Lecture 5 : FUNCTIONS OF MANAGEMENT CONT’D

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

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

The following are the important characteristics of organization.

Specialization and division of work

The entire philosophy of organization is centered on the concepts of specialization and

division of work. The division of work is assigning responsibility for each organizational
component to a specific individual or group thereof. It becomes specialization when the
responsibility for a specific task lies with a designated expert in that field. The efforts of the
operatives are coordinated to allow the process at hand to function correctly. Certain
operatives occupy positions of management at various points in the process to ensure
coordination.
ORIENTATION TOWARDS GOALS

Every organization has its own purposes and objectives. Organizing is the function employed
to achieve the overall goals of the organization. Organization harmonizes the individual goals
of the employees with overall objectives of the firm.

COMPOSITION OF INDIVIDUALS AND GROUPS

Individuals form a group and the groups form an organization. Thus, organization is the
composition of individual and groups. Individuals are grouped into departments and their
work is coordinated and directed towards organizational goals.

Purpose of organization

Helps to achieve organizational goal

Organization is employed to achieve the overall objectives of business firms. Organization

focuses attention of individuals‟ objectives towards overall objectives.

Optimum use of resources

To make optimum use of resources such as men, material, money, machine and method, it is
necessary to design an organization properly. Work should be divided and right people should
be given right jobs to reduce the wastage of resources in an organization.

TO PERFORM MANAGERIAL FUNCTION

Planning, Organizing, Staffing, Directing and Controlling cannot be implemented without

proper organization.

FACILITATES GROWTH AND DIVERSIFICATION

A good organization structure is essential for expanding business activity. Organization

structure determines the input resources needed for expansion of a business activity similarly
organization is essential for product diversification such as establishing a new product line.
HUMANE TREATMENT OF EMPLOYEES

Organization has to operate for the betterment of employees and must not encourage
monotony of work due to higher degree of specialization. Now, organization has adapted the
modern concept of systems approach based on human relations and it discards the traditional
productivity and specialization approach.

5.2 Leading/Controlling Function

Leading

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

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

Studies of motivation and motivation theory provide important information about the ways in
which workers can be energized to put forth productive effort. Studies of communication
provide direction as to how managers can effectively and persuasively communicate. Studies
of leadership and leadership style provide information regarding questions, such as, “What
makes a manager a good leader?” and “In what situations are certain leadership styles most
appropriate and effective?”

Controlling

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

The measurement of performance can be done in several ways, depending on the

performance standards, including financial statements, sales reports, production
results, customer satisfaction, and formal performance appraisals. Managers at all
levels engage in the managerial function of controlling to some degree.

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

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

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