timeline while being mindful of resource and budgetary constraints .
Three different types of planning in management include:
- Strategic : A long-term, high-level type of foundational planning that emphasizes the mission, values, and vision of the organization. Upper management drafts its strategic plans, and all managers should refer back to the strategic plans to guide their decisions.
- Tactical : A short-term (one year or less), objective-focused type of planning, often carried out by middle management.
- Operational : A plan that describes the daily roadmap of the activities within the company. Low-level managers and supervisors devise operational strategies in most cases.
The organizing function consists of taking the previously created plan and putting it into action. Key activities in this function include:
- Identifying all of the necessary steps of the project
- Determining who will complete the actions and deploying those resources to work
- Establishing levels of authority and responsibility for every individual involved
Organizing facilitates a clear development of the organizational structure for executing the plan, but it also encourages collaboration among team members spread amongst various teams and departments. When the Project Management Institute (PMI) cites poor communication as one of the leading causes of project failure, it’s evident that ensuring effective collaboration amongst team members plays an influential role in driving a project’s success .
With the first two functions of management underway, managers should then shift their attention to the people.
The leading stage consists of motivating and influencing employees to do the work and meet performance standards. Keep in mind that effective leadership extends beyond delegating and directing employees what to do.
Examples of effective leadership skills that managers can focus on include frequent and clear communication, expressing empathy, being an active listener, maintaining transparency, and empowering the team to perform to the best of their ability. Utilizing interpersonal skills and different leadership styles for different situations is crucial for managers to tap into while leading their employees.
The controlling function consists of monitoring performance and progress through project execution and making adjustments as needed. Managers should ensure that employees meet deadlines while simultaneously balancing synchronicity amongst the project’s resources and the overall budget. Managers may need to take corrective actions and be proactive in their approach to ensure that team members meet their assigned deadlines.
Two key areas where managers may need to make adjustments include staffing and budget. For example, let’s say an assigned leader working on a project leaves the company. The manager will need to identify a replacement as soon as possible, train them efficiently, and, hopefully, keep the project running smoothly.
From a budget perspective, managers should monitor spend closely. Suppose a project starts to run over budget — in that case, the manager should identify what’s causing the overspend. If that expense is justified, they should proactively ask for additional funding or curb spending to be more mindful of the budget in other areas.
Tips for applying the four functions of management
Applying the four functions of management may seem challenging at first, but with the right resources and knowledge, managers can carry out all duties successfully.
Feeling intimidated? Don’t be. Here are a few quick tips for getting started:
- Set yourself up for success at the start and document your plan using a project management platform like Wrike.
- Identify how your team may work best together during the organizing stage, such as through an Agile work environment.
- Implement processes for recognizing employees for a job well done at the start of the project, and ensure you acknowledge and celebrate them accordingly.
Keep in mind that leadership is a learning process — whether you’re brand new or well-established. As you manage a team or project, you’ll uncover different areas where you can improve and grow.
Become a successful manager using the four functions of management
Management isn’t an easy gig, and there isn’t a tried-and-true approach that works for everybody. However, every manager fulfills the same core responsibilities, known as the four functions of management.
When a manager checks the box of each of those major functions, they’re well-equipped to lead projects, teams, departments, or even entire companies to their objectives.
Want to boost your management abilities and keep your team and project on track? Sign up for a free trial of Wrike and start planning today.
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Functional Areas of Management
Everything you need to know about the functional areas of management. There is a very wide scope of management.
The management function varies in accordance of its use. Every organisation have different functional area of management require for planning of activities, organisation of resources, establishment of communication system, leading and motivation of people, and control of operations for the realisation of its goals or objectives.
Some major functional areas of management are:-
1. Personnel management 2. Financial Management 3. Marketing Management 4. Production Management 5. Purchase Management 6. Development Management
7. Maintenance Management 8. Office Management 9. Human Resource Management 10. Cost Management 11. Accounting Management 12. Sales Management
13. Advertisement Management 14. Communication Management 15. Public Relation Management 16. Environmental Management 17. Service Management 18. Quality Management 19. Research and Development Management.
Additionally, learn about the objectives, nature, functions and activities of each functional area of management.
Top 19 Functional Areas of Management
Functional areas of management – personnel management, financial management, marketing management, production management and a few others.
Functional areas of management mean the sum total of all those activities which are performed in an organisation to achieve the objectives of the organisation. These functions can be of different types but personnel, finance, marketing and production activities have a special importance.
Different management experts have created separate functional management areas.
Some major functional areas are given below:
1. Personnel Management
2. Financial Management
3. Marketing Management
4. Production Management
5. Purchase Management
6. Development Management
7. Maintenance Management
8. Office Management
1. Personnel Management :
All means of production (men, materials, machines, money, etc.) may be divided into two parts – active and passive. Active means include men while machines, materials, money etc. belong to passive means of production. An enterprise may have large quantity of passive means of production, such as, machines, materials and money but the same are of no use if not properly utilized. These can be utilized properly only with the help of active means, that is, human beings.
What is needed is that such human resource be made available as is perfectly efficient. It is the job of personnel management to make efficient human resource available. In order to fulfil this task, personnel department is established in large organisations. This department functions under the supervision of personnel manager.
Meaning of Personnel Management :
Personnel Management is that branch of management which is concerned with the recruitment, selection, development and the optimum use of the employees. In other words, personnel management is concerned with the employees engaged at all levels of an organisation.
Objectives of Personnel Management :
Main objectives of personnel management are as follows:
(1) To Provide able Employees:
First objective of personnel management is to provide able employees to the organisation. Able employees alone can contribute to the achievement of the objectives of the organisation.
(2) To Increase Employees’ Efficiency:
Proper selection of the employees is not sufficient for the success of the organisation. Rather it is necessary to add to their efficiency continuously. Personnel manager performs this function by arranging training for the employees.
(3) To Develop Team-Spirit:
It is the objective of personnel management to inculcate team-spirit among all the persons employed in the organisation. Objectives of the enterprise can easily be achieved in this way.
(4) To Develop Cordial Industrial Relations:
The aim of the personnel management is to develop a spirit of goodwill, confidence and mutual respect between the labourers and the employers. Such a spirit makes industrial relations cordial.
(5) To Develop Congenial work Environment:
The environment of work in which the employees have to work has great effect on their efficiency. Clean and healthy environment increase their efficiency. It is, therefore, the function of personnel management to provide good work environment.
Nature of Personnel Management :
Nature of personnel management is clear from the following facts:
(1) It is Related with People:
Personnel management is concerned with human resource. Its scope extends to employees working in an organisation at all levels. It includes recruitment of employees, selection, training, job evaluation, determination of remuneration, provision of good working conditions etc. In short, every activity of personnel management relates with people.
(2) It is a Pervasive Function:
Nature of personnel management is all pervasive. Pervasive here means that the function of personnel management is performed at all levels of management. In other words, managers at all levels perform this function with respect to their employees. In fact, the function of personnel management is performed by a separately established personnel department.
But it is necessary here to make it clear that establishment of this department does not relieve other managers of their personnel management function. Rather the objective of the establishment of this department is only to help other managers to accomplish their function of personnel management. However, its final responsibility remains with all the concerned managers.
(3) It is a Multiple-Objective Function:
Nature of personnel management is multi-objective.
It has to achieve three objectives at the same time:
(i) Organisational Objective:
As an organisational objective, personnel management has to make maximum utilisation of the available labour resources possible in an organisation.
(ii) Employee Satisfaction Objective:
Another objective of personnel management is to satisfy the employees by ensuring proper remuneration, promotion, training, etc.
(iii) Social Objective:
To maintain industrial peace is the social objective of personnel management.
(4) It is a Group of Personnel Activities:
Under personnel management comes several activities concerning employees. It is therefore called a group of personnel activities. Main personnel activities are recruitment, selection, training, job evaluation, fixation of remuneration, etc.
(5) It Requires the knowledge of Psychology:
Personnel management deals with human resource of production. Every individual working in an organisation has his own desires, expectations and tastes. In order to get maximum work out of his subordinates, a manager has to keep in mind all these things. Managers must, therefore, have knowledge of human psychology.
Role of Personnel Manager :
In modern organisations, a personnel manager performs not one but many roles which are mentioned below:
(1) As a Line Executive:
Personnel manager is the head of personnel department. In order to discharge the responsibility of his department when he performs the functions of recruitment, selection, training, etc. he acts as a line executive. The characteristic of a line executive is that he is directly responsible for his activities.
(2) As a Staff Executive:
When a personnel manager advises heads of other departments regarding solution to the problems relating to their employees, then he acts as a staff executive. It is the feature of a staff executive that he is not answerable for the results of his advice.
(3) As a Counsellor:
When a personnel manager listens to the problems of different employees working in the organisation and brings the same to the notice of general manager, then he plays the role of a counsellor. He gives his advice to the general manager regarding solution to these problems.
(4) As a Mediator:
When a personnel manager seeks to solve dispute between management and employees, then he plays the role of a mediator.
(5) As a Representative:
A personnel manager represents his organisation in the meeting convened by the government and non-government organisations to find solution to the problems of employees. Thus he also plays the role of a representative.
2. Financial Management :
The major objective of any business concern is to make profit for its owners by selling goods or services. To reach this goal finance is required. In this context it can be said that finance is the soul of any business concern. Keeping this in view, the proper management of finance is absolutely necessary.
In every business, three main questions which arise regarding finance are – (i) How much finance will be required for different business activities? (ii) How much of it will be obtained from different sources? and (iii) How profit earned from different business activities will be distributed? Answer to all these questions is inherent in financial management.
In other words, it can be said that under financial management, first of all, need for finance is estimated and then different sources of obtaining finance and its quantum are determined and finally arrangements are made for the distribution of profit.
To conclude, it can be said that under financial management, financial needs of a business are met in such a manner that its goals can easily be achieved.
Scope or Aspects of Financial Management :
Regarding scope or aspects of financial management there are two approaches. One, traditional approach and two, modern approach. According to traditional approach, procurement of necessary finance for a business is called financial management. Under modern approach scope of financial management is seen in a wider perspective. It includes not only procurement of finance but also its efficient utilization. Modern thinkers have made a mention of three important decisions taken by a financial manager.
The same area as under:
(1) Investment Decision:
Investment decision refers to the selection of those assets in which investment is to be made by the business or the assets which are to be purchased for running the business.
Assets which are obtained by the business are of two types:
(i) Fixed assets and
(ii) Current assets.
On the same basis, investment decision is also divided into two parts:
(i) Fixed Assets Investment Decision:
In order to take this decision, the financial manager must know what assets are required to be bought for other departments like production department, purchase department, sale department, etc. For example- production department is in need of a machine for producing a particular commodity. On receipt of this information from production department, financial manager has to decide which of the different alternatives (different machines) available in the market is the best for producing that particular commodity.
In order to make selection of the best alternatives, cost-benefit analysis of different alternatives is undertaken. That alternative is selected which yields more profit at less cost. Decision regarding investment in fixed assets is called Capital Budgeting.
(ii) Current Assets Investment Decision:
Current assets include mainly Cash, Stock, Debtors, etc. Financial manager has to ensure that there is adequate investment in current assets. By adequate investment is meant that investment in these assets should be so much as to meet the daily liabilities of the business on time. In other words, liquidity of the business must be maintained. It may however be mentioned here that if the amount of current assets is large, liquidity position of the business will improve but profitability will go down.
On the contrary, if the amount of current assets is less than required, it will add to the profitability of the business but liquidity position is adversely affected. Thus, the financial manager has to decide about the optimum amount of investment in current assets. Decision regarding investment in current assets is called management of working capital.
(2) Financing Decision:
The other decision by financial manager relates to different sources from where finance is to be procured to meet the requirements of the business. He is to ascertain the different sources from where the necessary finance is to be mobilized and in what amount. This question relates to capital structure. Capital structure is the sum of debt capital and share capital.
There should be a proper balance between debt and share capital as it influences the market price of the shares and cost of capital. Such a capital structure as makes use of proper amount of debt capital is called optimum capital structure. Such a capital structure has the attribute of maximum market price of shares and minimum cost of capital.
(3) Dividend Decision:
How much of the total profit be distributed among the shareholders as dividend and how much be retained by the business as reserve, is another decision that a financial manager has to take. Shareholders want that they should get maximum dividend and the managers want that maximum profit be retained as reserve to meet the future requirements of the business.
The financial manager has to strike a balance between these two demands on profit, so that both the parties are satisfied. This decision is also called disposal of surplus decision.
3. Marketing Management :
Marketing management refers to all managerial activities relating to marketing. Marketing includes all those activities ranging from knowing the needs of the consumers to their satisfaction. On the other hand, management includes planning, organising, staffing, directing and controlling. Performing of all managerial functions in the context of marketing is called Marketing Management.
Thus, main activities of marketing management are as under:
(i) Planning of marketing activities.
(ii) Organising of marketing activities.
(iii) Staffing for accomplishing marketing activities.
(iv) Directing of marketing activities.
(v) Controlling of marketing activities.
Objectives of Marketing Management :
Main objectives of marketing management are as under:
(1) To Ensure Consumer Satisfaction:
Prime objective of marketing management is to ensure consumer satisfaction. To achieve this objective, marketing manager makes an intensive study of the needs of the consumers. Production and distribution of goods are in tune with their needs.
(2) To Serve the Society:
Under marketing management, marketing manager plays an important role in discharging the social obligation of the business. To this end, his constant endeavour is to produce good quality products, to supply goods and services at reasonable prices, to avoid false promises through publicity media, to ensure good behaviour to the customers, etc. As a result of this effort, on the one hand, social obligation of the business is fulfilled and on the other, its goodwill is enhanced.
(3) To Increase the Market Share:
Increase in market share means increase in sales. Aim of a marketing manager is to bring under his possession a large part of the market. With a view to increasing the sale of goods and services, he adopts all means of sales promotion, such as, free samples, exhibition, discount sales, etc.
(4) To Generate Maximum Earning for the Business:
Marketing alone is such a business activity as yields income. It is quite clear, that in the absence of profit no business can last for long. It is, therefore, the objective of the marketing manager to generate maximum earning for the business while keeping in mind full satisfaction of the consumers.
(5) To Perform the Marketing Function Efficiently:
Marketing functions include – marketing research, product planning, purchase, sale, branding, packing, pricing, advertising, etc. Marketing manager is responsible for performing all these functions. He is expected to accomplish it efficiently. Thus, an important function of the marketing manager is to perform efficiently all these functions.
(6) To Perform the Managerial Activities in Reference to the Marketing Efficiently:
With a view to performing marketing functions, marketing manager has to plan, organise, direct and control them. It is the objective of the marketing manager that he should perform all mana gerial activities efficiently.
Functions of Marketing Management :
Functions of marketing management refer to those activities which are carried out to achieve the objectives of marketing. In the first instance, marketing objectives are determined. Then to achieve the same, need is felt for planning, organising, staffing, directing and controlling of marketing activities. These are, as a matter of fact, functions of marketing management.
Their brief description is as under:
(1) Planning of Marketing Activities:
First of all, planning of marketing activities is done in order to achieve marketing goals or to perform marketing activities. Here planning means to determine when, how, where and by whom different marketing activities are to be conducted.
(2) Organising of Marketing Activities:
In order to conduct different activities (purchase, assemble, sale, storage, transportation, packing, pricing, advertising, marketing research, etc.) the same are divided into some groups. Under grouping, a special post is created to carry out similar kind of activities. Rights and duties of different posts so created are clearly defined. Who will be the officer and who will be the subordinates are also decided?
(3) Staffing for Marketing Activities:
Under this function, appointments are made to do different marketing activities. In big organisations, personnel department is established for making appointments. Marketing manager helps personnel manager to secure staff for his department.
(4) Directing of Marketing Activities:
Directing refers to giving of proper guidance to persons working on different posts so that they may discharge their duties efficiently. Under this function, marketing manager supervises his subordinates, provides them good leadership and from time to time motivates them.
(5) Controlling of Marketing Activities:
By controlling of marketing activities is meant review of marketing activities from time to time so that deviations could be traced out. In case of negative deviation, the same is removed by taking corrective action immediately.
4. Production Management :
The production management is needed by the manufacturing organisations. These organisations change the form of the raw material and make it more useful.
This functional area of management includes the following activities:
(i) To anticipate the production activities,
(ii) To determine the kind and quantity of the goods to be produced,
(iii) To make provision for the raw material well in time,
(iv) To plan and control production,
(v) To determine the need of the employees of the production department and arrange for the recruitment and selection process,
(vi) To conduct the time and motion study,
(vii) To determine the method of production,
(viii) To control the quality of the goods produced, etc.
5. Purchase Management :
Purchase management means planning and controlling purchase. It means to determine as to what goods are to be purchased, where to purchase from, when to purchase, etc.
The following are the main functions to be performed under the purchase management:
(i) To obtain the requisition letter of purchase,
(ii) To make enquiry before purchase,
(iii) To place orders for purchase of goods,
(iv) To receive the goods,
(v) To arrange for the storing of goods,
(vi) To control the receipt of goods, its stock and issue.
6. Development Management :
Development management is related with the management of research activities.
The following activities are performed under it:
(i) To develop new production process,
(ii) To carry on research in relation to the goods, machines and implements used in the process of production,
(iii) To develop new products,
(iv) To discover new substitutes for raw material, etc.
7. Maintenance Management :
It is the responsibility of this functional area of management to keep the organisation in working condition. If the building and the machines of the factory are not in proper condition, the efficiency of the employees will certainly be reduced. It will, therefore, not be satisfying both for the owner and the employees. Therefore, maintenance management is important for both the categories.
The chief functions of the maintenance management are given below:
(i) To keep the machines and implements in proper condition,
(ii) To ensure the cleanliness of the building,
(iii) To plan for ensuring maintenance,
(iv) To control the maintenance activities, etc.
8. Office Management :
Office means a place for where the different activities of the organisation are planned and controlled. To run this place in a planned manner is called office management. It is the place from where the employees are given directions and guidance.
The office management includes the following activities:
(i) To prepare accounts and keep them safe,
(ii) To provide for effective communication,
(iii) To lay down plans,
(iv) To establish coordination among different departments
(v) To provide all the necessary equipments in the office,
(vi) To correspond, and
(vii) To ensure the best use of the services of employees, and of all other sources.
Functional Areas of Management – 4 Major Areas: Production Management, Marketing Management, Financial Management and Human Resource Management
The functional areas of management are very wide.
They have been listed as under:
1. Production Management:
As far as manufacturing organization is concerned, production is a core function. The entire production operations are to be planned, organized, directed, coordinated and controlled.
The production activities encompass the following:
i. Product designing.
ii. Acquisition of materials.
iii. Storage of materials.
iv. Planning and controlling of factory operations.
v. Repairs and maintenance.
vi. Inventory and quality control.
vii. Research and development.
2. Marketing Management :
Marketing is the total system of interacting business activities designed to plan, price, promote and distribute satisfying products and services to present and potential customers. Marketing is concerned with all those activities which enable the seller to transfer the title to the buyer.
The various marketing activities may be stated as under:
i. Product Planning:
It is concerned with the following-
a. Deciding on whether to manufacture one product or a number of products i.e., product line, product mix decisions.
b. New product development.
c. Product alternation.
d. Product diversification.
e. Product elimination.
h. Handling various phases in product life cycle.
Price determination is yet another task of the marketer. There are many factors that influence the pricing of the business. Pricing is governed by a number of objectives like target, return on investment, maximizing market share, meeting competition, preventing competition, etc. There are different types of pricing the product. Marketing management has to decide the right pricing method in the light of factors influencing pricing decisions.
iii. Physical Distribution:
Next important decision is choice of channel of distribution. Besides, it includes storage, identification source of supply, transportation, location of warehouse decisions, movement of goods within the facility, etc.
Marketer has to take important decisions on the promotional measures which would stimulate demand for the products thus enhancing volume of sales. A battery of tools used in this connection include advertising, personal selling, sales promotion and public relations.
3. Financial Management :
The main focus of financial management is to manage financial resources. Finance is the life blood of an organization. It is needed for carrying on business, achieving growth and development, and protecting its identity in the changing environment. Financial management is concerned with managerial decision of acquisition and financing of long term and short term credit for the business enterprise. It involves planning, organizing and controlling of financial resources.
It comprises the following:
i. Estimation of funds required for both long term and short term needs of business.
ii. Calculation of cost of capital.
iii. Mobilisation of funds.
iv. Determining capital structure.
v. Determining the level of leverage.
vi. Managing current assets.
vii. Dividend decisions.
viii. Selection of appropriate source of funds.
ix. Ensuring proper utilization and allocation of raised funds.
4. Human Resource Management :
This involves planning, organizing and controlling the procurement, development, compensation and maintenance of human resources in an enterprise.
It consists of the following areas:
i. Manpower planning.
ii. Recruitment and selecting.
iii. Job analysis.
iv. Training and development of the manpower.
v. Performance appraisal.
vi. Compensation and promotion.
vii. Employee well-being.
viii. Maintenance of personnel record.
Functional Areas of Management – 15 Major Functional Areas of Management
The business have a wide and dynamic area. In that, all the major parts like trade, commerce, industry and allied services are being included. In order to perform the tasks concerning of these major parts, there are different segments called the functional areas. These areas or respective departments perform their task under the leadership of functional manager or a businessman. The various areas are managed and organised as little segments or departments.
The different functional areas are briefly stating here:
1. Production Management :
Production is an important and specific part of the entire business. It performs all the managerial functions like planning, decision making, organising, coordination, direction and control for the production and manufacturing process in any concern. It aims to determine and prepare product planning, plant layout, select the production systems, the requirement of raw material, equipment, machineries and different infrastructural facilities. It has the major parts like product planning, product standards and norms, manufacturing process, work performance and research and development etc.
2. Cost Management :
Cost management is concerned to collect, evaluate, analyse, account and classify the expenditures relating to the activities of the concern. It deals to manage, organise, coordinate and control all the direct and indirect components of the cost of different tasks. It includes different aspects particularly the elements of cost, cost estimation, calculation of cost, cost structure and variation between estimated cost and actual cost etc.
3. Accounting Management :
Accounting management is also an important part of functional management. It includes the systems, procedures, documents and records concerning the financial managerial and cost management etc. It aims to manage and maintain the accounts, records, statements and other informative documents to be used in these accounting area.
4. Financial Management :
According to Boward and Upton – ‘Financial Management is the application of planning and control of the financial functions’. It deals with different financial aspects and issues. Financial management is an indispensable organ and have a wide scope of business management. It is more analytical and less descriptive. It helps the top management in determining policies and plans as well as in decision making also. Today the business performance is measured on the basis of financial results.
5. Office Management :
Office management is a pivot and central point of the business management. In fact, all the activities, performance, directions and policy implementation are directed and controlled over this focal point. It manages and maintain all the records and accounts relevant to different sections and departments of the concern.
6. Personnel Management :
Personnel Management is more concerned with the different aspects of human relations and behaviour. It performs several roles like policy determination, planning, organising, direction, decision making, motivation and control which are more concerned with the human assets and human behaviour.
It also conduct different tasks like recruitment, selection, wages and salary determination, training, promotion demotion, health, welfare and grievance redressal etc.
7. Marketing Management :
According to Stanton – ‘Marketing is total system of interacting business activities designed to plan, price, promote and distribute want satisfying products to target markets to achieve organisational objectives’. There are different functions like product planning, standardisation, procurements, warehousing, logistic, retailing, pricing, promotion, personal selling, buying and selling and market segmentation which are being performed at the marketing management scenario.
8. Sales Management :
Sales management includes the recruitment of sales employees, their selection and training, their supervision on work and motivation for work and the evaluation of execution of work.
Sales management is also an important part of business and it performs all the personnel functions. It aims to formulate sales plans, policies and programmes and to determine simple and effective sales procedures. It also manages and develop sales promotion and advertising tasks etc. It is also a specific part of marketing management.
9. Advertisement Management :
Advertising is any form of paid non-personal presentation of ideas, goods or services for the purpose of including people to buy. According to Sheldon – ‘Advertising is a business force, which through the printed words, sells or help sales, builds reputation and foster goodwill.’
It aims to introduce new products, to enhance product acceptance and to create new customers etc. It emphasise and influence the buying decision and to get public participation in selling the products.
10. Communication Management :
According to Newman and summer – ‘Communication is an exchange of facts, ideas, opinions or emotions from one person to another.’ In any business organisation, information are used for making and implementing different targets and policies for the achievements of organisational objectives.
The communication management organise a mutual process to make more reliable and integrated relations, to determine plans and policies, making sound decisions, coordination and to develop motivational aspects within different multidimensional structure in business organisation.
11. Public Relation Management :
The objectives of public relations is not to sale a product but to produce a favourable image of a concern and improve on it, if necessary. It is a media and have a two way communication with the society. Within business scenario, the public relations management perform the tasks like products’ publicity, promotional programmes, social services, community relations, advisory functions, welfare amenities and civil affairs etc.
12. Environmental Management :
It is also an important part of business area. It analyse and evaluate different roles of environmental factors and their consequence effects on the working and performance of business concern. The major factors to be considered are consumers’ demand, supply of product, price level, level of competition, new technology, Government rules and different demographical aspects etc. It develops and manage various measures and devices to make better environmental situation.
13. Service Management :
According to Philip Kotler – ‘A service is any activity or benefit that are being offer to another that is essentially intangible and does not result in the ownership of anything. In business concern, the service area is an important and decisional part to raise the customisation, value added aspects, customers’ relationship pattern and customers’ retention etc. The services can also provide market opportunities, product images, customers’ cares and products’ reliability etc., in the market.’
14. Quality Management :
Basically the concept of total quality is the notion that excellences is essential in all the functions of business and its allied activities. It aims to manage specialisation, raise the productivity, better work performance, create reliability in product and services, optimum utilise the resources, and raise the level of customers’ satisfaction etc.
15. Research and Development Management :
Today it is needful to make some worthwhile coordination and follow the different aspects of changing environment. With the emerging issues like innovations, change environment, technological upgradation, professionalisation, social values, service patterns and new behavioural approaches, there is a need to manage the research investigation and organise the developmental activities at large.
In any business, within the purview of strategical and operational planning, there is a needful area to develop the research and developmental task properly. It aims to make optimum allocation and utilisation of resources, quality maintenance, process control, innovative concepts, cost control, performance measures and time management etc.
In order to achieve its objectives, a business enterprise performs many functions which may be broadly grouped under the following headings – Production, Marketing, Finance and Personnel. In big business organisations, there are separate departments to look after these functional areas. It may be noted that these functions are inter-dependent and inter-related.
For instance, production department depends upon marketing department to sell its output and marketing department depends upon production department for the products of required quality to satisfy its customers. Thus, there must be proper integration of various functional areas of business to achieve its objectives. This can be achieved by the management of the enterprise by effective planning, organisation, direction and control.
The important functions of a business are briefly discussed below:
1. Finance Function :
It deals with arrangement of sufficient capital for the smooth running of business. It also tries to ensure that there is proper utilisation of resources. It takes many important decisions such as raising capital from various sources of finance, investment of funds in productive ventures, and levels of inventory of various items.
2. Production Function :
It is concerned with transformation of inputs like manpower, materials, machinery, capital, information and energy into specified outputs as demanded by the society. The production department is entrusted with many activities such as production planning and control, quality control, procurement of materials and storage of materials.
3. Marketing Function :
It is concerned with distribution of goods and services produced by production department. A business can perform this function efficiently only if it is able to satisfy the needs of the customers. For this purpose, the marketing department guides the production department in product planning and development. It fixed the prices of various products produced by the business. It promotes the sale of goods through advertisement and sales promotion devices such as distribution of samples and novelty items, holding contests, organising displays and exhibitions, etc.
4. Personnel Function :
This function is concerned with finding suitable employees, giving them training and fixing their remuneration and motivating them. The quality of human resources working in the enterprise is a critical factor in the achievement of business objectives. Therefore, it is necessary that the work-force is highly motivated and satisfied with the remuneration and facilities provided by the business.
5. Purchase Function :
Traditionally, purchasing is considered a part of the production function. But in big organisations, there may be a separate department to perform complicated purchase activities such as inviting tenders, choosing the sources of supply, making transport arrangements and import of raw materials and machines and equipment.
6. Public Relations Function :
Modern business houses want to be in touch with the public and government through their public relations departments. This department organises publicity campaigns to increase the image and goodwill of the business in the society.
7. Legal Function :
In a big organisation, the legal department may be organised to ensure that the business house is abiding by the rules and regulations framed by the government. It also gives advice to the management in case of disputes with the customers, suppliers and even government over various commercial matters.
Functional Areas of Management – Production Management, Marketing Management, Financial Management and Personnel Management
There is a very wide scope of management. The management function varies in accordance of its use. Every organisation have different functional area of management require for planning of activities, organisation of resources, establishment of communication system, leading and motivation of people, and control of operations for the realisation of its goals or objectives.
The various functional areas of management may be classified into the following categories:
1. Production management
2. Marketing management
3. Financial management
4. Personnel management.
Functional Area # 1. Production Management :
Production simply means the creation of utilities, i.e., when raw materials are converted into finished products, it is known as creation of utilities.
The main aim of any production system is to produce economically the goods and services required by the customers. In order to achieve this aim, it is essential to plan, organise, direct and control the production system. These activities comprise production management and are put under the charge of a ‘production manager’. The production manager should have both the technical and managerial qualifications and skills.
Production management deals with managerial functions related to the design of the production system and operation and control of the production system, i.e., production planning and control.
According to Elwood S. Buffa, “Production management deals with decision-making related to production process, so that resulting goods or service is produced according to the specification, in the amounts and by the schedule demanded, and at minimum cost. If accomplishing these objective, production management is associated with two broad areas of activities—the design and control of production system”.
Concept of Production Management :
The basic concept of production management is related with 5P’s:
Production is impossible with the very concept of product. Any produced is to meet the customer specification is terms of performance, quality, quantity reasonable price. In deciding a product, the production manager cannot afford to skip the effect of external factors like technological, economical, legal, social, etc. But internal factors are also important to the considered by the production manager.
For the making of a product, plant is required in the form of building and equipment. And like product, this plant should have concern for the level of future demand, what will be performance and reliability of equipment, what will be the safety norms.
The process is a sequence of operations and production process is related with those operations which transform the material into finished goods. A process is a series of activities leading to transform one thing to another.
A programme is a schedule of operations arranged in a logical sequence. So in a production programme activities are arranged in series and time to move from one activity to another activity is also determined. Proper time tables are set out for delivery of finished goods. But this can only be possible if proper schedules of purchasing the material, manufacturing of the products are already made.
Production is the act which largely depend on people from beginning to end. It is the people who are responsible for the success of the organisation which includes the production department also. All human beings are different in nature, attitude and behaviour. And production manager has to formulate his policies keeping in mind the needs and requirements of the people.
Functions of Production Management :
Production management involves a wide range of activities from the plant location to the packaging of products to be distributed by the marketing department of the enterprise.
Production management has a very wide scope and it includes the following operations:
(1) Design of Product:
It is the top management which determines the product to be produced by the firm. But the designing of the product is the responsibility of the production manager. The product designing deals with form and function. The form design deals with the product’s shape and appearance whereas the functional design deals with its working.
(2) Design of Production System:
Production system is the framework within which the conversion if inputs into output occurs. There are three basic kind of production system, namely, process production, job production and intermittent production. The choice of a production system will depend upon the type of product to be produced and the scale of production carried on by the firm. The suitability of the production systems has been defined as the manufacture in production.
(3) Production Planning and Control:
It deals with the determination and regulation of production processes. After the production system has been designed and activated, the production manager is concerned with production planning. He establishes the exact sequence of operation of each individual item, part or assembly and lays down the schedule of its completion. Production planning is followed by production control. Production control is a process by which actual performance is compared with the predetermined standards.
The production manager has to apply to control in these important areas:
(a) Control of inventories,
(b) Control of flow of raw materials into the plant, and
(c) Control of work-in-process.
(4) Selection of Location:
Plant should be located at such place where production and distribution costs are the minimum. Costs which influence the location decision include cost of land, rental value, transportation costs, labour cost, cost of water and power, etc. Other factors which influence the selection of location are – process inputs, process outputs, process requirements. Government policy, availability of site, personal, etc.
(5) Layout of Plant:
The plant layout represents an arrangement of machines and facilities. The plant layout should be efficient to achieve economy and efficiency in operations of the production department. An efficient layout is one that allows materials to move through the necessary operations rapidly and in the most direct way possible.
(6) Selection of Plant Location:
The choice of plant and equipment depends upon:
(a) What is available or what can be made available? That is technological feasibility constraints, and
(b) What is economically reasonable – That is cost constraints.
The quality of output, life of the machine and adaptability of the facilities are also important considerations.
(7) Research and Development:
Research means critical investigation in order to acquire new knowledge. Applied research explores information for the practical problems in mind and thus is directed to achieve immediate solution to practical problems. Development comes after applied research. It involves design and fabrication of new products and the testing their usefulness keeping in view the needs and demands of customers.
Functional Area # 2. Marketing Management :
Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm’s marketing resources and activities. It is an important functional area of business which generates revenues through the sale of goods and services to the customers.
The marketing management process consists of analyzing market opportunities, researching and selecting target markets, and implementing and controlling the marketing efforts. Marketing management is responsible for taking the decisions for the product, price, place and promotion keeping in view the requirements of the business.
The major function of marketing department is to generate revenue for the business by selling want satisfying goods and services to the customers.
In order to achieve this purpose, the marketing manager performs the following functions:
i. Marketing Research:
Marketing research is the function that links the customer, consumer and public to the marketer through information used to identify and define marketing opportunities and problems, generate, refine, and evaluate marketing actions, monitor marketing performance and improve understanding of marketing as a process.
Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process.
ii. Product Planning and Development:
A product is something which is offered by a business firm to customers to satisfy their needs. It has great importance in all other areas of marketing management. For instance, marketing research is mainly directed towards knowing the needs of the customers and increasing the sale of the product, storage and transportation activities depend upon the nature of the product. Therefore, it is necessary to plan and develop products which meet the specification of the customers.
iii. Buying and Assembling:
Procurement of raw materials, semi-finished or finished products has gained great importance for the modern industrial and commercial enterprises. Raw materials are purchased for production by the industrial enterprises and finished goods are purchased for resale by the commercial enterprises.
Purchasing is different from assembling. Purchasing involves determination of requirements, finding the sources of supply, planning the order and receiving the goods. But assembling means collection of goods already purchased from different sources at a common point.
Selling is providing the customer with the products that they want. Examples- Retail stores and sales people. Sale may take the form of (a) a negotiated sale, and (b) an auction sale. In case of negotiated sale, the terms and conditions between the buyer and the seller are arrived at by bargaining or haggling.
But in case of auction sale, there is no scope for negotiation between the seller and buyer. The buyers assembled at the place of auction and bid against one another for the goods are sale.
Financing involves getting the money that is necessary to operate a business. Business raise money by selling shares, selling their products and taking out loans. This is the preliminary function. Total budgeting is going to be done while planning for marketing the goods and services.
Pricing a product is perhaps the most important part of the marketing functions. Pricing a product involves choosing a price where the profit generated from a product would be at its maximum. This is based on the competitors, prices and how much the consumer would want to pay for the product.
Price of a product is influenced by the cost of product and services offered. Profit margin desired, prices faced by the rival firms and government policy, sound pricing policy are an important factor for selling the products to the customers.
Promotion of a product is crucial to a product’s success in the market. Efforts to try and convince consumers through communication to buy the product are generally called promotions. Promotion is one of the four elements of marketing mix (product, place, promotion place).
It is the communication link between sellers and buyers for the purpose of influencing, informing or persuading a potential buyer’s purchasing decision.
There are three basic objective of promotion.
a. To present information to consumers as well as others.
b. To increase demand.
c. To differentiate product.
Advertising has become an important function of marketing in the competitive world. It helps to spread the message about the product and thus promote its sale. It facilitates creation of a non-personal link between the advertiser and the receivers of the massage. The importance of advertising has increased in the modern era of large scale production and tough competition in the market.
Business firms use several media of advertisement to sell their product. These include newspapers, magazines, radio, television, cinema halls, hoardings, windows displays, etc.
So, these are the eight functions or ways, which is going to be considered by the marketing manager during the decision making process while marketing any product or services.
Functional Area # 3. Financial Management :
Financial management seeks to ensure the right amount and type of funds to business at the right time and at reasonable cost. Financial management means planning, organizing, directing and controlling the financial activities such as procurement of funds and utilisation of funds of the enterprise. It means applying general management principles of financial resources of the enterprise.
The financial manager of an organisation or business enterprise has to manage various aspect of the finance which determines the scope of his duties.
The various functions are discussed below:
(i) Formulation of Objective:
The foremost function of the finance department is the formulation of objective. This objective refers to those activities which are correlated with organisation objectives and helps in the fulfillment of goals of the organisation for the accomplishment of finance department goals, it is necessary to have coordination with other various functional departments.
(ii) Estimation of Capital Requirements:
A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmes and policies of a concern. Estimations have to be made in an adequate manner which increases the earning capacity of enterprise.
(iii) Determination of Capital Structure:
Once the estimation has been made, the capital structure have to be decided. This involves short-term and long-term deft equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.
(iv) Choice of Sources of Funds:
For additional funds to be procured, a company has many choices like:
(a) Issue of shares and debentures.
(b) Loans to be taken from banks and financial institutions.
(c) Public deposits to be drawn like in form of bonds. Choice of factor will depend upon the relative merits and demerits of each source and period of financing.
(v) Investment of Funds:
The finance manager has to decide to allocate funds into profitable ventures so that there is safety on investment and regular returns is possible. The funds procured from various sources are to be prudently invested in various a sets so as to optimise the return on investment. While investment decision, management should be guided by three important principles-safety, profitability and liquidity.
(vi) Disposal of Surplus:
The net profits decision has to be made by the finance manager.
This can be done in two ways:
(a) Dividend Declaration – It includes identifying the rate of dividends and other benefits like bonus.
(b) Retained Profit – The volume has to be decided which will depend upon expansional, innovational, diversification plans of the company.
(vii) Management of Cash:
Finance manager has to make decisions with regards to cash management. Cash is required for many purposes like payment of wages and salaries, payment of electricity and water bills, payment to creditors, meeting current liabilities, maintenance of enough stock, purchase of raw materials, etc. In order to know the need of cash during different periods, the management should prepare a cash flow statement in advances.
(viii) Financial Controls:
The finance manager has not only to plan, procure and utilize the funds but he also has to exercise control over finances. This can be done through many techniques like ratio analysis, financial forecasting, cost and profit control, etc.
Functional Area # 4. Personnel Management :
Personnel management involves planning, organising, directing and controlling the procurement, development, compensation, maintenance, etc., of the human resources in an enterprise. It consists of various functions for managing the human resource of an organisation.
Edwin B. Flippo has defined Personnel Management as that area of management which deals with planning the activities, maintain and utilising the workforce in the enterprise to help in the achievement of its objectives.
i. Manpower or Human Resource Planning :
Human resource planning may be defined as a process by which the management ensures the right number of people and the right kinds of people at the right place at the right time doing the right things for which they are best suited for the achievement of organisational objectives.
The process of manpower planning involves:
(1) Forecasting manpower requirements –
a. Work load analysis
b. Work-force analysis
(2) Manpower inventory preparation
(3) Manpower gap Identification
(4) Formulating manpower plans
ii. Recruitment :
Recruitment is the process of identifying the sources for prospective candidates to stimulate there to apply for jobs in the organisation.
It includes seeking and attracting a pool of people from which qualified candidates for job vacancies can be chosen. The process of identification different sources of personnel is known as recruitment. It is a positive process as it attracts suitable applicants who apply for available jobs.
The process of recruitment:
(i) Identifies the different sources of labour supply.
(ii) Assesses their validity.
(iii) Chooses the most suitable source or sources, and
(iv) Invites applicants from the prospective candidate for the vacant jobs. Recruitment is concerned with listing the candidates for consideration of selection to various jobs. It enables the management to select suitable employees for different jobs. Recruitment is done before selection or employment of workers. Recruitment is a positive process of searching the prospective employees and attracting them to apply for vacancies.
iii. Selection :
Selection is the process of choosing the best person for a particular job. It leads to employment of workers. Selection is a negative process it involves rejection of unsuitable candidates. More candidates are rejected than are selected. Selection involves several steps to weed out the unsuitable candidates for the job under consideration. Criteria are laid down at an each stage. Those who do not fulfil these criteria are rejected.
iv. Training and Development :
“Training is the act of increasing the knowledge and skills of an employee for doing a particular job.”
Training refers to the acquisition of knowledge, skills and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. Whereas training increases job skills, development shapes attitudes of employees.
Development involves growth of an employee in all respects. It denotes the process by which the employees acquire skills and competence to do their present jobs and increase their capabilities for handling higher jobs in the future.
v. Appraisal :
Appraisal refers to the rating or evolution of the worth, merit or effectiveness. Performance appraisal (earlier known as merit rating) implies the formal and systematic evaluation of performance on the job. Almost every large organisation has a formal system of evaluating work performance of its employees because its success depends upon such performance.
Performance refers to the degree of accomplishment of the tasks and it is measured in terms of results. According to Flipo, “Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in matters pertaining to his present job and of his potentialities for a better job.”
vi. Compensation and Promotion :
Compensation may be defined as money received in the performance of work, plus the many kind of benefits and services that organisation provide to their employees. ‘Money’ is included under direct compensation (popularly known as wages, i.e., gross pay); while benefits come under indirect compensation, and may consists of life, accident and health insurance, the employer’s contribution to retirement, pay for vacation or illness, and employee’s required payments for employee welfare as social security.
Promotion means the transfer of an employee to a job that pays more money or one that enjoys some preferred status. A promotion involves reassignment of an employee to a position having higher pay, increased responsibilities, more privileges, increased benefits and greater potential. According to Pigors and Myers “Promotion is the advancement of an employee to a better jobs in terms of greater responsibilities, more prestige of status, greater skill, and especially higher scale of pay or salary.”
vii. Personnel Records and Research:
Personnel department maintains the personnel records of the employees working in the enterprise. It keeps full records about their training, achievements, transfer, promotions, etc. It also preserves many other records relating to the behaviour of personnel like absenteeism and labour turnover and the personnel programmes and policies of organisation. Also the research upon the various functions of personnel is necessary for managing the personnel of organisation with the changing environment.
Functional Areas of Management – Quick Notes
Production or operations management is the area of management so as to produce the products and services. There products and services should be available in right quality and quality, at the right time, and at the right cost.
It consists of the following activities:
i. Designing the product.
ii. Location and layout of plant and buildings.
iii. Purchase and storage of materials.
iv. Planning and control of factory operations.
vi. Inventory control and quality control.
vii. Research and development etc.
2. Marketing Management:
Marketing management includes the identification of consumer’s needs and supplying them the products and services which can satisfy those needs.
It includes the following activities:
i. Marketing research to determine the needs and expectations of consumers.
ii. Planning and developing suitable products.
iii. Fixation of appropriate prices.
iv. Selection the right channels of distribution, and
v. Promotional activities through advertising and salesmanship to communicate with the customers.
3. Financial Management:
Financial management ensures the flow of funds in the business with suitable and fruitful financial policies.
It involves the following activities:
i. Estimating the volume of funds required for business.
ii. Determining the appropriate sources of funds.
iii. Raising the required funds at the right time.
iv. Ensuring proper utilization and allocation of raised funds so as to maintain safety and liquidity of funds.
v. Administration of earnings.
4. Personnel Management :
Personnel management involves planning, organizing, staffing, directing and controlling the procurement, development, compensation, maintenance etc of the human resources in an organization.
It comprises the following activities:
ii. Recruitment & selection.
iii. Training and development.
iv. Placement and induction.
vii. Employee services and benefits.
viii. Personnel records and research etc.
Functional Areas of Management – Explained
1. Functions of Production management;
2. Functions of Marketing management;
3. Functions of Financial management; and
4. Functions of Personnel management.
Some management experts have also talked of ‘Information and Administration Management’, ‘Accounting Management’, and ‘Research and Development Management’ as forming part of the functional area of management. But these are at best subsidiary parts of one or the other of the four main areas of management.
1. Functions of ‘Production Management’ :
A business unit is established for production and distribution of goods and/or services. Production management refers to planning, organization, direction, coordination and control of the production function in such a way that the desired goods or services could be produced at the right time, in right quantity and at the right cost.
Production management involves the following activities:
(a) Developing the product service;
(b) Establishment of proper organization structure;
(c) Selection of personnel;
(d) Management of purchase, storage and transportation of raw materials; and
(e) Ensuring effective production control.
2. Functions of ‘Marketing Management’ :
In the modern world, marketing function is becoming more and more complex. This is because, first, the market today is the buyers’ market. The needs, desires, buying capacities and habits of buyers need to be carefully studied to draw them to patronizing a particular product or service. If they are long habituated to using any other product or service, it becomes necessary to wean them away by convincing them how they stand to benefit if they switched to using the product or service offered by the organization.
Remember, how a TV manufacturer highlights the qualities of his product by calling the competing TVs as dabba. Or, how the manufacturer of a washing powder shows a woman washing two shirts, one using the advertised powder and the other—a rival powder, and demonstrating to friends how the advertised powder washes better.
Secondly, the market today is no longer localized. It extends to far-flung areas, even foreign lands. This involves problems of transportation, difficulties in securing payments, advertising in multiple languages, and tackling export and import procedures. Thirdly, there is increasing competition from local as well as foreign producers.
The marketing function comprises the following activities:
1. Assessing consumer demand;
2. Setting up facility to produce goods and/or services;
3. Ensuring adequacy of finance, depending on production costs and length of time-interval between production and sales;
4. Choice of the market, whether high-price top-end or low-price mass market; and
5. Assessing the extent of competition.
3. Functions of ‘Financial Management’ :
Finance is the life-blood of a business; business operations revolve round finance. In fact, all management decisions are subject to availability, safety and liquidity of financial resource.
The main objectives and functions of financial management are as follows:
(a) To ensure availability of adequate funds for business operations;
(b) To allow sufficient flexibility in financial planning to ensure that funds are available when needed;
(c) To raise and maintain funds at the lowest cost possible;
(d) To ensure adequate liquidity of funds so that the business is never short of liquid cash to pay current liabilities;
(e) To achieve safety of investment as also secure maximum return on investments;
(f) To maintain credit-worthiness and reputation of the organization among creditors, bankers, present and potential shareholders and members of the public; and
(g) To secure to owners (shareholders) a fair return on the capital invested by them.
4. Functions of ‘Personnel Management’ :
Personnel management is concerned with human resources of an organization. Its functions include procurement, development, provision of compensation, and integration of the personnel to contribute to accomplishment of organizational goals.
The main objectives of personnel management are as follows:
(a) To contribute to welfare of society by creating job opportunities;
(b) To contribute to welfare of individual workers by providing adequate monetary and non-monetary compensation, job-satisfaction, job security, and opportunities for all-round development;
(c) To ensure that various positions in the enterprises are, and continue to be, occupied by competent, contented and effective workers, and they have opportunity to put in their best performance in an atmosphere free from any physical or mental tension; and
(d) To recognize workers’ right to form or join labor unions and persuade their leaders to promote self-discipline among workers such that they achieve maximum efficiency and economy in the functioning of organization.
- Functional Organisational Structure
- Difference between Personnel Management and Human Resource Management
- What are the Levels of Management?
- Features of Human Resource Management
Module 1: Role of Business
Functional areas of business, learning objectives.
- Identify the primary functional areas within a business
- Identify key people and explain the activities within each functional area
One of the reasons for separating business operations into functional areas is to allow each to operate within its area of expertise, thus building efficiency and effectiveness across the business as a whole. Functional areas in a business vary according to the nature of the market and the size of the business. For example, manufacturing companies like Nike and Apple have significant Research and Development (R&D) departments in order to stay in the lead in their respective business segments. On the other hand, retail companies may have no R&D functional area per se, but will be heavily invested in Operations areas surrounding Supply Chain Management.
In general, the key functional areas of a business are the following:
- Research and Development
Each of these functional areas is represented in the following organization chart.
The primary role of managers in business is to supervise other people’s performance. Most management activities fall into the following categories:
- Planning : Managers plan by setting long-term goals for the business, as well as short-term strategies needed to execute those goals.
- Organizing: Managers are responsible for organizing the operations of a business in the most efficient way—enabling the business to use its resources effectively.
- Controlling: A large percentage of a manager’s time is spent controlling the activities within the business to ensure that it’s on track to achieve its goals. When people or processes stray from the path, managers are often the first ones to notice and take corrective action.
- Leading : Managers serve as leaders for the organization, in practical as well as symbolic ways. The manager may lead work teams or groups through a new process or the development of a new product. The manager may also be seen as the leader of the organization when it interacts with the community, customers, and suppliers.
Operations is where inputs, or factors of production, are converted to outputs, which are goods and services. Operations is the heart of a business—providing goods and services in a quantity and of a quality that meets the needs of the customers. Operations controls the supply chain, including procurement and logistics.
Marketing consists of all that a company does to identify customers’ needs and design products and services that meet those needs. The marketing function also includes promoting goods and services, determining how the goods and services will be delivered and developing a pricing strategy to capture market share while remaining competitive. In today’s technology-driven business environment, marketing is also responsible for building and overseeing a company’s Internet presence (e.g., the company website, blogs, social media campaigns, etc.). Today, social media marketing is one of the fastest growing sectors within the marketing function.
The goal of Sales is to close the revenue the company needs in order to operate profitably, especially in B2B businesses. Again, depending on the nature of the market and the company size, Sales functional areas can vary in structure and approach: inside/outside representation, vertical/horizontal focus, direct, etc. Sales works to exploit the leads created by Marketing and activities generated by the sales force itself.
The Finance function involves planning for, obtaining, and managing a company’s funds. Finance managers plan for both short-term and long-term financial capital needs and analyze the impact that borrowing will have on the financial well-being of the business. A company’s finance department answers questions about how funds should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the implications of financing decisions for the long-term health of the business.
Accounting is a crucial part of the Finance functional area. Accountants provide managers with information needed to make decisions about the allocation of company resources. This area is ultimately responsible for accurately representing the financial transactions of a business to internal and external parties, government agencies, and owners/investors. Financial accountants are primarily responsible for the preparation of financial statements to help entities both inside and outside the organization assess the financial strength of the company. Managerial accountants provide information regarding costs, budgets, asset allocation, and performance appraisal for internal use by management for the purpose of decision-making.
Key People Within Functional Areas
Here is an example of the functional areas of a large technology manufacturing corporation and the key functions and people within.
The Management functional area in most large corporations is led by the Chief Executive Officer (CEO). Depending on company size, there may be a President in position as well.
The Operations functional area is managed by the Chief Operations Officer (COO). In this example, Operations consists of Production, led by a Vice President (VP), a Supply Chain department, and a Procurement area with Director-level people in charge.
The Finance functional area is led by the Chief Financial Officer (CFO), who is one of the most important “C-level” executives. In addition to running Finance and Accounting, the CFO is responsible for reporting company results to the financial community. Finance also contains Human Resources (HR) in many companies and the Legal department as well. It is common for the CFO to have VPs of HR, Accounting, and Legal as direct reports. HR contains functions like employee training, compensation and benefits, and recruiting. Accounting has multiple functions, such as Accounts Payable, Receivable, record-keeping, and cash flow. The Legal department is responsible for contracts, copyrights, and various negotiations on behalf of the company.
The Marketing/Sales functional area is managed by the Chief Revenue Officer (CRO), which is a relatively new addition to C-level executives. The CRO may have a Sales VP and Marketing VP as direct reports, but in some cases, the CRO may act as VP of Sales or Marketing. This functional area may also contain Customer Service (and Support) with a Director-level manager in charge. Marketing has specialized functions, such as communications (press releases), social media, data science analysis, and product marketing. Customer Service is usually responsible for Customer Relationship Management (CRM) and problem resolution and support.
Finally, the Research and Development functional area is the lifeblood of manufacturing businesses. R&D is staffed with scientists, thought leaders, subject matter experts, and industry analysts striving to provide the organization with knowledge and ideas to keep up with, and ahead of, the competition. R&D is led by the Chief Technology Officer (CTO), who manages a Development VP or similar title, depending on what technology products are being produced: semiconductors, software systems, or dental appliances. In many organizations, the Information Technology area (IT), responsible for providing internal technology tools to the company’s employees, is housed in the R&D organization.
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Notes on Functional Areas of Management
This article throws light upon the top four functional areas of management. The functional areas are: 1. Production Management 2. Financial Management 3. Personnel/Human Resource Management 4. Marketing Management.
Functional Area # 1. Production Management :
The term ‘production’ was closely associated with manufacturing physical goods and, therefore, production management was also known as manufacturing management. Today, goods are not only physical goods but also services.
Production is related to both goods and services and, therefore, production management is known as operations management. It deals with conversion of inputs into outputs. It is a “set of components whose function is to transform a set of inputs into some desired output.”
“It is the management of productive processes that convert inputs into goods and services.” The inputs are the men, material, equipment, technical knowledge etc. The conversion process that transforms the inputs can be physical transformation in manufacturing operations, locational transformation in transportation, exchange transformation in retailing, storage transformation in warehousing, informational transformation in legal firms, physiological transformation in medicine, and gratification transformation in entertainment.
Outputs are the goods and services produced through the conversion process. Outputs also include by-products of goods, whether in the form of pollutants or wastes. This input-output conversion process is also affected by the environmental forces like Government regulations, economic-political-legal framework of the country, policies of competitors, international policies, etc. The feedback mechanism helps to know effectiveness of the conversion process and whether or not it requires changes in its components.
The working of the operations management is shown below:
Functional Area # 2. Financial Management :
All activities (production, marketing or personnel) require constant flow of funds. Finance department takes care of financial requirements of the enterprise. It makes arrangements for acquisition and effective utilisation of funds.
With increase in the size of business, its relationship with the internal and external environment, product diversification and differentiation, Government regulations and technological developments, finance manager assumes important role in management of finance. Financial management deals with management of finance. It is “the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.”
Functional Area # 3. Personnel/Human Resource Management:
Traditionally what was known as personnel management is now replaced with human resource management (HRM) today. Initially, in small organisations all the managerial functions of planning, organising, staffing, directing, and controlling (for all the functional areas of management) were performed by the managers but with increase in size of the organisations, managers could not look after all the functional areas. Personnel specialists or senior managers were appointed to look into matters related to personnel policies and separate departments called personnel departments were created.
Human resource department performs the following functions:
(a) Human resource planning or manpower planning balances the demand for employees in qualitative and quantitative terms and its supply from various internal and external resources. Internal sources fill organisational posts from within the organisation and external sources provide labour from outside sources such as labour market.
(b) Recruitment analyses requirements of the job, prepares job description and invites applications from those whose qualifications match the job description.
(c) Selection selects the most suitable person out of those who have applied for the job. Written tests and interviews are conducted to select the suitable candidates.
(d) Performance appraisal assesses the performance with the targeted performance to check deviations and provide training to improve the performance.
(e) Training enhances the knowledge and skills of employees. It enables them to effectively manage the organisational positions and promotes their growth. Training programmes can be conducted on-the-job or external agencies can provide training to the employees.
(f) Rewards deal with the pay structure for each job. Rewards vary with the skill, knowledge and competence for each job position.
(g) Industrial relations maintain harmonious relations between the management and employees. Grievances or disputes are settled by the personnel manager by following legal provisions and rules.
(h) Employee communication and participation communicates managerial decisions to employees and allows them to participate in the decision-making processes.
(i) Personnel records maintain record of employees regarding their qualification, experience and achievements. It is maintained by the personnel department. This serves as the basis for internal recruitment where employees can be placed at jobs within the organisation. These records help in matching job description with job specification, that is, matching the requirement of the job with qualifications of the person.
The focus of HRM is growth and development of the organisation along with its work force.
Features of HRM:
Following are the features of HRM:
(a) It views employees as important organisational resource that is committed to organisational needs and works towards its goals.
(b) It aims to satisfy individual needs by providing challenging, lucrative and meaningful jobs to employees.
(c) It follows the concept of ‘mutuality’ where managers focus on mutual goals, mutual respect, mutual rewards etc.
(d) It allows employees to participate in the decision-making processes.
(e) It caters to the interests of people internal (labour force) and external to the organisation (customers, suppliers, shareholders etc.)
Objectives of HRM:
HRM aims at the following:
(a) Effective utilisation of human resource.
(b) Motivate people to make them committed to organisational goals.
(c) Frame policies and procedures that fulfill the needs of employees.
(d) Aim at growth and development of employees through teamwork, co-operation, creativity and innovation.
(e) Maintain human flexibility in the jobs they are placed at and the number of hours they spend on each job to achieve quality management.
Functional Area # 4. Marketing Management :
Traditionally, markets were a place for exchange of goods and services between sellers and buyers to the mutual benefit of both. Today, marketing is exchange of values between the seller and the buyer. Value implies worth related to the goods and services being exchanged. The buyer will pay for the goods if they have value for him.
Marketing management is “planning, organising, controlling and implementing of marketing programmes, policies, strategies and tactics designed to create and satisfy the demand for the firms’ product offerings or services as a means of generating an acceptable profit.” It deals with creating and regulating the demand and providing goods for which customers are willing to pay a price worth their value.
Elements of marketing management:
The basic elements of marketing management are:
(a) Customer orientation:
The focus of marketing function is to sell goods desired by consumers; the goods that satisfy their needs.
(b) Integrated effort:
Marketing function should be co-ordinated with other functional areas of production, finance and personnel management.
While the consumer wants a product that satisfies his needs, seller sells a product which provides profit. A successful marketing strategy should provide profits to the marketer along with customer satisfaction.
The goods should not only earn profits, they should also build reputation of the firm in terms of quantity, quality and the price at which goods are sold.
Marketing plans are made within the constraints of controllable and non- controllable variables. The non-controllable variables are social, technological, political, cultural and legal factors which affect the marketing strategies. Controllable factors are the product, price, promotion and channels of distribution. Marketing mix is the combination of controllable variables that make a successful marketing programme.
(a) Product mix:
It deals with physical attributes and benefits of the product. Ownership gives a sense of pride and satisfaction to the consumer and, therefore, the product should be properly designed, coloured and packed.
(b) Pricing mix:
Pricing is an important marketing decision. Pricing is affected by factors such as costs, legal framework, prices charged by competitors and the prices that consumers are ready to pay. Price should recover the costs and earn a reasonable return on capital. This ensures long-run survival and growth of the enterprise.
(c) Promotion mix:
It refers to communication with the consumers regarding the product. It motivates them to buy the goods.
Sales can be promoted in three ways:
It presents the product details to consumers through media. It is a non-personal means of communication.
(ii) Personal selling:
The seller directly contacts the buyer and convinces him to buy the goods.
(iii) Sales promotion:
It supplements advertisement and personal selling as a means of promoting sales. It increases sales by holding contests, lotteries etc. Different combinations of sales promotion techniques can be used at a point of time.
After the product is designed, priced and advertised, it arouses consumers’ interest to buy. The channel mix identifies the path through which goods are transferred from sellers to buyers. The seller may sell directly to the buyer or through intermediation of wholesalers and retailers.
More than one channel of distribution can be adopted at the same time; for example, a wholesaler can sell through retailers and also directly to consumers. The channel mix selects and maintains the channel to ensure consistency in selling practices followed by the sales people.
- 5 Main Functional Areas of Management | Business Management
- Top 8 Functional Areas of Financial Management
- Notes on Line and Staff Authority
- Notes on Historical Change from Personnel Management to Human Resource Management
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Please note you do not have access to teaching notes, reflective writing: a management skill.
ISSN : 0143-5124
Article publication date: 5 January 2010
The purpose of this paper is to analyze students' reflective writing in terms of identifiable outcomes and explore students' thoughts on reflection and reflective writing as a process.
A mixed methods approach is taken with a qualitative analysis of 116 written reflections from MA Librarianship studying management over an eight‐month period. A quantitative statistical analysis assesses the relationships between reflective writing and a number of possible outcomes identified from the literature.
A significant relationship is found between seven of eight outcomes tested; academic learning, the need for self‐development, actual self‐development, critical review, awareness of ones' own mental functions, decision making and empowerment and emancipation. There is some evidence of a relationship between non‐academic learning and reflective writing, but it is not significant. A number of themes emerged from the reflective writings regarding reflection itself, with students seeing reflection as a positive activity, with benefits for the individual, groups and in the workplace, and identifying reflection as a skill that can be practiced and developed.
Reflection and reflective writing as a management skill has potential benefits for personal and professional development and improving work‐based practice.
This paper differs from the previous literature in presenting statistical evidence to confirm the relationships between reflective writing and a range of potential outcomes.
- Library management
- Information management
- Library studies
- Management skills
Anne Sen, B. (2010), "Reflective writing: a management skill", Library Management , Vol. 31 No. 1/2, pp. 79-93. https://doi.org/10.1108/01435121011013421
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Copyright © 2010, Emerald Group Publishing Limited
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What Are The Functions Of Management?
The new work-from-home routine has brought many challenges for management—what with so many of us now working out of different…
The new work-from-home routine has brought many challenges for management—what with so many of us now working out of different cities! Coordinating with employees, monitoring progress via email and collaborating digitally requires constant attention and a lot of time.
Office communication has now found a new home online with virtual meet-ups becoming the new normal. But even though this transition has been difficult, everyone is learning to get used to this way of working. At the end of the day, we have to work hard to achieve personal and professional goals.
Whether at home or in the office, every organization strives to achieve short-term and long-term goals. But how do you determine the clarity of roles and responsibilities, deliverables and deadlines?
This is where French Industrialist Henri Fayol’s management theory comes into play. The theory defines five functions of management—planning, organizing, staffing, directing and controlling. Each of these functions plays a critical role in helping organizations achieve efficiently and effectively. Luther Gulick, Fayol’s successor, further defined 7 functions of management or POSDCORB—planning, organizing, staffing, directing, coordinating, reporting and budgeting.
But Gulick’s 7 functions of management have been criticized by experts as an oversimplification of the managerial process. So, Fayol’s functions of management are more commonly accepted by management even today.
A manager should be well-versed in each of these five functions to accomplish organizational goals. We’ll be discussing the various functions of management to understand how they improve the day-to-day operations of an organization. We’ll also explore how they can help you become a qualified manager.
A manager is someone who can lead, direct and control operations and people in their organization without imposing their authority. In a world where a more informal working structure is becoming increasingly popular, a manager has to work with their team to achieve larger goals. Functions of management are a great starting point to find your footing before you dive straight into your role as a manager.
Functions of management help you stay informed about what you need to do and how so that you can guide your staff accordingly. Management experts like Fayol and Gulick explain the functions of management to equip yourself with the right skills to become an accomplished manager.
Let’s say that you’re in the planning stage of your managerial process. This means that you’ll first assess your goals, define your purpose and visualize what needs to be done. This requires the ability to interpret historical data, evaluate current trends and develop strategies for the future. Each function is successful if you can reach your destination without problems like surpassing your budget or missing deadlines.
Here are the functions of management and why they’re important.
Planning is an important function of management because it sets the pace for all subsequent steps in the managerial process. You need to develop a roadmap for the future—predefined steps—to accomplish organizational goals. In this step, you’ll have to evaluate methods and strategies to determine how you’ll progress toward your goal.
You may have to look at how things were done in the past to make any adjustments to mitigate errors. You have to consider both internal factors—people, time and cost—and external factors—competitors, policies and general business environment —to arrive at a sound planning strategy.
This is where you put your plan into action by establishing a system of authority or hierarchy in the context of your organizational structure. Determine the tasks that need to be completed to achieve your goals before assigning them to your staff. As opposed to the traditional ways of working where a manager made all the decisions, today’s business world is more dynamic and flexible. Every member of the organization—regardless of position—shares accountability and responsibility.
So, define an organizational structure that aligns with your workplace and assign tasks that map to your team’s skills and abilities. You have to get everyone on the same page and delegate tasks the way you see fit.
This is another important function of management. You have to assign tasks based on each team member’s knowledge, skills and abilities. You have to be careful here because you may have to hire new talent for specific tasks that require specific technical expertise. Assessing the needs of your employees in terms of incentives, training and development and compensation are critical for the success of this step.
An effective manager will have the insight to evaluate the competency and efficiency of their employees. This is to ensure that their assigned tasks match their skills. You have to adopt an empathetic approach to connect with your employees and understand their strengths and weaknesses.
Directing is concerned with supervising your team’s progress. In this step, you have to keep an open channel of communication and get regular updates to stay on top of things. A great way to do this is by giving and receiving feedback to address any problem areas and improve performance. This is where you have to act as a leader, navigate conflict and motivate your employees to take initiative.
Harappa Education’s Managing Teamwork course will teach you the Skill-Will Matrix —attributed to leadership coach Max Landsberg. It’s a quick and easy way to assign tasks based on the capabilities and motivation of each member.
As a manager, you have to give each team member enough autonomy to help them stay motivated and perform without constant supervision. Besides monitoring your team, you also have to keep your manager and other stakeholders informed with progress reports. The entire organization should work like a well-oiled machine to achieve your goals in a time-effective manner.
This is where you have to measure the progress of each step established in the planning stage against your organizational goals. This step requires you to coordinate with your employees to ensure that they’re moving in the right direction and in the right manner. According to Gulick’s 7 functions of management, controlling can be understood in terms of coordinating, reporting and budgeting.
Not only do you have to ensure that every step is going according to plan, but also watch out for potential problems to take corrective measures. Make timely adjustments and modifications where necessary. It’ll help you accomplish your goals faster within your timeframe and your budget. Take this opportunity to cooperate with everyone on your team.
Examples Of Management Functions
Management functions are a systematic framework that you can rely on in your professional life. Now that we’ve discussed each function in detail, let’s discuss their implementation with examples. Here are a few examples of management functions:
Say that you’re an operations manager with a firm that manufactures office furniture. Your responsibilities will include defining the production, packaging and delivery processes. You’ll have to monitor the progress of the assembly line, ensure that everything is up to standard and performance is not compromised at any stage.
As a manager, you have to set clearly-defined goals for production, hire the right people for your team and monitor progress to mitigate errors. From the planning stage to the controlling stage, you have to work with your team to maintain quality standards.
Let’s say that you’re a sales manager tasked with launching a new product. Now, your responsibilities include assembling a new sales team for this project. This is where you assess abilities and different skills to appoint the right people. For instance, someone who’s good with numbers can help you visualize sales projections and make budgets. Meanwhile, someone who’s good at design can contribute to the product packaging and ad campaigns. ( Provigil )
As a manager, in-depth knowledge of the various functions of management is critical for professional success. This is a good measure of your efficiency and effectiveness that play a crucial role in achieving organizational goals.
Leading a team isn’t a walk in the park because you have to accommodate different work styles, personalities and skillsets. Functions of management highlight essential skills that every manager needs to supervise, coordinate and communicate with their teams. As a good manager, you need to have the right insight to understand who you’re working with and how you can use their abilities for the greater good of the organization.
Our Managing Teamwork course will show you how to become an effective leader and a reliable member of your team. Learn the importance of feedback and how it can help you navigate conflict in your organization. With the power of the GRIN (Goals-Roles-Interdependence-Norm) framework, you’ll be able to set goals, define a code of conduct for your team and work closely with your teammates. Identify best practices for your team to achieve your goals without losing sight of the big picture!
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Explore our Harappa Diaries section to know more about topics related to the Collaborate habit such as Teamwork , Delegation of Authority , the Difference Between Leadership and Management , Employee Engagement , Building Relationships & Strategic Management in order to develop your collaboration skills.
L&D leaders need to look for reskilling programs that meet organizational goals and employee aspirations. The first step to doing this is to understand the skills gaps and identify what’s necessary. An effective reskilling program will be one that is scalable and measurable. Companies need to understand their immediate goals and prepare for future requirements when considering which employees to reskill.
Are you still uncertain about the kind of reskilling program you should opt for? Speak to our expert to understand what will work best for your organization and employees.
The four functions of management: Overview + examples
Being or becoming a manager can feel like a daunting task in today’s business world. But if you look closely, everything a manager does falls under four key functions:
While we can’t solve all the growing pains you face, we have some great news: No matter your industry or your level of management, you’ll perform this same set of functions. They may look different as a first-tier manager than they do as a CEO, and the problems within those functions vary endlessly.
But master each of these, and you’ll be well on your way to conquering nearly any business challenge.
A breakdown of the four functions of management
Let’s look more closely at each of the four functions — and the ways that effective managers leverage this framework to better meet their organization’s goals.
Managers are responsible for the long-range vision and goals within a company. The planning function includes this vision and goal-setting along with the work of creating a plan to reach those goals. They identify business challenges, work on future-facing initiatives (such as growth plans, company goals, and business forecasting) and make decisions that move the business toward goals.
Another element of the planning phase of management is resource allocation or workload management . Typically, the manager decides which employees in the department are assigned to which projects, seeking to balance workload and maintain efficiency through this work. Managers often enlist the help of project managers ( a vital role for businesses across many industries) to determine workload and capacity. Or, in some cases where there is no formal project manager, managers may use project management tools themselves to fill this role.
Planning is essential within any organization, and it’s an important part of the management role for a few reasons. First, the rank-and-file employees are usually too busy completing tasks to step back and think strategically about the big picture. Second, people management tend to get there precisely because they have above-average decision-making, leadership, and planning skills.
Managers are typically responsible for several types of planning within an organization:
The highest and most crucial level of planning looks at the long-range, big-picture view of the company. It identifies future threats and opportunities and sets long-term direction and organizational goals. Strategic planning isn’t concerned with day-to-day decisions and is looking instead at three-year plans, five-year plans, market trajectories, and similar big-picture elements.
In most organizations, top management does the bulk of the strategic planning. CEOs and other top-ranking leaders may rely on input from mid-level managers and will certainly inform them of the strategic plans, but most decisions here are made by the people in charge.
Tactical planning looks at how to accomplish more midrange or short-term objectives — usually those that last a year or less. Tactical planning is more targeted than strategic planning and is informed by the strategic plan, setting a general course of action that will be fleshed out further in operational planning.
Middle managers usually complete tactical planning, taking the strategic plan and breaking down the high-level goals within it into smaller, more measurable and near-term achievable goals.
Tactical planning is more granular than strategic planning, but it still doesn’t delve into the details of day-to-day operations.
Operational planning, on the other hand, is all about those day-to-day operations — seeking to use the principles and strategies laid out in tactical plans to accomplish the big-picture goals in the strategic plan. Department managers, first-level leaders, and project managers often contribute to operational planning.
Weekly project team meetings are one example of operational planning in action. Project schedules, timelines, RACI charts , swimlanes, and Gantt charts are all tools used within operational planning.
Next up is the organizing function, which refers to the way managers distribute resources, delegate tasks, structure departments, set staffing levels, etc. This function encompasses everything from assigning right-fit tasks to the appropriate team members to deciding how those team members relate to each other in an organizational structure .
If your company is growing rapidly, you’ll need more sales agents next year than you do this year (and more of just about every other role, too). At some point, even the structures and departments you have now will no longer make sense: you’ll need more managers to oversee those new hires, and you might need new divisions that wouldn’t have been feasible when you were smaller.
All of this takes careful organization from someone in a leadership role — which is why organizing is the second function of management.
Example of organizing functions
Managers have ongoing responsibilities to rebalance workload and even headcount as they respond to changes in the business landscape. Just 20 years ago, most marketing departments were doing little (if any) digital marketing, let alone content marketing or SEO. Today those areas comprise the majority of business for many marketing departments and agencies. And that same story plays out across numerous departments, roles, and business units.
Managers must keep jobs, job hierarchies, and resource allocation organized and appropriate for the business landscape of today — with an eye toward future needs and further changes.
Are you a manager or business leader at a creative agency? Find out why Teamwork.com is the project management software solution of choice for agencies .
Every organization, from creative agencies to enterprise operations, needs a force to drive it forward: rallying the troops and pushing them toward a common goal. Move down through the layers of a business and you’ll find a similar need for teams, projects, departments, and any other organizational or work structure that’s in place.
This is the leading or leadership function of management — a crucial part of every manager’s job.
The leading function of management focuses on people (whether individual, teams, or groups) more than work tasks. That’s not to say that tasks don’t matter, but rather, how those people are or aren’t handling their tasks and responsibilities will influence the type of leadership response that managers ought to give.
Managers and business leaders provide both direction and inspiration to those who follow them. This can take all sorts of forms:
Encouraging or praising
Demanding or commanding
Additionally, leadership includes both people management and making the tough right calls that others might miss.
There are many approaches to leadership in management, each with its own pros and cons. And it’s important to understand that there is no one right style — successful managers skillfully move between approaches, as each has its uses.
We’ll use the situational leadership model popularized by author and business coach Marshall Goldsmith , which highlights four other leadership styles: directing, coaching, supporting, and delegating.
A top-down, more authority-driven style of leadership, the director makes decisions and provides strong leadership without much, if any, input from the person or team being led. This style is useful when leading new or inexperienced teams, training new employees without a background in your industry, and potentially when forging ahead into a new market or technology (but only when the leader has experience worth trusting).
This method doesn’t work as well when the manager isn’t a powerful, experienced figure or when the people being managed have valuable input to offer.
A coach comes alongside skilled contributors, guiding them as they use their skills. The coaching style of leadership is much the same, working alongside team members yet retaining authority to make the final call. Coaches also develop potential or raw talent into something better and more useful, and it works exactly the same way in business.
Coaching is highly effective for employees who have input to give or raw talent that needs refining. It’s also effective with skilled employees who need help staying on target. Just like in sports, a coach can’t be better than the sum of the players on the team. So coaching may not be the best approach for inexperienced employees or those with significant performance issues.
Supporting steps back even further than coaching. This method assumes team members know what to do and how to do it, so the manager takes a more hands-off approach. Supportive managers often step into the relational aspects of a team, helping team members work better together.
This style of leadership also comes into play when individuals grow unsteady in terms of output or performance, offering support to a person who may need a hand getting through a rough patch.
Supportive management works best with highly skilled teams that still have some issues with interpersonal relationships, consistent performance, or other metrics.
The delegating style of leadership assigns tasks to employees (delegation) and provides little more than basic oversight once assigned, freeing the leader to spend more time on high-level work — like long-term vision and goal-setting for the project.
This method is very attractive to managers because in some ways it’s the easiest and least time-consuming. However, it only works consistently well with high-performing teams and team members who don’t need directing, coaching, or support.
Controlling includes all of management’s efforts to make sure the goal (established way back in the planning phase) is accomplished. It includes ongoing analysis of the plan and iterative updates to that plan as needed.
The manager’s project monitoring component (the analysis of how well the project team is adhering to the plan) may overlap slightly with project management. Not every business or project gets a dedicated project manager, either. If you’re a manager and find yourself doing more project management than you’d like, a good project management software tool can help.
Teamwork.com is a robust project management suite that managers and project leads alike can use to improve their project workflows. Take a look at Teamwork.com’s powerful Resource Management capabilities .
Examples of controlling functions
Schedule and deadline management, employee training, performance evaluations, adjustments to budgets or staffing assignments, and resource allocation are all included within the controlling function.
Lead better — stay organized with Teamwork.com
The four functions of management can be a powerful framework that helps effective leaders categorize and prioritize their tasks and responsibilities, identifying where their particular leadership skills best fit within an organization.
But even the most successful manager can struggle to stay on top of long-range plans, detailed planning processes, and the specifics of multiple concurrent projects. All of this combined is just too much information.
Teamwork.com is a powerful project management platform that helps busy managers stay organized so they can focus on leveraging their management skills, not tracking down project details.
Take a look and see what Teamwork.com can do to transform your workflows and keep projects organized. Sign up today for free!
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