Addis Ababa University

College of Business and Economics

DEPARTMENT OF MANAGEMENT

By Tekle G.

2021
Course outline
Chapter one: overview of management
Chapter two: the emergence and development of management thought
(Assignment)
Chapter three: the planning function
Chapter four: decision making
Assessment method
Chapter five: the organizing function
 Individual Assignment: 25%
Chapter six: the staffing function
 Mid term exam: 25%
Chapter seven: the leadership function
 Final exam: 50%
Chapter eight: the controlling function
 Chapter one: management overview
DEFINITIONS
 No single and universal definition for the term management
is given.
 F.W. Taylor Management is the art of knowing what you
want to do and doing it in the best and cheapest way.
 Stanly Management is the process of decision making and
control over the action of human being for purpose of
attaining the predetermined goals.
 Cont.
Boone and Kurtz

 Management is the use of people and other resources

to accomplish organizational objectives.

H. Fayol

 Generally management is the process of planning, organizing, staffing,

leading and controlling of activities and using an organization’s
resource for accomplishing organizational goals effectively and
efficiently in a changing environment.
What are 5M’s?
1. Man
2. Methods
3. Machinery
4. Money
5. Materials
Characteristics of management

 It is goal oriented
 It is a group activity
 It is a dynamic function
 It is a system of authority
 It is intangible because it is service
 It is a profession
 It is the optimal utilization of resources
Significance of management

 For better utilization of resources

 It facilitate accomplishment of goals by planning resources and by directing

and controlling activities.

 It establish sound organizational structure by clearly defining authority and

responsibility.

 To formulate and implement organizational policies.

 Coordination of factors of production and among departments of the

organization .

 Creates a sense of security and oneness to employees.

 Management vs leadership

 A manager is someone who:

 Plans and budgets, organize and allocate resources, controls and solve
problems

 Focuses on system process

 Relies on control

 A leader is someone who:

 Shows a direction, aligns and influences, motivate and inspire employees

 Focuses on people

 Inspires trust

 Believe in fairness, freedom, and commitment

Managerial Functions

The five managerial functions are

1.planning

5. controlling
2. Organizing

3. Staffing
4. Leading/
directing
1. Planning

 The first function of all managers

 It is concerned with determining the objectives of an

organization and the means of achieving them.

 It is a function that determine in advance

 What should be done.

 How it should be done.

 When it is to be done.
Planning (cont.….)

 Planning requires ability to foresee, visualize, and to look

ahead purposefully.

 Plans can be classified as

 Long range

 Intermediate range

 Short range
2. Organizing

It is the function in which the managers develop the

organization structure that allows working together and achieve
organizational goals.

It involves grouping similar activities in one department.

It also involves clearly stating authority and responsibility

relationships
General manager

Finance
Production Marketing
3. Staffing

-It deals with filling the position in the organizational structure.

-It involves

 Recruiting and selecting

 Transferring of employees

 Promotion

 Lay off
4. leading/directing

-It is the process of influencing, motivating, and directing of

employees to achieve organizational goals.

-Managers need to understand

 Individual and group behavior

 Techniques of communication

 Techniques of motivation (---?)

 Effective style of leadership(---?)

The outcome of the leading function is high level of motivation and

commitment by the employees.
5. controlling

-It is the process of comparing actual performance with the

stated standard.

-The aim of controlling is to take corrective action if the

performance is lower than the plan.

-The outcome of the controlling function is the accurate

measurement of performance.
Levels of management
 Organizations’ level of management varies with
the size of the organization.
 Management level commonly classified in to
three.
Levels of management

Levels of management

Top level managers

Middle level managers

Operating level/first line

managers/lower level
1. Top Level Managers

 Manage the overall activity of the organization.

 Establish policies, strategies, long term plans, and make

major decisions.

 Represent the organization (deal with external bodies)

 They are few in number.

 Their title includes Board of Directors, Executive

Committee, Chief Executive, President, and General
Manager.
2. Middle level managers

 They are specialists (their activity limited to a particular area of

operation)

 They act as intermediary between top and operating level

managers.

 Develop medium range plans

 They supervise first line managers.

 Their title includes Department Managers, Division Managers,

and Operation Managers.
3. First line managers

Operating Level Management

 Plan daily and weekly activities (short range plans)
 They manage only non managers.
 Their typical title includes Section Chief, Office Manager,
Foreman, and Supervisor.
Cont.
Managers can also be classified based on the scope of activities
they mange.

1. Functional Managers have specialized skills in single area of

operation such as accounting, marketing, and
production.

2. General Managers are responsible for overall operation.

 They coordinate two or more departments.

Managerial roles
All managers must play some role and must have some skills to be
effective.

 Henery Mintzberg identified ten managerial roles by closely

observing the day to day activities of a group of CEOs and
divided them in to three.
Managerial roles (cont.…)

Interpersonal Decisional role

Informational role
role

1. Entrepreneurial
role
1. Monitor role
1. Figure head role 2. Disturbance
2. Disseminator role
2. Leadership role handler role
3. Spokesperson
3. Liaison role 3. Resource
role
allocator role
4. Negotiator role
 Cont.….
1. Interpersonal Role- Involves dealing with other people and it arise from
managers formal authority.
1.1. Figurehead role
-Managers act as representatives of the organization.
-Managers represent the organization at ceremonial and symbolic functions
like making speech, signing
documents, attending ribbon cutting
ceremonies.
Cont.….
1.2. Leadership Role

-Managers influence behavior and activities of their

followers in order to accomplish organizational objectives.
-Leadership role involves hiring, training, motivating…
 Cont.….

1.3. Liaison Role

-It refers to dealing with people outside like customers,

government officials, and suppliers.

-It also includes dealing with people inside the organization

like people in different departments.

-Coordinating activities.
Cont.….

2. Informational Role

-It involves processing of information.

-It involves receiving and communicating information.

2.1. Monitor Role

-Involves gathering and screening information.

2.2. Disseminator Role

-Involves distributing the screened information.

Cont.….

2.3. Spokes person role

When managers transmit the information to outside of
the organization or to outside of the unit.
Cont.….
3. Decisional Role

3.1. Entrepreneurial Role

-Managers initiate changes to improve organizational

performance.

-Managers mostly use this role at the time they

initiate new project
test a new market
test a new business
 Cont.….
3.2. Disturbance handler role
-Managers play this role when they
deal with problems like---?
 Conflict between workers
 Breaking contract
 Labor strikes
 Bankruptcy
Cont.….
3.3. Resource Allocator

-Managers play this role when they distribute

resources like:

Human Resource

Time…

3.4. Negotiator Role

-When managers negotiate or deal with other organization

or with in, they are playing negotiator role.
Managerial skills

Managerial Skills and their Relative Importance

-Skill is an ability to perform a particular task.

 As the job of managers is complex it needs multidimensional skills.

The three managerial skills are

1. Technical Skills

2. Human Relation/ Interpersonal Skills

3. Conceptual skills
 Cont.….
1. Technical Skills

-It is the ability to use specific knowledge, technique, methods or resources in

specialized field in order to accomplish specific tasks.

 Technical skill includes specialized knowledge, analytical ability, and the

competent use of tools and techniques to solve problems in that specific
discipline.

 It is acquired through formal and Informal education

 It is very important for first line managers

2. Human Relation/ Interpersonal Skills
 The ability to interact effectively with people

 It is the manager’s ability to work with other people and to work

effectively as a group member.

 A manager with human skills likes other people and is liked by them.

-It includes the managers ability to

 Resolve Conflict

 Communicate effectively

 Motivate

 Coordinate
3. Conceptual skills

-the mental capacity to understand the overall working of the organization.

-involves the managers information processing, thinking, and planning

abilities.

-The managerial activities that require conceptual skill includes decision

making, planning, and organizing.

-Conceptual skill is more important for the top level managers.

Skills needed by managers

Top level

Midd
le

First
line

Technical Human Conceptual

relation
Is management a science or art?
 Science is a systematized knowledge derived from observation, study, and
experimentation carried on in order to determine the natures and principles of the
subject under study.

o Management is a science because it is based on principles which are derived

from the detailed study and observation of:

 Organization

 Authority

 Communication

 Motivation
 Cont.….
Art is the application of knowledge and skills to the specific time,
place and condition tactfully, creatively and wisely.

 Management is an art because managers apply Judgment,

decision making, and motivation tactfully, creatively and wisely.
Individual assignment
 Refer books and other sources and write a five pages
summary on the evolution of Management.
 Guideline
- Font: Times New Roman,
- Font size: Heading 14
Body 12
 Spacing: 1.5
 Normal margin
 Submission date: 10/05/2021
 Good referencing is rewarding
End of chapter one
Chapter two: planning function
 Planning is the management of the organization's future in an uncertain
environment.

 Planning is the process by which managers set objectives, assess the future
and develop courses of action to accomplish these objectives.

 Planning – is the dynamic process of making decisions today about future

actions.
Cont.….
 it is a selection or choice among alternatives as to:

 What missions or objectives be achieved

 What actions should be taken

 What organizational positions be assigned

 When to achieve it

 Who is to do it

 Where to do it
Nature of planning
 It is goal oriented.

 Primacy of planning.

 Pervasiveness/ universality of planning.

Corporate
 Planning and information are deeply related. plans

 Planning is a continuous process. Departmental/

divisional plans
 Planning is the means to an end.

 Plans are arranged in a hierarchy Unit plans

Importance of planning
o It helps to reduce risk and uncertainties.

o Leads to success

o It provides basis for controlling

o Focuses attention on the organization’s goal

o It promotes efficiency (resource use)

o Developing managers (it is an intellectual activity, systematic thinking)

o It provides guideline for decision making (policies and rules for instance).
Limitations of planning
 Planning is risky (uncertainties)
 It is a difficult and complicated task
 It is expensive and time consuming
 Affected by external factors (nature, government policies…)
The vision
 A vision or strategic intent is a view of a future reality that the organization
seeks.

 Vision is a mental journey from known to the unknown, creating the future
from a montage of current facts, hopes, dreams, threats and opportunities.

 A vision is often expressed in a vision statement.

 A vision statement should answer the basic question, “What do we want to

become?”
 The mission
-Mission is defined as “the fundamental purpose of the organization & its scope of
operation”.

-Organization mission is written in terms of the general set of goods & services the
organization provides & the markets & clients it serves.
 An organization’s mission statement is a concise introduction to its work.
 It describes an organization in terms of its:
 Purpose: what the organization seeks to accomplish (WHY DO WE EXIST?)
 Target Audience: the target group or beneficiaries of the organization’s work (WHO
DO WE SERVE?)

 Business: what products do we provide and how do we go about providing them?

Organizational objectives/goals

The term objective or goal indicate an end result to be sought and accomplished.

 Mission or purpose- reason for establishment of firms

 Goals are pre determined or stated in advance

 Goals describe future desired results

 Goals should specific and measurable

 Goals should have time frames

 Goals should be reviewed

 Goals should be challenging but realistic

Objective setting
Points to consider Include:

 Quantification (if possible)

 Indicate how the mission can be achieve

 Represent specific planned levels of achievement

 Provide precise points or states to be achieved

 Allow review and appraisal of achievement

Cont.….
Make clear:

 What is to be accomplished

 How much is to be accomplished

 By when it is to be accomplished

 By whom it is to be accomplished
Cont.….
In short an objective should be SMART

 Specificity indicates clearly what needs to be achieved. Example: reduce

delay.

 Measurability indicates the possibility to determine if the desired condition

is fulfilled. Example: Reduce delays by 40%

 Achievability indicates a consensus and commitment to the objectives

among the major stakeholders

Cont.….
 Relevance: It answers feasibility, the availability of authority of the

managers and the means of realization.

 Time bound indicates a clear understanding of the time scales associated

with each objective as defined. It is difficult to have commitment without

time frame. E.g. Reduce delays by 40% by 2025.

The planning process

Planning can be considered as a series of sequential steps.

1. Establishing objective/setting organizational goals.

It has three steps.

-Assessing the present situation

-Anticipating future conditions

-Setting the objectives

2. Developing premises- investigating the company’s environment.

-Internal Environment

-External Environment
Cont.….
3. Determining alternative courses of action

-Roads(actions) to achieve the objective

-Try to create as many roads as possible

4. Evaluating alternative courses of action

 Managers usually consider many alternatives for a given situation, but the

merits, demerits as well as the consequences of each alternative must be examined

before the choice is being made.

Cont.….
5. Selecting a course of action

 A point of decision making

 The analysis of each alternative’s disadvantages, benefits, costs and effects

should result in determining one course of action that appears better than
the others.

6. Formulating derivative plans(supportive plans)

 Formulating what if plans.

7. Numbering plan /Budgeting plans.

 Plans will have meaning when they are changed into numbers.

 Budgeting is the means of adding various plans together and set important
standards against which planning process can be measured.

8. Implementing the plan.

This is a step where by the entire organization will be in motion or real

operation.

? what resource will be used, who will be involved, how the plan will be
evaluated

9. Controlling and evaluating the results (monitor progress)

 Types of plans

Organizations can establish different types of plans Based

on different dimensions.
Factor Type
Time  Short range
 Intermediate range
 Long range
How repeatedly used  Single use plan(program, project, budget)
 Standing plans( policies, procedures, rules)
Breadth/scope  Strategic
 Tactical
 operational
Cont.….

1. Time dimension

Planning can be divided in to three based on the length of

time a plan covers.

1.1. Long-range plan- covers five year or more

1.2. Medium-range/ intermediate plan- covers between

one and five years.

1.3. Short-range plan- covers one year or less.

 Cont.….
2. Use dimension/frequency of usage

This classification is based on their usage(how

repeatedly/frequently a given plan is used)

2.1. Single use plans

Are developed to achieve specific purposes and dissolved when

these have been accomplished. They are developed for relatively
unique and non repetitive situation.

A. Program

B. Project

C. Budget
Cont.….
A. program

Program specifies the objectives, major steps necessary to

achieve these objectives, individuals or departments
responsible for each step, the order of the various steps,
and resources to be employed.
Program (cont.….)
A program is characterized as:

 A one-time organizational goal.

 May take several years to complete.

 Large in scope and complex in nature

 May use standing plans and other single use plans to be

effective.

Example: Building a new headquarters

Cont.….
B. Projects

It is a single use plan that is a component of a program or

that is on a smaller scale than a program.

characteristics of project

 It is a plan for attaining a one-time organizational goal.

 Smaller in scope and complexity than a program; shorter

time duration.
Cont.….
 Often one part of a large program

 Example: renovate the office ,Setting up the company's

internet

C. Budget

Budgets are statements of financial resources set aside for

specific activities in a given period of time.

 It is a device to accomplish a program or a project.

 It can be considered as a part in a program or a project

Cont.….
2.2. STANDING PLANS

Standing plans- are plans that provide an ongoing

guidance for performing recurring activities.

 It is formulated to be used again and again.

 Standing plans allow managers to save time.

 Standing plans become valuable under relatively

stable situations.
Cont.….
E.g. a bank can more easily approve or reject loan
requests if criteria are established in advance to evaluate
credit ratings, collateral assets, and related applicant
information.
Cont.….
TYPES OF STANDING PLANS

A. Policies:

 It is a general guidelines for decision making.

 It provides boundaries or limits within which decisions are

made.

 While organization's goal decide “what to do” policies

deal with “how to do”. Example : Not to accept returned
merchandise
CONT….
B. Procedure

-Procedures are statements that detail the exact manner

in which certain activities must be accomplished.

-It provides a detailed step by step instruction as to what

should be done.

-Procedure is narrower in scope than policies.

CONT….
Example,

1. Procedure for withdraw money from bank.

2. the procedure for handling orders.

3. Purchasing procedure in an organization

Cont.….
C. Rule

Rules specify actions that must be taken or must not be

taken with respect to a situation.

 Rules allow no discretion or judgment.

 Rules are the most explicitly stated(clearly stated) of

standing plans

 Rules demand strict compliance

Example-No smoking
Similarities of policy, procedure and Rule

 They are directives to guide people’s behavior to the desired

end.

 All are plans to be followed in the future.

DIFFERENCES OF POLICY, PROCEDURE, AND RULE

 Policy is guide to thinking.

 Procedures and rules are guides to action.

 Policy render freedom to make a judgment.

 Rules and procedures render no freedom.

 Cont.….
 Rules guide action without specifying a time sequence.

 Procedures specify a time sequence.

 Although procedures may incorporate rules, rules do not

incorporate procedures.
Cont.….
3. Scope/breadth dimension

Scope refers to comprehensiveness (detail) of the plan.

Based on scope plans are divided in to three

3.1. Strategic plan

 It is a process of developing organizational objectives.

 Mostly strategic plans are long range.

 It is expressed in relatively general terms.

 It is top level managers responsibility.

Cont.….
3.2. Tactical plan

Tactical plans support the implementation of strategic plan

and the achievement of strategic goals.

Tactical plans have shorter time frame and narrower in scope

than strategic plans.

 Middle level managers are responsible to develop tactical

plans.
Cont.….

3.3. Operational Plan

 Concerned with the day to day operation of the

organization.

 Made by lower level managers.

 It is detailed plan.

 Have short time frame.

 More specific than tactical plans and strategic plans

Characteristics of good plan

 Objectivity

 Futurity

 Flexibility

 Stability

 Comprehensiveness/clear

 Contingency planning/ alternative plan

End of chapter two
Chapter three: decision making

 “If there is no option, there is no choice & no

decision.” In decision making, managers are making
judgments – reaching conclusion- from a list of known
activities.

 Decision making is a rational choice or selection of one

alternative from among a set of alternatives.

 All managerial functions involve decision making, but

the critical decision making is during planning.

 Decision making is universal

Cont.….
Decision making has three elements:

1. Availability of alternatives

2. Selection of the best alternative

3. Making decisions in light of objectives

Decision making process

These choices are made based on the following steps

1. Identifying the problem: (deviation from past

performance, deviation from plan, outside criticism);

This is accomplished by asking the right question &

developing a sound questioning process.

As to Peter Drucker, “The most common source of mistake

in management decision is the emphasis on finding the
right answers rather than the right questions.”
Cont.….
2. Develop alternatives

At this point, it is necessary to look for, develop & list as many

possible alternative solutions to the problem as you can.
Sources for alternatives include:

Experience, Persons, The practice of successful manager,

Group opinions, The use of outside sources, including
managers in other organizations.
Cont.….
3. Evaluate the alternatives: This step is to decide the
relative merits and demerits of each of the alternatives.

The manager might need to make a more through analysis by

applying different decision making aids.

4. Select the best alternative: To select the best alternative,

you must find a solution that appears to offer the fewest
serious disadvantages & the most advantages.

Take care not to solve one problem & create another with
your choice.
Cont.…..

5. Implementing the selected alternative: Like plans,

decisions need effective implementation to yield the
desired results. People must be sold on their roles & must
know exactly what they must do & why.

Programs, procedures, rules or policies must be thoughtfully

put into effect.
Decision making conditions

Based on the information the decision makers have, there

are three decision making conditions.

1. Decision making under certainty (programmed)

In this case the decision maker has complete knowledge

(perfect information) of consequences of every decision
choice (alternative).

The probability of making poor decision is very low.

Cont.….
2. Decision making under risk (partially structured)

The decision maker has less than complete knowledge.

The decision maker is in the dilemma of choosing the best

alternative solution.

There is a probability of making poor decision.

3. Decision making under uncertainty

The decision maker has no information about the outcome

of each course of actions.
Types of decisions

1. Programmed decisions

-They are made in routine, repetitive, and well structured

situations through the use of predetermined decision rules,
procedure, and policies.

-Most of the decisions of first line managers are programmed

decisions.

2. Non programmed decisions

-To solve non routine and novel (strange or new problems)

Non programmed decision (cont.….)

 Because of their newness they involve significant amount

of uncertainty.

 Non programmed decisions are mostly made by top level

managers.

Example- acquiring another firm.

Why do managers make poor decision?

Cont.….

Managers make poor decision because of:

 Lack of adequate time.

 Failure to define goals clearly.

 Using unreliable source of information.

 Fear of consequence.

 Focus on symptoms rather than causes.

 Reliance on hunch and intuition.

End of chapter three
Chapter four: the organizing function:
Meaning of Organizing

 It is a process of deciding how best to group organizational

elements (human and non-human (physical resources) .

 The organizing process leads to the creation of

organizational structure, which defines how tasks are
divided and resources are deployed.

 It is defined as the process of putting similar activities in

the same position.
 Cont.….
 No single organizational structure can be effective in all

situations.

 organization is the process of defining and grouping activities

and establishing the authority relationship among them.

 organizing consists of dividing work among groups/

individuals and providing coordination between individual

and group activities.

 Cont.….
 Organizing is the process of identification, classification and
grouping of tasks that are necessary to achieve objectives and
assigning of work to individuals and designing hierarchy of
decision making relationship.
 is a managerial function; it leads to the creation of the formal
organization and results in an organization structure.
 Organization is a group of people working together in some
type of coordinated efforts to achieve commonly stated
objectives. It is the end result of organizing process.
Importance of organizing

 Organizing promotes collaboration. Thus, it improves

communication within the organization.

 Organizing sets clear-cut lines of authority and

responsibility

 Organizing improves the directing and controlling

functions of managers.

 Organizing develops maximum use of time, human, and

material resources
 Types of organizations

1. Formal organization

The formal organization represents the classification of

activities within the enterprise, indicates who reports to
whom.

Formal organization has consciously designed durable and

inflexible organizational structure or chart.

 Organization chart is a diagram of formal relationship

which shows how departments are tied together along
Cont.….
Characteristics of formal organization

 It is properly planned

 It is based on delegated authority

 It is deliberately impersonal (careful)

 Organizational charts are usually drawn

 Unity of command is normally maintained

 The responsibility and accountability at all levels of

organization is clearly defined.
 Cont.….
2. Informal organization

 Also called grapevine

 It is an organization which establishes the relationship on the

basis of the likes and dislikes of officers without considering the
rules, regulations and procedures.
Characteristics of informal organization
 arises voluntarily.

 It is a social structure formed to meet personal needs.

 has no place in the organization chart

 can be found on all levels of organization

 The rules and traditions are not written but are commonly
followed.

 Develops from habits, conduct, and behavior of social groups.

Cont.…..
 Reasons for the formation of informal organization are:

1. Mutual benefit

2. The need to fulfill social needs

3. Friendship

4. Physical work condition

Groups under informal organizations

5. Horizontal groups

6. Vertical groups

7. Mixed groups
Impact of Informal Organization on Formal
Organization
The Negative Impacts
 Resistance to change
 Conflict
 Rumor/false information
 Pressure to conform
The positive impacts
 Makes the total system effective
 Provides support to management
 Provides a useful communication channel
 Encourages better management
 Major elements of organizing function

1. DIVISION OF LABOR

When joint accomplishment of a grand task is the goal of

many people, this overall task must be split into its
component jobs and apportioned among the people
involved.

 The degree to which the grand task of the organization is

broken down and divided into smaller component parts is
referred to as division of labor.
Cont.…..
 Division of labor refers to the process of dividing the
total task of a unit to successively smaller jobs.

 overall task must be split into its component jobs and

apportioned among the people involved.

 All jobs are specialized to some degree, since every one

cannot do everything.
 Cont.….

In short, division of labor involves:

 Breaking down a task into its most basic elements

 Training workers in performing specific duties

 Sequencing activities so that one person’s efforts

build on another’s
 Cont.….
2. Departmentalization

 Departmentalization is a means of dividing the large and

complex organization into smaller and flexible
administrative unit.
 Department is a distinct area division or branch of an
organization over which a manager has authority for the
performance of specified activities.
 The five common ways of departmentalization are
functional, territorial, product, service and customer.
Cont.….
1. Functional Departmentalization- groups together those
jobs involving the same or similar activities.

Example: engineering, accounting, information system….

Advantage

 Each department can be staffed by experts in that

functional area.

 Facilitates supervision.

 Easy to coordinate activities in each department.

Cont.….
Disadvantage

 Not applicable for larger organizations

 Slow decision making because of excessive bureaucracy.

 Employees may concentrate too narrowly (only in their unit.

2. Product Departmentalization- jobs are grouped by product

line.

Example: women's footwear, men's footwear, two wheeler,

three wheeler, four wheeler, heavy motors, ….
Cont.….
Advantage

 All activities associated with one product can easily be

integrated.

 Enhanced speed of decision making.

 Performance of each product group can easily be

assessed
Cont.….
Disadvantages

 Managers in each department may focus only on their

product.

 Administrative cost rises(each department must have its

own functional specialists).
 1. functional

Human
manufacturing accounting
resource

2. Divisional (product)

Product Product
division 1 division 2

Human manufacturing accounting Human

manufacturing accounting
resource resource
3. Customer departmentalization- departments are separated
from each other based on the type or groups of customers to be
handled or dealt with.

E.g. Foreign customers, wholesalers, retailers….

Advantage

 Give attention for unique customers or customer groups.

Disadvantage

 Requires large administrative staff to integrate the activities

of the various departments.
4. Location departmentalization- groups jobs on the basis of
defined geographic sites or areas.

e.g. a small firm may operate only within city boundaries through
its offices established in different zones of that city.

Advantage

 It enables the organization to respond easily to unique customer

and environmental characteristics in the various regions.

Disadvantage

 Larger administrative staff may be required.

5. Matrix departmentalization

 A company uses a mixture of two or more different bases

President
 more flexible
V/ president V/president V/president V/president
finance manufacturing marketing
engineering

Product
manager 1 Horizontal
 Two boss- chain of
employees command
Product for
manager 2 product
divisions

Product
manager 3
Vertical chain of command for functions
3. Delegation of authority:

is the process wherein the manager assigns responsibility to its

subordinate along with certain authority to accomplish a task on the
manager’s behalf.

DA is the base of superior- subordinate relationship and it involves

assignment of duties, granting of authority, creating responsibility and
accountability

Authority

 It is the formal and legitimate right of a manager to make decision,

issue order, command and compel subordinates and allocate resources
Cont.…..
 level of authority varies with levels of management

 It carries with it the burden of responsibility

 It is the downward pushing of authority from superiors to
subordinates to make decision within their area of
responsibilities.
 use to transfer authority and responsibility to positions below
them.

Why do managers delegate their authority?

Cont.….
Managers delegate their authority because of the following
factors:
 Enables the manager to get more work done.
 Ease the managers burden.
 Some times the subordinates may have more expertise.
 It helps to develop the subordinates.

Why do managers refuse to delegate authority?

Problems in delegation
 Fear of loss of power.
 “I can do it better myself”
 Managers may not have confidence on the subordinates.
 Fear of being exposed-fearing the subordinates will do better
than the managers themselves.
 Some subordinates are reluctant to accept delegation. (fear
of fail)
4. Centralization and decentralization

Centralization-is the extent to which power and authority are

systematically retained by top managers.

If an organization is centralized

 Decision-making power remains at the top

 The participation of lower-level managers in decision making

is very low
Cont.….
Decentralization- is the extent to which power and
authority are systematically dispersed/delegated throughout
the organization to middle and lower level managers.

When decentralization is greater:

 The greater is the number of decisions made at lower level

of the organization.

 The less a subordinate has to refer to his/her manager

prior to a decision.
Authority Relations in Organization (Line, staff, Functional)

1. Line authority is the relationship between superior and

subordinates.
 It is directed supervisory relationship.
 It enables the manager to tell subordinates what to do.
 It is represented by the chain of command.
 It flows downward in an organization.
A manager supervising employees or other managers has line

authority.
2. Staff authority

 Staff authority is the right to give advice.

 It is advisory in nature.
 People in theses positions have the authority to offer advice
and recommendations.

e.g. legal service; public Relation service.

 It is an advisory authority for manager.
 Advisory authority doesn't provide any basis for direct control
over subordinates or activities of other departments.
3. Functional authority

 Functional authority is an authority exercised or the right to

control activities in other departments.

 It is an authority delegated to an individual or department

over specific activities undertaken by personnel in other

departments.

 Functional authority is usually limited in scope and duration.

It is exercised one level below the person who has it.

Conflict between staff and line managers
From the reasons of conflict between staff and line
managers:

 Threats to Authority

 Dependence on knowledge

 Staff managers may exceed their authority

What are the solutions for the above problems?

Cont.….
The solutions for the conflict are:

 Understanding authority relationship

Line Authority- making decision

Staff Authority- assist and counsel

 Line managers should listen to what the staff manager

advice.

 Keeping the staff informed.

Span of management/ span of control

Span of management refers to the number of subordinates

who report directly to a manager.

-It can be

1. Narrow span of management- superior controls fewer

number of subordinates.

 Tall organizational structure

 More communication between superiors and subordinates.

Cont.….

Advantage

 Easy communication between subordinates and superiors.

 Easy to coordinate and to control activities

Disadvantage

 Superiors too much involved in the subordinates activity.

 Excessive distance between top and lower level managers.

 Cont.….
Example of narrow span of control

Manager 1

Employee Employee Employee

Employee Employee

Each employee holding a position of authority is responsible for at

least two others- i.e., the span of control is at least two.
2. Wide Span of management

 Many subordinates report to a superior.

 Flat organization with fewer managerial levels.

Advantage

 Superior delegation.

Disadvantage

 Superior may loss control.

 Requires exceptional quality of managers.

 Example of a wide span of control
Manager 1

Employee Employee Employee Employee Employee Employee

Employee Employee Employee Employee Employee

Each employee holding a position of authority is responsible for at least five

others. i.e., the span of control is at least five
Factors Determining Span of Management

 Ability of the manager

 Subordinates motivation, commitment, and ability

 Managers personality(need to share power)

 Economic factor
Organizational structure

Organizational structure: is the arrangement of people and

tasks to accomplish organizational goals.

 Organizational chart: It is a line diagram that depicts the

broad outlines of an organization’s structure.

the organization chart can tell us:

1. Who reports to whom (chain of command)

2. The span of control.

Cont.….

3.The hierarchy of decision-making

4. Channel of official communication

5. How the organization is structured by function, territory,…

End of chapter four
Chapter five
The staffing function
Staffing

"Human resource is the most important resource of an

organization which deserves special treatment, respect &
dignity”. (Robert Own)

Staffing is the process of identifying HR needs, procuring the

necessary employee, training, utilizing and separation of
these employees.
Cont.….
 The major objective of staffing function is to enable an
organization to attract, to maintain, and to utilize
efficient and effective workforce.

 Hence selection of the right person & placement in the

right position are the main aspects of staffing.
The staffing process
1. HR planning (manpower planning):

HR planning is the starting point in the process of staff

procurement; and refers to the determination in advance

the number & quality of people to be employed.

It involves assessing current HR of the organization, future

needs & ways to fill the gap

2. Recruitment & selection
Recruitment is the process of searching and attracting
for prospective employees to apply for the job vacancies
in the organization.

Sources of recruitment

Internal source: is the process of filling a vacancy by a

person already employed by the organization.
Cont.…..
Internal source have many advantages:

 enhances employees moral

 easy to evaluate existing employee than the new one

 minimum time be spent on training

 employees are more reliable

Disadvantages

 restrict the nourishment of new ideas.

 the existing employees become outdated
 narrow down selection options
 Promotions are limited to seniority, ignoring merit. This
leads to ill-feeling and conflict in the organization.
2. External sources
 External source refer to the sources of job application from
outside of an organization.
 They are new entrants/ fresh products, educated but
unemployed section of the society, employees of other
organizations, retired persons, etc.

Advantages:

 helps to get best professionals available in the market with

required experience, skills, education, etc.


Cont.…..
Disadvantages
 more expensive
 chance of brain drain or to be recruited by other
organization

During recruitment, potential candidates pooled together

through advertising vacancies.
Methods of recruitment

1. Direct method: Recruiters directly contact the

prospective employees and attract them. i.e.

 contact graduating students

 hold conferences/ seminars for prospective employees

2. Indirect method: Organizations encourage prospective

employees to apply for vacancies through advertisements in
newspapers, magazines, journals, etc..
Cont.….
3. Third party method: using Private employment
agencies, those carryout recruitment process of an
organization for a fee.
 Selection is the process of identifying and choosing
those applicants who can successfully perform a job from
the available candidates.
 Selection process

1. Preliminary Screening/ interview

2. Filling formal application form or Application blank

3. Reference letters

4. Employment interview/ Final interview

5. Employment tests/: it may include Intelligence test, aptitude

taste, Personality test and Interest test.
3. Decision making and Placement

The candidates who have been selected should be given

placement letters that state their employment and specific
positions, and other employment related matters.

4. Induction & orientation (socialization)

When the candidate is selected and offered a job, it is

necessary to introduce the new employee to the
organization’s philosophy, rules, policies, etc…..then the
new employee begins his work.
 Induction:
Refers to the process of familiarizing a new employee with the overall
organizational environment through the provision of adequate
information to bring about change in new employee’s expectation,
behavior, and attitude in order to assure the best match with
organizational interest.

Orientation: Designed to enable new employee to familiarize with

working environment through the provision of adequate information.
It involves discussion between a manager & employee regarding the
job assignment including specific location, rules and procedures of
the work as well as the materials, equipment needed to do the job.
Purposes of induction and orientation

 Reduce the start up cost

 Reduce anxiety of the new employee
 Decrease turnover
 Save time to supervision
5. Training and Development

 Training & development programs include various

activities that enhance the awareness of employees in
policy issues & procedures, educate them to job skills, and
develop them for future advancement.

A. Training is any process by which the aptitudes, skills and

abilities of employees to perform specific jobs are
increased.
Methods of training

1. On-the- job training: It is putting the worker on the

job under close supervision of the trained instructor
within the actual work environment.

Its approaches are:

 Job rotation/ position rotation

 Coaching

 Apprenticeship
2. Off-the- job training

 It refers to training conducted away from the actual

work setting.

 training given to the trainees away from the work floor

 is not the everyday activity of the organization.

 There can be special site in the organization itself or in

non-organizational location.
Cont.….
The approaches/of off-the-job training are:

 Lectures

 Conferences

 group discussion etc….

3. Vestibule/ Simulated training
 It is a method where the identical machines & equipment
that are used on the work floor are installed in the training
center and also an effort is made to implicate work
atmosphere found on the actual floor.

e.g. training given for a pilot.

B. Development

 Development refers to the organization’s efforts to help

employees acquire knowledge, skills & behavior that
improve their ability to meet changes in job
requirements and customer needs.
 It involves learning opportunities aimed at the individual
growth but not restricted to a specific job.
Cont.…
 To develop employee’s competency, organization can use
the combination of

 formal education,

 assessment,

 job experience &

 interpersonal relationships
6. maintenance and utilization)

 Procured and trained employees should be maintained and

utilized utmost capacity.

 In order to maintain and utilize employees compensation

and performance appraisal are the hearts of HR function.

Compensation
 It is just the reward for the work done by an employee and
it should be balanced so as to keep the employer and the
employee happy & satisfied.
Factors affecting compensation policies

 Factors affecting compensation policies of the

organization are:

 Organizational ability to pay

 supply & demand of labor

 Cost of living

 Productivity

 Job requirements
 Performance Appraisal (PA)

 Performance appraisal is the process of determining &

communicating to an employee how he is performing the job.
 PA involves the formal evaluation of an employee
performance.
 PA provides highly useful information for making decisions
about the employee & the organization.
Cont.….
 It helps:

 To determine who shall receive merit increases.

 To determine training needs

 To identify employee to be transferred.

 To provide adequate feedback to each individuals for his

performance.
Methods of PA
 There are different methods to carryout PA. Some of the
methods are:
1. Ranking method
2. Person to person comparison
3. Check List
Performance appraisal processes

 They are steps to be followed during the evaluation of

workers performance.

1. Establishing performance Standards

2. Communicating Standards to employees

3. Measurement of the actual performance.

4. Comparison of the actual performance with that of the

standards

5. Communication of the results

6. Corrective actions
Who does the appraisal?

In most cases the immediate supervisor does the appraisal.

But an organization can use different appraisers.
This could be:

 the immediate supervisor of the employee

 group appraisal &

 self appraisal
7. Separation, Promotion, transfer & layoffs

A. Separation: refers to the discontinuation of the relation

between employee & the employer.

Separation can be initiated by:

 the employers like

mandatory retirement; dismissal; layoff

 the employees like

resignation; voluntary retirement; quit

 the agreement: when the contract ends;

Cont.….

B. Promotion: is the advancement of an employee to better job

in which an employee seeks greater responsibilities, more

prestige or status, greater skill, and specially increased rate of

salary, better locations or working conditions.

Upgrading is the movement of an employee to a more responsible job

within the same occupational unit and with a corresponding increase

in pay.
C. Transfer
 Transfer is the movement of an employee from one job
to another on the same occupational level of salary.

 Some transfers entail a decrease in job duties and

especially in pay, and called downgrading or bumping.

 It is more frequently used to protect employment

opportunities for employees displaced from higher rated
jobs.
 D. Layoff
 Layoff occurs when there is business or budget shortage.
 It is the most frequent type of separation of employees from
the employed workforce.
 It doesn’t necessarily involve a permanent separation from
the payroll.
 Laid-off employees normally expect to be rehired by their
employer when conditions improve.
End of chapter five
 Chapter six
The leading/Directing
function
Leadership
 Leadership is the process of influencing, motivating and
directing a group so that they will strive willingly and
enthusiastically toward the achievement of organizational
or group goals.

sources of power
 There are five major sources of power

1. Legitimate power- derived from persons official

position. Also known as positional power.
Cont.….
2. Reward power- derived from persons ability and habit
to give or withhold reward for followers

3.Coercive power- derived from persons ability to punish.

4. Expert power- derived from the followers belief that

the superior possesses outstanding skills, knowledge, and
expertise in certain area.

5. Referent power/ charismatic power- derived from

being admired and liked by others.
 Authority versus power
Authority Power

Is the right to give Is the ability or capacity to influence

orders, make decision, the behavior of others
and enforce others. Personal
Positional Broader
Narrower Some power can change with position
Change with the position (legitimate, reward coercive) some don’t
Can be delegated change (expert and referent)
Some power can’t be delegated (expert
and referent)
Leadership Theories
1. Trait Theory

Originated from “great man theory” (Leader are born not

made).

It states that leaders are taller, good appearance, more self

confident… than the followers.

2. Behavioral Theories

They have Studied behaviors that made leaders effective.

States that leaders have no distinguishing traits.

Two studies included

Cont.….
A. University of Michigan Studies

In this study it is concluded that there are two types of

leadership styles.

 Job centered- interested on performance of work.

 Employee centered- interested in welfare of the

subordinate.

B. Ohio State Studies

Identified two kinds of leaders behavior:

Cont.….
 Initiating structure behavior- the ability of leader to
establish well defined pattern and channel of
communication and develop ways of getting the job
done.

 Consideration- the ability of the leader to respect the

subordinates idea and two way communication.
Most efficient
High

leadership style
Conside
ration

Worst leadership
style
Low Initiating High
Low

structure
3. Douglas McGregor Theory X theory Y assumption

Theory X (pessimistic) Theory Y(optimistic)

The manager  Most people hate work  Developmental approach

assumes  Most are lazy  People like work
 People avoid work if  People don’t avoid work
possible

Need for  People should directed  People are self directed

direction and closely controlled

Motivation  Coercive (negative  Gives reward

motivation)
4. Contingency/ Situational Leadership Theories

 It states that successful leadership depends on the

relationship between the organizational situation and
the leader’s style.
 Leadership is the result of the interaction of leaders and
followers behavior and situational variables.
Leadership styles
Four types of leadership styles based on the degree to
which managers share decision making authority with
subordinates:

1. Autocratic Leadership style

 manager do not share decision-making authority

 placing most of their emphasis on task accomplishment

little on the human elements and welfare.

 Very little willingness to delegate

2. Democratic Leadership style

 Leaders shares decision –making authority with

subordinates.

 Leaders have high concern for both people and work

practice.

 Leaders are not much sensitive about their authority

 Leaders Appreciate suggestions from subordinates

 Leaders Motivate subordinates with rewards

3. Laissez-faire (free-rein style)

 It is leadership approach in which a manager develops a

frame work for subordinates in which they can act and

leave decision making authority to the subordinates and

remain for consultation.

 This type of leadership is mostly applied in organizations

with highly skilled and well-trained professional.

4. Situational leadership style

 It is leadership approach in which managers utilize the

combination of the above style depending on the situation in
external environment.
Motivation
 Motivation- is an inner desire to satisfy an unsatisfied
need.

 It is an internal force that energize behavior and

gives direction to behavior.

 Motivators are rewards or incentives which induce an

individual to perform.

 Motivation results in satisfaction.

 Performance=ability*motivation*environmental conditions
Motivation cycle

Need
deficiency

Need
satisfaction

Goal
directed
behavior
Theories of motivation
1. Carrot and stick approach

“give carrot for donkey to make go quick and hit with

stick if it refuses to move fast having eaten the carrot”.

 In an organization, it means that pay adequate money to

your employees to motivate them or to make them work;
if they fail to perform fairly, punish them to work in front
of the worker.
Cont.…..
Failures of this approach
 Carrot can be obtained without differentiation in
performance.
 Stick gives rise to defensive behavior.
2. Money as a motivator

Money can be used as a motivator in the following conditions.

 For people who are in low living Standard

 If the amount of money is very significant

 When the payment is differentiated for different levels of

performance.

3.The need hierarchy approach

 Maslow’s need hierarchy

 ERG Theory
3.1. Maslow’s Need Hierarchy
Maslow proposed that motivation is the function of needs
and a human need can be arranged in a hierarchy of five
levels.

Assumptions

 Maslow believes a satisfied need is not a motivator.

 A person’s needs are arranged in a priority of importance.

 As the first level needs are met, the person advances to

the next level need.
 5. Self
actualization

4. Esteem

3. Social/
love

2.
Safety/security

1.
Physiological
1. physiological needs- includes basic needs such as need for
food, cloth, shelter.

2. Safety/security/ needs – are freedom from fear and

anxiety, job security, desires for retirement….

3. Social needs- once we feel reasonably safe and secure,

we turn our attention to relationships with others to
fulfill our belongingness and affiliation needs.

4. Esteem needs-are needs for self respect, recognitions etc.

5. Self-actualization needs- need of accomplishing

something.
3.2. ERG theory- by Clayton Alderfer

Growth
Self
actualization

Esteem

Social/ love
Relatedness

Safety/securi
ty

Physiological

Existence
Differences between Maslow's need
hierarchy and ERG theory
 ERG states more than one levels of need can cause
motivation at the same time.

 ERG has Frustration-Regression element (if needs

remain unsatisfied the individual become frustrated and
regress to the lower level needs again) which do not
exist in Maslow’s need hierarchy.
4. Herzberg’s two factor theory

There are two factors

1. Motivator factors- accounts for high level of motivation.

-Includes factors like nature of the work, work
difficulty, achievement, recognition, responsibility and
personal growth. motivators influence the level of
motivation positively.

2. Hygiene factors- are factors that can cause

dissatisfaction; even these hygiene factors are
addressed people may not be motivated
Cont.….
Includes factors like salary, job security, working
condition, company policies, quality of interpersonal
relationship among peers, supervisors, subordinates, etc.

Hygiene factors influence the level of dissatisfaction.

Communication in organization
 Communication is the process of transmitting information
among two or more people.

 Two types of communication

1. Formal Communication- intentionally designed by the

organization. There are three types of formal
communication.

 Vertical

 Horizontal

 Diagonal
Cont.….
2. Informal Communication(Grapevine)

Created not deliberately/intentionally by the organization

Created unintentionally by the informal organization in order

to satisfy their need to interact and share information among
themselves.
End of chapter six
 Chapter seven

The controlling function

Controlling
 Controlling is the process in which management evaluates
performance using predetermined standards and in light of
the results makes a decision regarding corrective action.
 Controlling is directly related to planning.
 Controlling is important in order to confirm the degree to
which organization is efficient in using its resources and to
ensure the degree to which organization is successful in
attaining its objectives.
The Purpose of controlling

Controlling have the following major importance.

 Adapting to the environmental change

 Limiting the accumulation of error

 Minimizing costs

 Preventing failure
The process of controlling
1. Determine areas to control: this is the process of
identifying critical control points.

 Critical control points include all the areas of an

organization’s operations that directly affect the success
of its key operations or areas where failure cannot be
tolerated and costs in time and money are greatest.
1. Establishing performance standards

 Standard is any established rule or basis of comparison

used to measure capacity, quantity, content, value, cost,
quality, or, performance.

 Standard is pre-determined amount of desired

performance which use as the basis for measurement.
2. Measuring actual performance

 After standards are established, managers must measure

actual performance to determine variation from
Cont.….
 In measuring performance emphasis should be placed on its
quantitative as well as qualitative aspects.

 personal observation, statistical reports, oral reports and written

reports can be used to measure performance.

3. Comparing measured performance against established

standards.

 Comparison of actual performance with the set standards leads to

identification of deviations needing attention.
Cont.….
 If there is significant deviation, managers should analyze
the real causes of deviations to take actions.

4. Taking corrective action

 Once the underlying causes of deviations have been

identified, the next step is to take corrective actions.

 The corrective action helps to avoid repetition of the

problem or defect.
Types of controlling

 Controlling will be successful, if implemented at the right

stage.

 Supervisors can implement controlling at three stages:

I. Before the process begins (feed forward)

II. During the process (concurrent) or

III. After it ceases (feedback)

1. Feed forward Controlling (preventive controlling)

 Also known as steering or preliminary input control

 It focus on operation before every activity begins.

 It allow managers to anticipate problems before they

arise.

Example

 Carefully screening job applicants and using several

effective interviews.

 Regular maintenance
2. Concurrent controlling

 Also called screening or yes/ no checking control

 Are controls that give managers immediate feedback.

 Is designed to detect and anticipate deviations from

standards at various points through the process.
3. Feedback Controlling (post action)

 are controls that focus on the results of operations.

 They are after the fact or post performance controls.

 It provides information for managers to examine and

apply to future activities that are similar to the present
one.
Cont.….

 In a feedback control, managers measure actual

performance against the standard and take corrective
actions if there is any unfavorable variation.
Three types of controls

Con
versi
Inpu Out
Feed
on
Concurrent
Feedback
control
ts
forward
control
problems
puts
(manage

(anticipate
proc
(manage
problems as
problems
after they
problems) ess
they occur) occur)
Characteristics of effective control systems include:

 Accuracy- information that is received from control

system should be accurate or real.

 Timely- the information being transferred must be

provided on time to allow managers to obtain full
benefits from the data.

 Economical- the cost of control system must be

weighted against its benefits.
Cont.….
 Focus on critical points- a manager does not have time
to control every aspect of operations.
 Acceptability- people must agree that controls are
necessary.
 The end
Thank you very much for your
undeserved attention