Republic of the Philippines

Department of Education
REGION III
SCHOOLS DIVISION OF SAN JOSE DEL MONTE CITY
PARADISE FARMS NATIONAL HIGH SCHOOL
SHS – ORGANIZATION and MANAGEMENT
(FUNCTIONS OF MANAGEMENT)
Planning is the first management function and a very essential component of management.
Planning is a process that involves the setting of the organization’s goals. Establishing strategies for accomplishing those goals and
developing plans of action or means that managers intend to use to achieve organizational goals.

DEFINITION AND NATURE OF PLANNING

Planning provides direction to all of the organization’s human resources – both managers as well as employees. If they know what their
firm or their work unit is trying to achieve and what activities they should engage in to be able to contribute to the achievement of the
firm’s set vision, mission, goals and objectives, they would coordinate their actions and collaborate well with one another.
Planning is important because it reduces uncertainty; it compels managers to consider future events that may affect their company.
Anticipating changes and their impact will help managers and other workers to react to such changes appropriately.
Minimizing of wastes will result if there is proper coordination of activities due to planning; negative practices, ineffectiveness and
inefficiencies could be easily detected and can be corrected or eliminated.
Establishing goals and standards during planning may be used for controlling, another necessary managerial function.
Without planning, goals and standards will be absent and controlling will not be possible.
Goal- Setting – the identification of targets or desired ends that management wants to reach.
Vision- a mental image of what the organization will be in the way future, as desired by the company management and employees.
Mission – basic purpose of an organization and range of their operations.
Objectives – steps needed in order to attain desired ends.

RELATIONSHIP OF PLANNING TO INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE

Is there a clear relationship between planning and performance? Although numerous researchers have shown a generally positive
relationship between planning and performance, it would not be advisable, however, to judge that organizations or individuals who
formally plan have better performance compared to those who do not plan.
There are other environmental factors that also affect individual or organizational performance, thus, result in reducing the impact of
planning to performance. This is safer to say that the relationship between planning and performance is mainly due to association of
systematic planning with the excellent financial status of the organization and higher return of investments, higher income and profit that
could be traced to the excellent performance of its human race.
Finally, the planning-performance relationship could also be associated with the time spent in preparing and executing a formal
organizational or individual plan. A well-thought-out plan must require a longer period of preparation; its execution or application must
also be done for a certain period of time – months or years – before it begins to affect performance.

Difference between Goals and Plans

Goals are the targets or desired ends that management wants to reach, while plans are the actions or means that
administrators/managers intend to use to achieve organizational goals. In short, goals serve as the foundation of planning. Goals precede
plans because knowing the desired targets is a must before establishing plans for reaching them.

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TYPES OF PLANS
Organizational plans can be generally described in terms of comprehensiveness, length of time covered or time frame, specificity and
frequency of use.
Comprehensiveness refers to the completeness of planning coverage; for example; it may start from plans that cover the entire
organization, called strategic plans, up to operational plans that apply to a particular operational area only. The more comprehensive the
plan is, the better, as this could completely guide both the employer and employee toward the fast achievement of company goals.
A plan may be long-term, or covering more than three years, or short-term, covering one year or less. Top-level management usually
sets the long-range plans, while lower-level management focuses on short-term goals.
Specificity refers to very detailed, clearly defined plans wherein objective are clearly stated and could easily be understood. Simple
language must be used in order to facilitate understanding of the plan.
Frequency of use refers to the number of times or instances a plan may be used. For example, strategical plans have single use, while
operational plans are usually standing or are used frequently or for several times. Referring to set plans is often necessary to ensure that
all plans are carried out, thus, hastening the achievement of the organization’s goals. Managers meet many planning challenges as they
go about their tasks and direct their company’s affairs. In some organization’s goals. Managers meet many planning challenges as they
go about their task and direct their company’s affairs. In some organizations, the planning environment is steady, but in others, it is
dynamic, so, different types of plans are made to meet organizational needs. Different types of planning include the following;
Strategic plans – plans that establish the organization’s overall goals and apply to the entire firm; they are broad in scope and are the
responsibility of the CEO, president and general manager of the company.
Operational plans – plans that apply to a particular unit area only; their scope is narrow; achievement of company goals may not be
achieved if operational plans are not clear.
Long-term plans – plans that go beyond three years; everyone must understand the organization’s long-term plans to avoid confusion
that may divers the organization members’ attention.
Short-term plans – plans that cover one year or less; such plans must lead toward the attainment of long-term goals and are the
responsibility of the unit/department heads.
Directional plans – plans that are flexible or give general guidelines only; although flexible and general, these plans must still be related
to the strategic plans.
Specific plans- plans that are clearly stated and which have no room for interpretation; language used must be very understandable.
Single-use plans – plans used or stated once only as this applies to the entire organization; refer to the operational plans of the firm.
Standing plans – plans that are ongoing; provide guidance for different activities done repeatedly; refer to the identified activities of
operational plans.

STEPS IN PLANNING
Planning is a process and, as such, involves steps –from carrying out its purpose, setting of goals/objectives, and determining what
should be done to accomplish them. Schermerhorn (2008) gave five steps in the planning process:
1. Define your goals/ objectives by identifying desired outcomes/results in very specific ways.
2. Determine where you stand in relation to set goals/objectives; know your strengths and weaknesses.
3. Develop premises regarding future conditions; anticipate future events, generate alternative “scenarios” for what may happen;
identify for each scenario things that may help or hinder progress toward your goals/objectives;
4. Analyze and choose among actions alternatives; list and carefully evaluate possible actions and choose the alternative, most
likely to accomplish goals/objectives.
5. Implement the plan and evaluate results; take corrective action and revise plans as needed.
PLANNING AT DIFFERENT LEVELS IN THE FIRM
Different levels in the firm are all engaged planning; however, all the resulting plans must be related to one another and directed toward
the same goals. Planning at the different levels of management include strategic planning, tactical planning and operational planning.
Top-level Management Planning (Strategic Planning)
As earlier mentioned, top-level managers are responsible for the organization’s strategic planning which involves making decision about
the organization’s long-term goals and strategies. CEOs, company presidents, or the organization’s senior executives develop and
execute the said strategic plan, They, however, do not formulate or execute the plan on their own; a management team supports and
helps top-level managers in carrying out these tasks.
Strategic planning starts with defining the organization’s goals/objectives, the major targets related to the maintenance of the
organization’s stability, and its organizational culture, values and growth improving its productivity, profitability, effectiveness and
efficiency, among others.
Middle-level Management Planning (Tactical Planning)
Tactical planning refers to a set of procedures for changing or transforming broad strategic goals and plans into specific goals and plans
that are applicable and needed in one unit/portion of the organization. I tis focused on major actions that must be done by a unit in order
to contribute its share for the achievement of the strategic plan.
Frontline/Lower-level Management Planning (Operational Planning)
Operational planning involves identifying the specific procedures and processes required at the lower levels of the organization. This also
involves routine at the lower levels of the organization. This also involves routine tasks or tasks repeatedly done by the organization’s
lower-level units.
Integrating Strategic, Tactical and Operational Planning
The present organizational planning is not as rigid as the hierarchical planning. Managers in different hierarchical levels of the
organization may contribute their ideas or suggestions in developing the strategic plan, a task originally assigned to the senior executives.
Also, frontline managers may make decision that could influence strategy formulation in the higher levels. All plan, however, must be
directed toward the achievement if the organization’s strategic goals.
Finally, CEOs or company presidents must see to it that all communication lines in their organization are open, that there is excellent
dissemination of information to all levels, and they are aware of everything that is happening in their firm.

Appropriate planning techniques and tools in business decision-making

For effective planning in today’s dynamic environments, different techniques and tools must be used, such as forecasting, contingency
planning, scenario planning, benchmarking and participatory planning.
According to Schermerhorn (2008), forecasting and participatory planning predict what may happen in the future. All planning types,
without exception, make use of forecasting. Business periodicals publish forecasts’ such as employment and unemployment rates,
increase or decrease of interest rates, stock market data, GNP/GDP data, and others. Forecasts use may either be quantitative or
qualitative. Opinions of prominent economists are used in qualitative forecasts while mathematical calculations and statistical analyses
of surveyors/researchers are used in quantitative forecasts. These, however, are just aids to planning and must be treated with caution.
As the name implies, forecasts are predictions and may be inaccurate, at times, due to errors of human judgement.
Contingency factors may offer alternative courses of action when the unexpected happens or when things for wrong. Contingency plans
must be prepared by managers, ready for implementation when things do not turn out as they should be. Contingency factors called
“trigger points” indicate when the prepared alternative plan should be implemented.
Meanwhile, planning for future states affairs is a long-term version of contingency planning and is also known as scenario planning.
Several future states of affairs must be identified and alternative plans must be prepared in order to meet the changes or challenges on
the future. This is a big help for organizations because it allows them to plan ahead and make necessary adjustments in their strategies
and operations. Some examples of changes or challenges that may arise in future scenarios are environmental pollution, human rights
violation, climate and weather change, earthquake damages to communities and others.
Benchmarking is another planning technique that generally involves external comparisons of a company’s practices and technologies
with those of other companies. Its main purpose is to find out what other people and organizations do well and then plan how to
incorporate these practices int the company’s operations. A common benchmarking technique is to search for best practices used by
other organizations that enable them to achieve superior performance. This is known as external benchmarking. Internal benchmarking
is also practiced by some organizations when they encourage all their employees working in their different work units to learn and improve
by sharing one another’s best practices.
Participatory planning is a planning process that includes the people who will be affected by the plans and those who will be asked to
implement them in all planning steps. Creativity, increased acceptance and understanding of plans, and commitment to the success of
plans are the positive results of this planning technique.
Trigger point – change in an attribute, condition, factor, parameter or value that represents crossing a threshold and actuates or initiates
a mechanism or reaction that may lead to a radically different state of affairs.
Forecasting – an attempt to predict what may happen in the future.

DECISION MAKING
All managers and workers/employees in organization’s make decisions or make choices that affect their jobs and the organization they
work for. This lesson’s focus is on how they make decisions by going through the eight steps of the decision-making process suggested
by Robbins and Coulter (2009).
Decision Making – Is a process which begins with problems identification and ends with the evaluation of implemented solutions.

TYPES OF DECISIONS
A decision is a choice among possible alternative actions. Like planning, decision-making is a challenge and requires careful
consideration for both types of decisions, namely:
Structured or programmed decision – A decision that is repetitive and can be handled using a routine approach
Such repetitive decision applies to resolving structured problems which are straightforward, familiar and easily defined. For example, a
restaurant customer complains about the dirty utensils the waiter has given him. This is not unusual situation, and therefore standardized
solutions to such a problem may be readily available.
Unstructured or non-programmed decisions – applied to the resolution of problems that are new or unusual and for which information
is incomplete.
Such nonprogrammed decisions are described to be unique, nonrecurring and need custom-made decisions. For example, a hotel
manager is asked to make a decision regarding the building of a new hotel branch in another city to meet the demands of businessmen
there. This is an unstructured problem and, therefore needs unstructured or non-programmed decisions to resolve it.

TYPES OF DECISION-MAKING CONDITIONS

Conditions, under which decisions are made, also vary. These are:
Certainty conditions – ideal conditions in deciding problems; these are situations in which a manager can make precise decision
because the results of all alternatives are known.
For example, bank interests are made known to clients so it is easier for business managers to decide on the problem of where to deposit
their company’s funds. The bank which offers the highest interest rate, therefore, is the obvious choice of the manager when asked to
make a decision.
Risk or uncertainty conditions – a more common condition in deciding problems.
Risk or uncertainty conditions compel the decision maker to do estimates regarding the possible occurrence of certain outcomes that
may affect his or her chosen solution to a problem. Historical data from his or her own experiences and other secondary information may
be used as basis for decision to be made by the decision maker under such risk conditions. For example, a manager is asked to invest
some of their company funds in the money market offered by a financial institution. Risk factors must be considered, because of the
uncertainty conditions involved, before making a decision – whether to invest or not in the said money market.
THE DECISION-MAKING PROCESS ACCORDING TO ROBBINS AND COULTER
Step 1: Identify the Problem. The problem may be defined as a puzzling circumstance or a discrepancy between an existing and a
desired condition.
Step 2: Identify the Decision Criteria. These are important or relevant to resolving the identified the problem.
Step 3: Allocate Weights to the Criteria. This is done in order to give the decision maker the correct priority in making the decision.
Step 4: Develop Alternatives. This step requires the decision maker to list down possible alternatives that could help resolve the
identified problems.
Step 5: Analyze the Alternatives. Alternatives must be carefully evaluated by the decision maker using the criteria identified in Step 2.
Step 6: Select an Alternative. This is the process of choosing the best alternative or the one which has the highest total points in Step
5.
Step 7: Implement the Chosen Alternative. This step puts the decision into action. Changes in the environment must be observed and
assessed, especially in cases of long-term, decision, to see if the chosen alternative is still the best one.
Step 8: Evaluate Decision Effectiveness. This is the last step and involves the evaluation of the outcome or result of the decision to
see if the problem was resolved. If the problem still exists, the manager has to assess what went wrong and, if needed, repeat a step or
the whole process.

The nature of Organization and types of Organizational Structures.

Differentiation of the Organization’s Internal Environment
Differentiation in organizations involves division of labor and specialization according to Bateman and Snell (2008). These necessarily
result from the organization’s composition – many different work units with different kinds of tasks, and different skills and work activities
coordinating with one another for a common end.
Division of labor involves assigning different tasks to different people in the organization’s different work units. Related of it is
specialization, the process in which different individuals and units performs different tasks. An organization’s overall work is complex and
would be too much for any individual, therefore the bigger the organization, the more work units or work divisions and specializations are
to be expected.
Organization is a social unit of people that is structured and managed to meet a need or to pursue collective goals.
Integration Of Work Units
Integration is another process in the organization’s internal environment which involves the collaboration and coordination of its different
work units or work divisions. Coordination refers to the procedures that connect the network activities of the different work divisions/units
of the firm in order to achieve its overall goal. Structural mechanisms may be devised in order to increase collaboration and coordination.
The more highly differentiated one’s organization is, the greater the need for integrations among the different units.

Types of Organization Structures

An organizational structure is a system made up of tasks to be accomplished, work movements from one work level to other work levels
in the system, reporting relationship and communication passageways that unite the work of different individual persons and groups. The
Types of Organizational Structures include:
a. Vertical Structure
b. Horizontal Structure
c. Network Structure
According to Bateman and Snell (2008), a vertical structure clears out issues related to authority rights, responsibilities and reporting
relationships. Authority rights refer to the legitimate rights of individuals, appointed in positions like president, vice president, manager
and the like, to give orders to their subordinates, who in turn, report to them what they have done.
Organizational Chart with Vertical Structure

Sample of Functional Organization

Owners of private business companies are said to have absolute authority, even if other person are appointed as managers in their
companies. In corporations, the owners are the stockholders and they elect a board of directors to manage the organization’s activities.
The board has a chairman who acts as the leader, while the members act as the corporation’s authority figures, responsible for making
major decisions affecting their organizations, subject of the corporation’s constitution and by-law provisions. Besides the chairman of the
board, a chief executive officer (CEO) is appointed to occupy the top post in the organization pyramid and is personally accountable to
the members of the board and other owners for the organizational performance.
Below the top-level manager are the middle-level managers in charge of departments who, as earlier mentioned, report to them. Under
the middle-level managers are the lower-level managers which include office managers, sales managers and supervisors who directly
report to the former. Employees under the lower-level managers also have reporting relationships with their respective department
managers.
A horizontal structure refers to the departmentalization of an organization into smaller work units as task become increasingly varies
and numerous.
Types of Departments:
Line departments – deal directly with the firm’s primary goods and services; responsible for manufacturing, selling and providing services
to clients.
Staff departments – support the activities of the line departments by doing research, attending to legal matters, performing public
relations duties, etc. Meanwhile, departmentalization may done using three approaches:
Functional approach – where the subdivisions are formed based on specialized activities such as marketing, production, financial
management and human resources management.
Divisional approach – where departments are formed based on management of their products, customers or geographic areas
covered.
Matrix approach – is a hybrid form of departmentalization where managers and staff personnel report to the superiors, the
functional manager and the divisional manager.

A network structure is a collection of independent, usually single function organizations/companies that work together in order to
produce a product or service. Such network organizations are each capable of doing their own specialized work activities independently,
like producing, distributing, designing etc., but are capable of working effectively at the same time with other network members.

Network structure
Often their communication is by electronic means where sharing of information is speedy. This results to their ability to respond at once
to their customers’ demands. Organizational structure is needed to keep employees needed, to build a learning organizational and to
manage global structural problems.

There are two main classifications of theories regarding organizational design (how management achieves the right combination of
differentiation and integration of the organization’s operations, in response to the level of uncertainty in its external environment).
According to Robbins & Coulter (2009): Traditional and Modern Traditional pertains to the usual or old fashion ways while modern
refers to contemporary or new design theories.
Traditional Theories include:
Simple - This organizational design has a few departments, wide spans of control, or a big number of subordinates directly
reporting to a manager: has a centralized authority figure and has very little formalization of work: usually used by companies that start
as entrepreneurial ventures.
Simple Organizational Design
Strengths Weaknesses
❖ Flexible ❖ The risk that overdependence with over-dependence on a

❖ Fast decision-making and result single person

❖ Clear accountability ❖ No longer appropriate as the company grows

Functional - This organizational design groups together similar or related specialties. Jobs are grouped in departments with the
specified skills and/or business functions.
Example of the functional organization includes:
a. An English department for a particular school teaches all the English subject regardless of what grade level the students are.
b. The municipal water district is responsible for all the water needs in a particular town.
c. The purchasing department of an enterprise buys all the materials, supplies, and other resources required by an enterprise, whether
these inputs are required by marketing, finance, accounting, human resources, or other departments.
Functional Organizational Design
Strengths Weaknesses
❖ Cost-saving advantages ❖ Managers have little knowledge of other units’ function
❖ Management is facilitated because workers with similar tasks
are grouped.

Divisional - This organizational design is made up of separate business divisions or units, where the parent corporation acts
as overseer to coordinate and control the different divisions and provide financial and legal support services.
Example of the divisional organization includes:
1. NORSU set up university branches located in the different towns in Negros Oriental.
2. Health Centers set up “barangay health units” to provide the health services of each barangay in the town.
Divisional Organizational Design
Strengths Weaknesses
❖ Focused on results ❖ Possible duplication of activities and resources
❖ Managers are responsible for what happens to their products ❖ Increased cost and reduced efficiency
and services
Modern Theories include:
Team Design - This organizational design is made up of workgroups or teams. They define team structures such as roles and
responsibilities, and they collaboratively identify working arrangements that allow their team to deliver on their purpose and goals.
Team Organizational Design
Strengths Weaknesses
❖ Better Communication ❖ Potential conflict

❖ Teams Resolve Problems Quicker ❖ Some people are not team players
❖ Flexible and Empowered Workforce ❖ Under-performing employees hide behind the team

❖ Empowerment of team members and reduced barriers among

functional areas

Matrix-Project Design - This refers to an organization design where specialists from different departments work on projects
that are supervised by a project manager. This design results in a double chain of command wherein workers have two managers - their
functional area manager and their project manager-who share authority over them.
Matrix-Project Organizational Design
Strengths Weaknesses
❖ A specialist is involved in the project ❖ Task and personality conflicts
❖ Increased communication efficiency ❖ The potential conflict between managers and projects

❖ Improved employee motivation ❖ Authority confusion

❖ Increased teamwork ❖ Reduced employees’ effectiveness

❖ Maximize resource usage ❖ Increased management overhead costs

❖ Increase professional development

Project design - It refers to an organizational design where employees continuously work on a project.
Project Organizational Design
Strengths Weaknesses
❖ Flexible designs ❖ Task and personality conflicts

❖ Fast decision making

Boundary-less Design - This refers to an organization design where the design is not defined or limited by vertical, horizontal,
and external boundaries. There are no hierarchical levels that separate employees, no departmentalization, and no boundaries that
separate the organization from customers, suppliers, and other stakeholders. The key to this design is electronic communication, where
information is shared with the member enterprise with distinct competencies.
Boundary-less Organizational Design
Strengths Weaknesses
❖ Highly flexible ❖ Lack of control

❖ Responsive and draws on talent where it is found ❖ Presents communication difficulties

CONCEPT AND NATURE OF STAFFING MANAGEMENT

Managers often consider human resources as their organization’s most important resources. Very few administrators would argue with
the fact that human resources are very important for the efficient and effective operation of a company. To emphasize their importance,
human resources are also called human capital, intellectual assets, or management or company talents. These terms imply that human
resources are the drivers off the organization’s performance; hence, staffing is a crucial function of managers.
Staffing – Introduction
In a new enterprise, the staffing function follows the planning and organizing function. In the case of running an enterprise, staffing is a
continuous process. So, the manager should perform this function at all times.
It is obvious that the management must ensure a constant availability of sufficient number of efficient executives in an enterprise for the
efficient functioning of the enterprise. The selected personnel should be physically, mentally and temperamentally fit for the job.
Staffing is a basic function of management. Every manager is continuously engaged in performing the staffing function. He is actively
associated with recruitment, selection, training and appraisal of his subordinates. These activities are performed by the chief executive,
departmental managers and foremen in relation to their subordinates. Thus, staffing is a pervasive function of management and is
performed by the managers at all levels.

Meaning of Staffing:
The term ‘Staffing’ relates to the recruitment, selection, development, training and compensation of the managerial personnel. Staffing,
like all other managerial functions, is the duty which the apex management performs at all times. In a newly created enterprise, the
staffing would come as a. third step—next to planning and organizing—but in a going enterprise the staffing process is continuous.
In order to define and clarify the group of employees included in the staffing concept, it must be stated that the staffing function is
concerned with the placement, growth and development of all of those members of the organization whose function it is to get things
done through one effort of other individuals.
This definition includes all levels of management because those who will occupy positions in the top two or three levels of management
fifteen or twenty years from now are likely to be found in the lower levels today.
“The managerial function of staffing involves manning the organizational structure through effective and proper selection, appraisal, and
development of personnel to fill the roles designed into the structure.” — Koontz and O’Donnell
https://www.yourarticlelibrary.com/business-management/staffing-its-meaning-nature-and-importance-business-management/27912

Staffing is related to performing a set of activities which aim at inviting, selecting, placing and retaining individuals at various jobs to
achieve the organizational goals. It involves determining the need for people at various organizational posts, appointing and retaining
them at those posts by training and developing their abilities and skills. This is done by performing a number of functions like manpower
planning, recruitment, selection, training and development, performance appraisal, compensation and maintenance.
https://www.businessmanagementideas.com/notes/management-notes/staffing-management-notes/notes-on-staffing-nature-need-and-
importance-organisation/5017

Staffing, according to Dyck and Neubert (2012), is the Human Resource function of identifying, attracting, hiring, and retaining people
with the necessary qualifications to fill the responsibilities of current and future jobs in the organization. The number of managerial
personnel or non-managerial human resources needed by an organization depends upon the size and complexity of its operations, its
plans for branching out or increasing products, and turnover rates of both types of human resources, among others. Besides considering
their number, the qualifications for the individual positions must be identified, so that the best-suited individuals for the job positions may
be selected for hiring.

Staffing – Concept
Once the organizational goals are set, the plans are prepared and organization is appropriately structured to pave the path for
achievement of the set goals. The next step is to provide appropriate personnel to fill in the various positions created by the organizational
structure. The process putting people to jobs is termed as staffing. Staffing, the management function involves appointing appropriate
personnel, developing them to meet organizational needs and ensuring that they are a satisfied and happy workforce.
Staffing is defined as a managerial function of filling and keeping filled the positions in the organizational structure. The personnel
appointed are a combination of permanent employees, daily workers, consultants, contract employees etc.
Staffing includes:
1. Identifying the requirement of workforce and its planning.
2. Recruitment and selection of appropriate personnel for new jobs or for positions which may arise as a result of existing employees
leaving the organization.
3. Planning adequate training for development and growth of workforce.
4. Deciding on compensation, promotion and performance appraisals for the workforce.

The following are the basic nature of staffing:

I. People-oriented – Staffing deals with efficient utilization of human resources in an organization. It promotes and stimulates every
employee to make his full contribution for achieving desired objective of the organization.
II. Development-oriented – It is concerned with developing potentialities of personnel in the organization. It develops their personality,
interests, and skills. It enables employees to get maximum satisfaction from their work. It assists employees to realize their full potential.
It provides opportunities to employees for their advancement through training, job education, etc.
III. Pervasive function – Staffing is required in every organization. It is a major sub-system in the total management system that can be
applied to both profit making and non-profit making organizations. It is required at all levels of organization for all types of employees.
IV. Continuous function – Staffing is a continuous and never-ending process. It requires constant alertness and awareness of human
relations and their importance in every operation.
V. Human objectives – It develops potentialities of employees so that they can derive maximum satisfaction from their work. It creates
an atmosphere where employees willingly cooperate for the attainment of desired organizational goals.
VI. Individuals as well as group-oriented – Staffing is concerned with employees both as individuals and as group in attaining goals.
It establishes proper organizational structure to satisfy individual needs and group efforts. It integrates individual and group goals in such
a manner that the employees feel a sense of involvement towards the organization.
VII. Developing cordial working environment – It develops a cordial environment in the enterprise where each employee contributes
his best for the achievement of organizational goals. It provides a very comfortable physical and psychological working environment.
VIII. Interdisciplinary nature – Staffing has its roots in social sciences. It uses concepts drawn from various disciplines such as
psychology, sociology, anthropology, and management. It has also borrowed principles from behavioral sciences. It is a science of human
engineering.
IX. Integral part of general management – Staffing is an integral part of the general management. It is very much a part of every line
manager’s responsibility. Every member of the management group (from top to bottom) must be an effective personnel administrator. It
renders service to other functional areas of management.
X. Science as well as art – Staffing is a science of human engineering. It is an organized body of knowledge consisting of principles
and techniques. It is also an art as it involves skills to deal with people. It is one of the creative arts as it handles employees and solves
their problems systematically. It is a philosophy of management as it believes in the dignity and worth of human beings.
https://www.economicsdiscussion.net/organisation/staffing/31866

Characteristics of Staffing as a Function of Management

The following facts clearly bring out the characteristics of staffing as a function of management:
1. Related to Human Beings
The first important characteristic of staffing is its relationship with human beings. It means that unlike planning and organizing it is not
mere paper work but involves the appointment of competent persons on various posts. Planning lays down what, when, how and by
whom work is to be done. Similarly, an organizational structure chart is prepared under organizing.
On the contrary, under staffing, competent individuals are selected and given training keeping in view the importance of the post and not
only doing paper work alone. All the activities done to accomplish this work are connected with human beings-they may be recruitment,
selection, training, promotion, etc.
2. Separate Managerial Function
The second important characteristic of staffing is that it is a separate managerial function. Separate managerial function means that far
from being a major part of some function, it is in itself a major function. Staffing is included in the other categories of managerial functions
like planning, organizing, leading, and controlling. A little earlier, some management experts considered it a part of organizing. But these
days, on the basis of various researches, it is accepted as an important separate managerial function.
3. Essential at All Managerial Levels
Staffing is essential at all managerial levels. The Board of Directors performs the function of staffing by appointing General Manager. The
General Manager does so by appointing departmental managers, while the departmental managers perform this function by appointing
their subordinates. It must be clarified here that the establishment of a separate personnel department does not free the concerned
managers from this all-important function.
The aim of establishing this department is to assist the managers at every level in the performance of their function of staffing. It is
important to note that the final responsibility regarding staffing lies with the managers concerned.
4. Related to Social Responsibility
Staffing deals with human beings and man is a social animal. Since it is connected with human beings, the social responsibility of this
function is born. In order to discharge this responsibility, the managers should take care and be impartial while going through the allied
functions of recruitment, selection, promotion, etc.
5. Effect of Internal and External Environment
The performance of staffing is affected by the internal and external environment of the enterprise. The internal environment of the
enterprise includes policies connected with the employees — like the promotion policy, demotion policy, transfer policy, etc. If as a matter
of policy, the vacant posts are to be filled up by promotion, the employees already working in the enterprise will have the opportunity to
reach higher posts, and the people from outside will be appointed only on lower posts.
In this way the internal policy of the organization does affect the function of staffing. The external environment affecting the enterprise
includes government policies and educational environment. It can be the policy of the government that in a particular enterprise
employees should be recruited only through employment exchange. Educational institutions can help in the development of the
employees by organizing special training camps. In this way, external environment also affects the function of staffing.

7 Important Functions of Staffing

1. Manpower Planning - Manpower may be planned for short-term and long-term. The short-term manpower planning may achieve the
objectives of the company at present conditions. The long-term manpower planning should be concerned with the estimation of staff
members required in future.
2. Development - Development is concerned with the development of staff members through adequate and appropriate training
programs. The training is given only to the needy persons.
3. Fixing the Employment Standards - It involves the job specification and job description. These enable the management to select the
personnel and train them scientifically. Job description is a systematic and organized written statement of the duties and responsibilities
in a specific job. Job specification is a statement of personal qualities that an individual must possess if he is to successfully perform the
job.
4. Sources - It is concerned with the method by which the staff members are selected. The sources may be internal and external sources.
Internal source means that a vacancy is filled up by the company out of the staff members available within the company. The external
source means that a vacancy is filled up by the company from outside the company. The person selected may be unemployed or working
in any other company.
5. Selection and Placement - It includes the process of selection of the staff members. The placement includes giving a job to a person
on the basis of his ability, education, experience and the like.
6. Training - The training may be arranged by the company itself. In certain cases, the staff members may be sent out by the company
to get the training. The expense is borne by the company. The training may be required not only by the new staff members but also by
the existing staff members.
7 Step Process of Staffing - Staffing starts with the estimation of manpower requirements and proceeds towards searching for talented
personnel to fill the various positions in an organization. Staffing, therefore, should follow a logical step by step process.

Following are the important steps involved in the process of staffing:

Step # 1. Estimating Manpower Requirements/Manpower Planning:
The process of manpower planning can be divided into two parts. One is an analysis for determining the quantitative needs of the
organization, i.e., how many people will be needed in the future. The other part is the qualitative analysis to determine what qualities and
characteristics are required for performing a job.
The former is called the quantitative aspect of manpower planning in which we try to ensure fair number or personnel in each department
and at each level. It should neither be too high nor too low leading to overstaffing or under-staffing respectively. The second aspect is
known as qualitative aspect of manpower planning wherein, we try to get a proper fit between the job requirement and the requirement
on the part of personnel in terms of qualification, experience and personality orientation.
Step # 2. Recruitment and Selection:
The second step after manpower planning is recruitment and selection. These are two separate functions, which usually go together.
Recruitment aims at stimulating and attracting job applicants for positions in the organization. Selection consists of making choice among
applicants. To choose those which are most suited to the job requirement keeping in view the job analysis information.
Selection processes must begin by precisely identifying the task to be performed and also drawing a line between successful and
unsuccessful performance. Thereafter, the process of selection tries to find out how far a job applicant fulfils those characteristics or traits
needed to successfully perform the job.
Step # 3. Placement and Orientation:
Placement refers to place the right person on the right job. Once the job offer has been accepted by the selected candidate, he is placed
on his new job. Proper placement of an employee reduces absenteeism, employee’s turnover and accident rates. Orientation/Induction
is concerned with the process of introduction or orienting a new employee to the organization.
The new employee is introduced to fellow employees, given a tour of the department and informed about such details as hours of work,
overtime, lunch period, rest rooms, etc. They are mostly informed about the company, the job and work environment. They are
encouraged to approach their supervisors with questions and problems.
Step # 4. Training and Development:
It is more accurately considered as a process of skill formation and behavioral change. It is a continuous process of the staffing function.
Training is more effectively conducted when the actual content of jobs for which people are being trained and developed is known.
Training programs should be devised to impart knowledge, develop skills and stimulate motives needed to perform the job. Development
involves growth of an employee in all respects. It is a wider concept. It seeks to develop competence and skills for future performance.
Thus, it has a long-term perspective.
Step # 5. Performance Appraisal:
It means evaluating a performance employee’s current and past performance as against certain predetermined standards. This process
includes defining the job, appraising performance and providing feedback.
Step # 6. Promotion and Career Planning:
Managers must encourage employees to grow and realize their full potential. Promotions are an integral p art of people’s career. They
usually mean more pay, responsibility and job satisfaction.
Step # 7. Compensation:
It refers to all forms of pay or rewards paid to employees by the employer/firm. It may be in the form of direct financial payments (Time
based or Performance based) like salaries and indirect payments like paid leaves.
https://www.economicsdiscussion.net/organisation/staffing/31866
THE PROCESS OF RECRUITING, SELECTING, AND TRAINING EMPLOYEES
Staffing as defined in the previous discussion is the Human Resource function of identifying, attracting, hiring, and retaining people with
the necessary qualifications to fill the responsibilities of current future jobs in the organization. Staffing is one way to open roles within a
company or organization. Staffing has two main components, recruitment, and selection. Hiring is similar to staffing in many ways. Like
staffing, it is a way for a company or organization to fill open roles in the roster.

Below is a diagram showing the steps of the hiring process:

Figure 1. Steps in Hiring Employees effectively

Recruitment is a set of activities designed to attract qualified applicants for job position vacancies in an organization.
The two methods of recruitment are external and internal recruitment.
Let us discuss it one by one.
External recruitment method considers outside sources in locating potential individuals who might want to join the organization and
encouraging them to apply for actual or anticipated job vacancies.
The following are methods of external recruitment:
1.Advertisements – this can be done through websites, newspapers, trade journals, radio, television, billboards, posters, and emails
among others.
2.Unsolicited applications – these are applications from individuals who took the initiative to apply even though the company did not
indicate that they need a new staff.
For example, you are interested in working in an organization but you do not have any idea if they are hiring employees or not. So,
what you did is you submitted your application documents to the organization. In this case, the organization has not put out a notice for
new workers.
3.Internet recruiting – independent job boards of the web commonly used by job seekers and recruiters to gather and disseminate job
opening information. Examples are jobstreet.com, jobfinderph.com, OnlineJobs PH, and many more.
4.Employee referrals – are recommendations from the organization’s present employees who usually refer to friends and relatives
who they think are qualified for the job.
An example is when you are working as a teacher in a private school and you know that this school is looking for an English teacher.
Since your cousin is an Education graduate with English as her specialization then you refer her to your School Principal as one of the
applicants for the job.
5.Educational institutions – these are good sources of young applicants or new graduates who have formal training but with very little
work experience. For technical and managerial positions, schools may refer to some of their alumni who may have the necessary
qualifications needed for the said job positions.
For example, a university known for its successful Engineering Graduates is looking for additional instructors in this field. And since
they have their lists of best graduates, they can hire some of their alumni to work with them.
6.Public and private employment agencies – this may also be good sources of applicants for different types of job vacancies for they
usually offer free services while private one’s charge fees from both job applicants and employers soliciting referrals from them.
Some examples of public employment agencies in the Philippines are the Philippine Overseas Employment Administration (POEA), the
Department of Labor and Employment (DOLE), etc. Private employment agencies like Ephesians Human Resource Inc., Brilliant Minds
Inc., and other employment agencies that are recognized by the government.

Internal recruitment is a process of filling job vacancies through promotions or transfers of employees who are already part of the
organization. In other words, recruitment is within the organization.
For example, you are working in an organization as an assistant supervisor for three years already. Since your senior supervisor is
about to retire, the organization is hiring for his replacement but what they do is internal recruitment. In this case, you as a qualified
applicant for the position can apply.
In simple words, external recruitment is looking for prospective applicants from outside the organization while internal is from inside.
Depending on the need of the organization, they can have both methods of recruitment at the same time.

Advantage and disadvantage of Internal and External Recruitment

Internal Recruitment External Recruitment
Advantages Advantages
• Cheaper and quicker to recruit • Outside people bring in new ideas
• People already familiar with business and how it operates • A larger pool of workers from which to find the best candidate
• Provides opportunities for promotion with in the business • People have a wider range of experience
Disadvantages Disadvantages
• The business already knows the strengths and weaknesses of • Longer process
the candidates • More expensive process due to advertisements and interviews
• Limits number of potential applicants required
• No new ideas can be introduced from outside • The selection process may not be effective enough to reveal
• May cause resentment amongst candidates not appointed the best candidate
• Creates another vacancy which needs to be filled.

Selection is the process of choosing individuals who have the required qualifications to fill the present and expected job opening. This
is the second component of staffing which includes the following steps:
1. Establishing the selection criteria – this includes the citation of the nature and purpose of the job position which has to be filled. This
may include the skills that the company is looking for in an employee.
Here is an example:
Formal Education – i.e. Must be a college graduate
Experience and Past Performance – i.e. Must have at least five-year experience in related work
Physical Characteristics – i.e. With pleasing personality
Personality Characteristics – i.e. hardworking
2. Requesting applicants to complete the application form – application forms must be filled by the applicants with the necessary
information that the company is asking so that it will be easy for managers to decide whether the applicants meet the minimum
requirements or not.
3. Screening by listing applicants who seem to meet the set of criteria – this is the time when the company’s human resource team will
assess who among the applicants meet the minimum criteria and who will proceed to the next step. This is to minimize the cost of time
spent in interviews with applicants who do not meet the criteria for the job opening.
4. Screening interview to identify more promising applicants – this is the time where shortlisted applicants will undergo a formal interview
and will be assessed more closely if he/she fits the job.
5. Interview by the supervisor/manager or panel interviewers – this is when the supervisors/managers will assess if the applicants are
well oriented with his/her characteristics and abilities towards the job that he/she is applying for.
6. Verifying information provided by the applicant – this is done to check if the applicants are not telling false information to the company.
7. Requesting the applicant to undergo psychological and physical examination – this is very important because having a healthy mind
and a healthy body is important for good job performance.
8. Informing the applicant that he or she has been chosen for the position applied for – this can be done verbally or in writing by the
managers who give the final decision regarding the applicant’s hiring. Final instructions regarding the company’s rules and regulations
for hiring an applicant must be given in this step.
In the selection process, organizations do not find it easy. Some will have different ways of selecting employees because it is difficult to
know what is the real performance of their people. Predicting their performance is difficult because of the difference between what
individuals can do at present to what they can do in the future.

TRAINING AND DEVELOPMENT

Training refers to learning given by organizations to its employees that concentrates on short-term job performance and acquisition or
improvement of job-related skills.
Development refers to learning given by organizations to its employees that is geared toward the individual’s acquisition of his or her
skills in preparation for future job appointments and other responsibilities.
Why are training and development important in achieving success in today’s organization? This is very important for every employee in
an organization to be properly equipped with the skills and abilities for them to be capable of meeting the organization’s goals.
Newly hired employees need to be trained for them to develop their skills, capabilities, characteristics and enhance their inter and
intrapersonal relations with their subordinates and workmates.
Before conducting the training, an organization analysis, task analysis, and person analysis will be conducted by managers. Organization
analysis may include the analyses of effects of downsizing, branching out, conflicts with rival companies, and others that may require
training or retrain personnel. Task analysis involves, for example, checking of job requirements to find out if all these are being done to
meet company goals. Person analysis determines who among the employees need training or retraining. This is to avoid spending on
the training of employees who no longer need it.
In conducting training, a training design must be prepared first. Instructional objectives that describe the knowledge, skills, and attitudes
that employees must acquire are included in this design. The objective must be aligned with the company’s objectives. Trainee readiness
and motivation is also a consideration in making the design. They need to refer their design to the trainee’s background knowledge and
experiences.
Next, when the design is already complete, it is time for its implementation. This may include; on-the-job training, apprenticeship training,
classroom instruction, audiovisual method, simulation method, and e-learning.
After implementation then the evaluation will follow. This is the moment when the training program will be evaluated by the participants.
Their reactions, their learnings, and their way of behaving during the training will be gathered and evaluated.
Employee development is a part of an organization’s career management program and its goal is to match the individual’s development
needs with the needs of the organization. An employee must know himself or herself well, he or she must be aware of his knowledge
and capabilities, values, and interests so that he or she could also identify the career pathway that he or she would like to take.
As part of the organization's goal towards its employees, it will provide its employees with the results of their evaluations, organization’s
plans, or direction that may be related to his or her career path. This is a very good combination to blend the employee’s career
development goals with the organizational goals.

THE FUNCTIONS AND IMPORTANCE OF COMPENSATION, WAGES AND PERFORMANCE EVALUATION, APPRAISAL,
REWARD SYSTEM, EMPLOYEE RELATIONS AND MOVEMENT
COMPENSATION/WAGES and PERFORMANCE EVALUATION
Compensation/wages and performance evaluation are related to each other because the employees’ excellent or poor performance also
determines the compensation given to them, after considering other internal and external factors like the actual worth of the job,
compensation strategy of the organization, conditions of the labor market, cost of living, and area wage rates, among others.
Compensation may come in different forms. It may be direct, indirect, or nonfinancial.
Types of Compensation
Direct compensation – includes workers’ salaries, incentive pays, bonuses, and commission
Indirect compensation – includes benefits given by employers other than financial remunerations; for example, travel, educational and
health benefits, and others
Nonfinancial compensation – includes recognition programs, being assigned to do rewarding jobs, or enjoying management support,
ideal work environment, and convenient work hours
Connecting Compensation to Organizational Objective

➢ The daily minimum wage rate differs in

relation to factors such as geographical area
and industry or sector. The National Wage
and Productivity Commission is the
government agency concerned with
minimum wage determination in the
country.

➢ Figure 1. Pay equity is among the important

considerations in preparing compensation
packages. As illustrated in this diagram, pay
equity is based on the idea that an
employee’s pay must be commensurate to
his or her effort.

Worker compensation/wages had tremendously changed in the 21st century due to increased market competition (both local and global),
required skills from workers, and changes in technology, among others. Along with these, organizations’ pay philosophies have also
changed. Instead of paying employees based mainly on their job position or titles, they are now given pay according to their competencies
or according to how much they could contribute or have contributed to their company’s success. Wage experts now prepare compensation
packages to create values for both the organization and its employees.
Compensation: A Motivational Factor for Employees
Compensation pay represents a reward that an employee receives for good performance that contributes to the company’s success.
With this, the following must be considered:
Pay Equity – related to fairness; the Equity Theory is a motivation theory focusing on employees’ response to the pay that they receive
and the feeling that they receive less or more than they deserve.
Employees generally feel that their pay must be commensurate to the effort exerted in the performance of their job. In other words, pay
equity is achieved when the pay given to them by their employers is equal to the value of the job performed; thus, this motivates them to
perform well and to do their jobs to the best of their abilities.
Expectancy Theory – another theory of motivation which predicts that employees are motivated to work well because of the attractiveness
of the rewards or benefits that they may receive from a job assignment.
The employee’s perception of the compensation or pay attached to a job position is an important factor in ascertaining the motivational
value of compensation.

Bases for Compensation

Employees may be compensated based on the following:
Piecework basis – when pay is computed according to the number of units produced
Hourly basis – when pay is computed according to the number of work hours rendered
Daily basis – when pay is computed according to the number of workdays rendered
Weekly basis – when pay is computed according to the number of workweeks rendered
Monthly basis – when pay is computed according to the number of work months rendered

Compensation rates are influenced by internal and external factors. Among the internal factors are the organization’s compensation
policies, the importance of the job, the employees’ qualifications in meeting the job requirements, and the employer’s financial stability.
External factors, on the other hand, include local and global market conditions, labor supply, area/regional wage rates, cost of living,
collective bargaining agreements, and national and international laws, among others.
Purposes of Performance Evaluation: Administrative and Developmental
Improving individual job performance through performance evaluation is just one of the reasons why employees are subjected to
assessments on a continuous basis. There are other purposes behind employee assessment that are beneficial to the company and
employee.
Administrative Purposes – These are fulfilled through appraisal/ evaluation programs that provide information that may be used as a
basis for compensation decisions, promotions, transfers, and terminations.
Human resource planning may also make use of it for the recruitment and selection of potential employees.
Developmental Purposes – These are fulfilled through appraisal/ evaluation programs that provide information about employee’s
performance and their strengths and weaknesses that may be used as a basis for identifying their training and developmental needs.
Through this approach, the workers become more receptive to explanations given by the organization’s management regarding the
importance of having evaluations at regular intervals – that these are conducted to improve their competencies to prepare them for future
job assignments.
Different performance appraisal methods are used depending on the information an evaluator aim to find out.
Performance Appraisal Methods
Methods of evaluating workers have undergone development to adapt to new legal employment requirements and technical changes.
Some appraisal methods used today are the following:
1. Trait Methods – performance evaluation method designed to find out if the employee possesses important work characteristics such
as consciousness, creativity, emotional stability, and others
2. Graphic rating scales – performance appraisal method where each characteristic to be evaluated is represented by a scale on which
the evaluator or rater indicates the degree to which an employee possesses that characteristic
3. Forced-choice method – performance evaluation that requires the rater to choose from two statements purposely designed to
distinguish between positive or negative performance; for example: works seriously – works fast; shows leadership – has initiative
4. Behaviorally anchored rating scale (BARS) – a behavioral approach to performance appraisal that includes five to ten vertical scales,
one for each important strategy for doing the job and numbered according to its importance
5. Behavior observation scale (BOS) – a behavioral approach to performance appraisal that measures the frequency of observed behavior
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be justified by the following advantages: (Enriquez,
2016)
➢ Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programs for efficient employees. In this regard,
inefficient workers can be dismissed or demoted in case.
➢ Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through
performance appraisal. Performance appraisal tries to give worth to performance. Compensation packages which include bonuses, high
salary rates, extra benefits, allowances, and pre-requisites are dependent on performance appraisal. The criteria should be merit rather
than seniority.
➢ Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and
programs. It contributes to analyzing the strengths and weaknesses of employees so that new jobs can be designed for efficient
employees. It also helps in framing future development programs.
➢ Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection
procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of the selection procedure. Future
changes in selection methods can be made in this regard.
➢ Motivation: Performance Appraisal serves as a motivation tool. Through evaluating the performance of employees, a person’s
efficiency can be determined if the targets are achieved. This very well motivates a person for a better job and helps him to improve his
performance in the future.
Why Some Evaluation Programs Fail
Performance appraisals (such as manager/supervisor appraisal, self-appraisal, subordinate appraisal, customer appraisal, peer
appraisal, team appraisal, or 360-degree appraisal) may sometimes fail due to various reasons including the following:
• the inadequate orientation of the evaluatees regarding the objectives of the program;
• incomplete information of the evaluatees (e.g. proper answering of the evaluation questionnaire);
• bias exhibited by evaluators;
• inadequate time for answering the evaluation forms;
• ambiguous terms used in the evaluation questionnaire;
• employee’s job description is not properly evaluated by the evaluation questionnaire used;
• inflated ratings resulting from the evaluator’s avoidance of giving low scores;
• evaluator’s appraisal is focused on the personality of the evaluatee and not his or her performance;
• the unhealthy personality of the evaluator; and
• the evaluator may be influenced by organizational politics.

REWARD SYSTEM
Organizations offer competitive rewards systems to attract knowledgeable and skilled people and to keep them motivated and satisfied
once they are employed in their firm. Further, rewards promote personal growth and development and present fast employee turnover.
Management offers different types of rewards:
Monetary rewards – rewards that pertain to money, finance, or currency.
a. Pay/Salary – financial remuneration given in exchange for work performance that will help the organization attain its goals; examples:
weekly, monthly, or hourly pay, piecework compensation, etc.
b. Benefits – indirect forms of compensation given to employees/ workers to improve the quality of their work and personal lives; health
care benefits, retirement benefits, educational benefits, and others are examples of these
c. Incentives – rewards that are based upon pay-for-performance philosophy; it establishes a baseline performance level that employees
or groups of employees must reach to be given such reward or payment; examples; bonuses, merit pay, sales incentives, etc.
d. Executive Pay – a compensation package for executives of
organizations which consist of five components: basic salary, bonuses, stock plans, benefits, and perquisites
e. Stock Options – are plans that grant employees the right to buy a specific number of shares of the organization’s stocks at a guaranteed
price during a selected period
Nonmonetary Rewards – rewards that do not pertain to money, finance, or currency; refer to intrinsic rewards that are self-granted and
which have a positive psychological effect on the employee who receives them.
a. Award – a nonmonetary reward that may be given to individual employees or groups/teams for meritorious service or outstanding
performance; trophies, medals, or certificates of recognition may be given instead of cash or extrinsic rewards
b. Praise – a form of nonmonetary, intrinsic reward given by superiors to their subordinates when they express oral or verbal appreciation
for excellent job performance

EMPLOYEE RELATIONS
Employee relationships apply to all phases of work activities in organizations, and managers to be effective, must be able to encourage
good employee relations among all human resources under his or her care. Employees/workers are social beings who need connections
or relations with other beings – other employees/workers – who can give them social support as they carry out their tasks in the
organization where all of them belong. Talking to a co-worker, perceived to be a friend, or working on a delicate task with others can be
comforting during times of stress, fear, or loneliness. When these negative feelings are overcome, employees will be able to work better
toward the achievement of their organization’s goal.
Effective Employer Relations and Social Support
Social support is the sum of perceived assistance or benefits that may result from effective social employee relationships. The quantity
and quality of an employee’s relationship with others determine social support (esteem support, informational support, or financial
support). In short, social support and effective employee relations must always go together “a horse and a carriage,” where one would
be useless without the other. Therefore, without social support, effective employee relations are not possible; and without effective social
employee relationships, social support, likewise, is not possible.
Below are some barriers to good employee relations:
• Anti-social personality: refusal to share more about oneself to co-employees; being a loner
• Lack of trust in others
• Selfish attitude; too many self-serving motives
• Lack of good self-esteem
• Not a team player
• Being conceited
• Cultural/subcultural differences
• Lack of cooperation
• Communication problems: refusal to listen to what others seek to communicate
• Lack of concern for others’ welfare
Here are some ways to overcome barriers to good employee relations:
• Develop a healthy personality to overcome negative attitudes and behavior.
• Find time to socialize with coworkers.
• Overcome tendencies of being too dependent on electronic gadgets.
• Develop good communication skills and be open to others’ opinions.
• Minimize cultural/subcultural tension.
The Benefits of Strong Employment Relations
Having a strong employer and employee relations reaps a lot of benefits for your business. The most advantages are listed below:
(Enriquez, 2016)
1.Productivity
Strong employment relations create a pleasant atmosphere within the work environment; it increases employee motivation and can also
be increased through improved employee morale. Companies that have invested in employee relations programs have experienced an
increase in productivity, and therefore, the increased productivity leads to increases in profits for the business.
2.Employee Loyalty
Creating a productive and pleasant work environment has a drastic effect on an employee’s commitment to the firm, it encourages a loyal
workforce. Having such a labor force improves employee retention, in doing so the cost of recruitment, hiring, and training are cut
drastically. For most businesses, the high cost of employee turnover outweighs the cost of the employee relations program that they have
in place. Another benefit is that when the employee turnover is low, it ensures that the employer has a trained and skilled set of employees.
3.Conflict Reduction
When a work environment is efficient and friendly, the extent of conflict within the workplace is reduced. Fewer conflict results in the
employees being to concentrate on the tasks at hand and they are therefore more productive. All the research and statistics lead to one
conclusion, ‘A happy workforce is a productive workforce.’ Creating a sound and efficient work environment with excellent management
and a strong employer-employee relation can be the vital key to any business success or failure.
Three Types of Employees
Engaged • employees who work with passion and feel a deep connection
with their company
• they drive innovation and move the organization forward

Not Engaged • employees who are essentially “checked out”

• they put time, but not energy or passion, into their work

Actively Disengaged • employees who are not only unhappy at work but also act out
their unhappiness
• they undermine what their engaged coworkers accomplish

According to a study on employee engagement published by www.gallup.com, there are three types of employees, as shown in this table.
Employee engagement may be influenced by the kind of relationships employees have in their workplace.
EMPLOYEE MOVEMENTS
A labor union is a formal union of employees/workers that deals with employers, representing workers in their pursuit of justice and
fairness and in their fight for their collective or common interests.
Employees or workers unionize because of financial needs, unfair management practices, or social and leadership concerns.
a. Financial needs – complaints regarding wages or salaries and benefits given to them by the management are the usual reasons why
employees join labor unions
b. Unfair management practices – perceptions of employees regarding unfair or biased managerial actions are also the reason why they
join mass movements; examples of lack of fairness in management are favoritism related to promotion and giving of training opportunities
and exemption from disciplinary action
c. Social and leadership concerns – some join unions for the satisfaction of their needs for affiliation with a group and for the prestige
associated with coworkers’ recognition of one’s leadership qualities
 Figure 2. Company owners have to make sure that they make their employees satisfied in order to prevent a labor strike.

Steps in Union Organizing

Terry Moser, an expert union organizer was credited by Snell and Bohlander (2011) for the following union-organizing steps:
Step 1. Employee/Union Contact – to explore unionization possibilities, employees weigh the advantages and disadvantages of seeking
labor representation while the union officers gather more data about the employee’s complaints, as well as data about the employer’s
management styles, financial stability, policies, etc. these actions by employees and union officers are necessary to build a case against
the employer and defense for the employees’ decision to unionize.
Step 2. Initial organizational meeting – This is conducted to attract more supporters and select potential leaders among the employees
who can help the union organizers. Information or data obtained in Step 1 will be used by the organizers to meet the employees’ need to
explain the means to accomplish their goals.

Figure 3. The Collective Bargaining Process

Step 3. Formation of the in-house organizing committee – this starts with the identification of employees who are ready to act as leaders
in campaigning for their goals, in trying to get the interests of the other employees to join their movement, and in convincing employees
to sign an authorization card to show their willingness to be represented by a labor union in collective bargaining with their employer. The
strength of the union is shown by the number of employees who signed the authorization card. At least 30 employees must sign the said
card before the National Labor Relations Commission (NLRC) approves the holding representation election.
Step 4. If a sufficient number of employees support the union movement, the organizer requests for a representation election or
certification election – a representation petition is filed with the NLRC asking for the holding of a secret ballot election to determine the
employees’ desire for unionization. Before the election, leaders’ campaign for employees’ support for the election and encourage them
to cast their votes. Intense emotions are shown by employees, the labor group, and the employers during this period.
Step 5. End of union organizing – when a sufficient number of votes is garnered, the NLRC certifies the union as the legal bargaining
representative of the employees. Contract negotiation or collective bargaining agreement (CBA) negotiations follow the certification.
The CBA process involves the following procedures:
a. Prepare for negotiations – data to support bargaining proposals are collected and arranged in an orderly manner by both parties – the
union and the employer’s groups. This is followed by the selection of the members of their respective bargaining teams. Usually, each
side has four to six representatives at the bargaining table. The chief negotiator for the union is the union president while the chief
negotiator for management is the organization’s vice president of the labor relations manager. Supporting data to back up the positions
of each group are gathered. Economic data are very
important. Other internal organization data needed include records of promotions, transfer, overtime work, grievances, disciplinary
actions, and arbitration.
b. Develop strategies – management proposals are developed and limits of concessions are determined, while also considering the
union’s goals and their possible strike plans. The union, on the other hand, tried to develop better strategies to convince the management
group to accept its proposals.
c. Conduct Negotiations – this consists of bargaining, analyzing proposals, resolving issues related to the proposals, and remembering
to stay within their respective bargaining zone. If no agreement is reached at this point, a deadlock may result.
The union’s bargaining power may be exercised by holding a strike, picketing, or boycotting the employer’s products or services. The
management’s bargaining power, on the other hand, maybe exercised either by continuing operations or shutting down operations.
Another method is by a lockout of its employees or denying the employees the opportunity to work.
Unions and employers may try to resolve bargaining deadlocks by mediation or arbitration. Mediation is the use of a neutral third party
to reach a compromise decision in employment disputes. Arbitration also uses a neutral third party who resolves the labor dispute by
issuing a final decision in the disagreement.
d. Formalize agreement – after the negotiation process, the union and the management group have to formalize their agreement. This
agreement is a formal binding document that lists down the terms, conditions, and rules under which employees and managers agree to
operate; the clear language must be used in the contract, which has to be ratified by the majority of the employees. After ratification, all
the members of the union and the management bargaining teams, as well as the president or chief executive officer of the organization,
must sign the document before its dissemination to all parties concerned.
CBA activities, ideally, must be a continuous process (although it is held every five years in many companies). Right after the formalization
of the agreement and its ratification and signing, preparations for negotiations on the next CBA must begin again. This will allow
negotiations to review weaknesses and mistakes committed during the previous negotiations while these are still fresh in their minds.

Grievance Procedure
The grievance procedure is a formal procedure that authorizes the union to represent its members in processing a grievance or complaint.
Such grievance must be expressed orally or in writing to the employee’s immediate supervisor and the union steward. If the immediate
supervisor shows a willingness to discuss the complaint with the employee and the union steward, the grievance may be resolved
immediately.
This is possible especially if the supervisor has formal training in handling grievances. If not resolved within ten working days, the
employee forwards the grievance to the department manager and the chief steward of the union. Again, the resolution of the grievance
is possible at this point if the department manager is willing to discuss the matter with the employee and the chief steward. However, if
this remains unresolved, the next step is for the employee to forward the complaint to the vice president for labor relations and the local
union president after 15 workdays. Resolution of the matter is possible, but if nothing happens within 30 workdays, the employee may
now forward the complaint, with the aid of the local union president, to the NLRC arbitration. The arbitrator is a neutral third party who
resolves the grievance by issuing a final decision which both parties – the employee, represented by the union president, and the
employer – have to follow.
Figure 4. The Philippine government has implemented a law that requires business establishment to give 13 th month pay to all
employees that have worked for them for at least a month.

MOTIVATION, LEADERSHIP, AND COMMUNICATION IN AN ORGANIZATION

There is a saying that a “manager is not necessarily a leader.” Many managers find themselves in their positions because of exemplary
performance in “follower” positions, or even due to tenure ship and loyalty to their job. Whether this is true or not, the managers in
leadership positions have ample opportunity to build their leadership characteristic traits. Here are some of the differences between a
leader and a manager.

Successful leading must begin by focusing on the psychological capital of both the employer/leader and the employee/subordinate.
Looking for what is right with people rather than for what is wrong is suggested to prevent mental and behavioral problems which are
barriers to achieving both organizational and individual goals.

The Five Personality Traits in The Big Five Model

1. Extraversion- the degree to which someone is sociable, talkative, and assertive
2. Agreeableness-the degree to which someone is good-natured, cooperative, and trusting
3. Conscientiousness- the degree to which someone is responsible, dependable, persistent, and achievement-oriented
4. Emotional Stability- the degree to which someone is calm, enthusiastic, and secure (positive), or tense, nervous, depressed, and
insecure (negative)
5. Openness to Experience- the degree to which someone is imaginative, artistically sensitive, and intellectual.
Blake and Mouton’s Leadership Grid
Blake and Mouton’s Leadership Grid, a well-known leadership training model developed to help managers rate their performance or
maintenance orientation in the workplace. Performance orientation or concern for production is plotted in the x-axis or horizontal line,
while maintenance orientation, or concern for people, is plotted in the y-axis or vertical line.

The grid explains five management or leadership orientations, as follows:

1. Impoverished Management (1,1), ranking low concern for people and low concern for production or results
2. Country Club Management (1,9), rating low concern for production and high concern for people
3. Middle of the Road Management (5,5), showing balanced concern for management and people
4. Team Management (9,9), ranking high concern for production and people
5. Produce or Perish Management (9,1), rating low concern for people, and high concern for production.

Motivation
Motivation encourages individuals to work enthusiastically, often performing more work than what is required. What could managers do
to ensure such motivated and enthusiastic performance among their subordinates? What could be done to inspire employees whose
work performance is limited to the minimum need? Understanding individual human needs, perceptions, thoughts, and beliefs may
provide good answers to such questions that are often asked in different work settings.
According to Kreitner and Kinicki (2013), early Theories of Motivation revolved around the idea that motivation is brought about by the
employee’s desire to fulfill their need, their work habits, and their job satisfaction. Among these are:
Maslow’s Hierarchy of Needs
The theory indicates that people satisfy their needs in a specific order, from bottom to top, as follows:
1. Physiological needs- food, water, and shelter
2. Safety and security-protection against threat and deprivation
3. Social needs- friendship, affection, belonging, and love
4. Ego or Esteem- independence, achievement, freedom, status, recognition, and self-esteem
5. Self-actualization- realizing one’s full potential, becoming everything, one is capable of being

McClelland’s Acquired Needs Theory

The key needs for managers, according to McClelland, are achievement, affiliation, and power needs. Achievement means an orientation
toward success and goal realization. Affiliation reflects a strong wish to be liked while power refers to the need to persuade or be in
command of other people.
Managers are advised to be observant of these needs among their subordinates so that they could be given job assignments that would
satisfy their highest needs, if possible. In doing so, they may be more motivated to work well.

Alderfer’s ERG Theory

It was developed by Clayton Alderfer in the 1960s. For Alderfer, a set of core needs explains the behavior. E stands for existence needs,
R refers to relatedness needs, and G pertains to growth needs. The needs or desire for physiological and materialistic well-being, to have
meaningful relationships with others, and to grow as a human being are similar to the needs presented in Maslow’s Theory.

Modern Theories of Motivation

These are process theories that focus not on the notion that motivation is a function of employee’s perceptions, thoughts, and beliefs.
Among these are:
1. Goal-Setting Theory
A theory stating that specific goals motivate performance and that more difficult goals, when accepted by employees result in greater
motivation to perform well as compared to easy goals.
Managers are advised to set goals for their subordinates as this is a major source of job motivation. Doing well also helps increase their
motivation.
2. Reinforcement Theory
A theory which states that behavior is a function of its consequences. If the result or consequences that immediately follow a behavior is
good, then there is a probability that the individual will be more motivated to repeat the behavior. Using this theory, managers can motivate
an employee’s positive behavior by using positive reinforcement for actions that help the company achieve its goal.
3. Job Design Theory
A theory which states that employees are motivated to work well by combining tasks to form complete jobs. Mangers are advised to
design jobs that will meet the requirements of the ever-changing environment, the form’s technology, and the workers' skills, abilities,
and preferences. In doing so, employees are motivated to perform well. Examples are:
a. Job enlargement- the horizontal expansion of a job by increasing job scope
b. Job enrichment- the increasing of job depth by empowering employees to assume some tasks usually done by their managers.
 c. Job characteristics model- where employees are motivated to perform well because the task assigned to them have the five
core job dimensions that serve as motivators.
4. Equity Theory
A theory developed by J. Stacey Adams which states that employees assess job outcomes about what they put into it and then compare
these with their co-workers. If the employee perceives that his job is equitable in comparison to those of his coworkers, there is no
problem. However, if the opposite is true, this will become a de-motivator to his or her job performance. Mangers must see to it that they
exercise fairness or equity in their company.
5. Expectancy Theory
A theory that sets an individual tends to act in a certain way, based on the expectation that the act will be followed by an outcome that
may be attractive or unattractive to him or her. Mangers are advised to understand an employee’s goal so that he or she would be able
to link the rewards or outcomes to be offered with the said goals.

Communication

Communication applies to all management functions and its general purpose for the organization to bring positive changes that influence
activities leading to the firm’s welfare. The communication process starts with the sender who has an idea or a message, which is then
transmitted through a selected channel to the received, who in turn has to be ready for the reception of the message so that it could be
decoded into thoughts. Accurate communication occurs when the sender and the receiver understand one another.
Types of Communication
Communication may be classified into the following:
A. Verbal- through the use of oral and written words
B. Non-Verbal - through body movements, gestures, facial expressions, eye contact, and by touching
C. Formal- if communication takes place within prescribed, routine organizational work arrangements
D. Informal- if communication is not defined by an organization’s hierarchical structure.
Communication flows in different directions within an organization. It could either be:
A. Vertical- involves communication flow between people belonging to different organizational levels.
B. Upward- the flow of information from an employee who belongs to a lower hierarchical level to the boss/manager who belongs to a
higher hierarchical level. Employees or subordinates may communicate upward regarding their problems, requests that they would like
the boss to approve, issues with coworkers and others.
C. Downward- is the flow of information from the manager, who belongs to a higher hierarchical level, to the subordinates/employees,
who along to the lower hierarchical levels. Examples are when the boss gives orders to subordinates to finish certain tasks, communicates
organizational policies and practices, and comments about work performance month others.
D. Horizontal/Lateral- takes place among employees who belong to the same hierarchical level. Members of cross-functional teams who
belong to different units/departments but occupy the same organizational level make use of this type of communication to save time and
facilitate coordination.
E. Diagonal- entails communicating with someone or others who belong to different departments/units and different hierarchical levels.
For example, an employee belonging to the company’s financial management department communicates directly with the head of the
human resource department about his complaint against a marketing department employee. Take note of the different departments and
different organizational levels of the persons communicating with each other. Diagonal communication is said to be beneficial because
of its efficiency and speed; however, it may also cause some confusion.

The Basic Elements of the Communication Process

The Sender The communication process begins with the sender, who is also called the communicator or source. The sender has some
kind of information — a command, request, question, or idea — that he or she wants to present to others. For that message to be
received, the sender must first encode the message in a form that can be understood, such as by the use of a common language or
industry jargon, and then transmit it.
The Receiver The person to whom a message is directed is called the receiver or the interpreter. To comprehend the information from
the sender, the receiver must first be able to receive the sender's information and then decode or interpret it.
The Message or content is the information that the sender wants to relay to the receiver. Additional subtext can be conveyed through
body language and tone of voice. Put all three elements together — sender, receiver, and message — and you have the communication
process at its most basic.
The Medium Also called the channel, the medium is how a message is transmitted. Text messages, for example, are transmitted through
the medium of cell phones.
Feedback The communication process reaches its final point when the message has been successfully transmitted, received, and
understood. The receiver, in turn, responds to the sender, indicating comprehension. Feedback may be direct, such as a written or verbal
response, or it may take the form of an act or deed in response (indirect).
Other Factors The communication process isn't always so simple or smooth, of course. These elements can affect how information is
transmitted, received, and interpreted:
Noise: This can be any sort of interference that affects the message being sent, received, or understood. It can be as literal as
static over a phone line or radio or as esoteric as misinterpreting a local custom.
Context: This is the setting and situation in which communication takes place. Like noise, context can have an impact on the
successful exchange of information. It may have a physical, social, or cultural aspect to it. In a private conversation with a trusted
friend, you would share more personal information or details about your weekend or vacation, for example, than in a conversation
with a work colleague or in a meeting.

Communication Networks in Organizations

Communication networks are varied patterns of combined horizontal and vertical flows of organizational communication. Types of
communication networks include the following:
a. Chain of network- where communication flows according to the usual formal chain of command, downward and upward.
b. Wheel network- where communication flows freely among all members of their group/team.
c. All-channel network- where communication flows freely among all members of a team
d. Grapevine network- is informal communication. An example of this is gossip/rumor which could quickly disseminate information.
Managers must stay aware of the grapevine’s flow and the patterns and could use it to transmit important information. They, however,
should also be conscious of the negative effects of gossip as these may cause conflicts in their company. Negative effects of rumors may
be minimized by practicing transparency and communication openly with employees.
e. Computer network- Information technology has made it possible for managers to communicate with each other and with subordinates
and for employees to communicate with each other anytime, regardless of distance. Examples of computer communication applications
are e-mail, blogging, teleconferencing, and intranet.
It has been observed by communication researchers that there’s no single network that could be considered applicable or fit for all
circumstances in an organization.

Barriers to Communication
Organization members encounter various types of barriers that can alter the meaning of communications that they receive. These barriers
included:
1. Filtering- the shaping of information communicated to make it look good or advantageous to the received.
For example, a sales agent may report to his manager the big amount of sales that he was able to make with one of their customers but
failed to report the complaints he received from other customers regarding their products.
2. Emotions- the interpretation of communications which may be influenced by extreme emotions felt by the received.
For example, a manager who is in a very bad mood and received good news may not see the positive aspect of it because his rational
thinking process is affected by his emotional judgment.
3. Information overload- another barrier to good communication since there are too many pieces of information received by an individual
may harm a person’s processing capacity.
For example, the hundreds of job applications received by human resource managers through e-mail may be too many for them to read
fully and respond to accurately.

4. Defensiveness- the act of self-protection when people are threatened by something or someone. Due to this feeling, people may resort
to communicating lies to protect themselves or to interpret communications differently to defend their interests, thus, reducing mutual
understanding.

5. Language- could also hamper good communications because words used may have different meanings to different people belonging
to a different age, educational background, or cultural group. Diversity of background of organization members may influence the
language or the words that they use.
For example, the word “hello” may just be an ordinary greeting to the older members of an organization; but the same word, “hello” may
have a negative connotation to the younger group of employees depending on the context.
6. National culture- just like languages, the prevailing national culture may also cause problems in communication among members of
an organization, especially if it's a multinational company. Certain office practices, like sending formal memoranda to employees, maybe
negatively interpreted by employees coming from another country with a different culture that values face to face interpersonal
communication. Such negative interpretation may, in turn, cause employee dissatisfaction and less motivation to perform their work well.

Overcoming Communication Barriers

To avoid conflicts resulting from communication problems, managers try to overcome communication barriers through the following
means:
a. Using feedback- This is usually done by asking questions about a memo sent to subordinates or by asking them to give their comments
or suggestions. In doing so, they can determine whether the communication they sent out was understood the way they originally
intended.
b. Using simple language- This is done by avoiding uncommon terms and flowery words that may just cause misinterpretation. The
language used must fit the level of understanding of the intended recipients of the communication. Effective communication is achieved
when the message is understood by those who received it.
c. Active listening- This means listening well to grasp the full meaning of the communication. Hearing without giving full attention to what
others seek to communicate usually results in misinterpretation and communication distortions.
d. Controlling emotions- This is another method of overcoming communication misinterpretation
. When the received is affected by extreme anger, his interpretation of a message received may not be accurate. On the other hand,
when the sender is affected by extreme emotions, he or she may also send or transmit inaccurate information. Therefore, it is important
to practice emotional restraint.
e. Observing body language- This also influences how communication is interpreted. Actions of the message received, like throwing
away a letter delivered to him, betrays his negative feelings regarding its message, even if he says yes or no to what is requested.
Nonverbal cues must always be watched because, as the saying goes, action speaks louder than words.

Photo Analysis: Tree swing cartoon Below is detailed photo documentation that shows how poor communications can have real-world
costs and consequences.
APPLICATION OF CONCEPT AND NATURE OF DIFFERENT CONTROL METHODS AND TECHNIQUES IN ACCOUNTING AND
MARKETING
Controlling is a management function involves ensuring the work performance of the organization’s members are aligned with the
organization’s values and standards through monitoring, comparing, and correcting their actions.
Control methods are techniques used for measuring an organization’s financial stability, efficiency, effectiveness, production output,
and organization members’ attitude and morale.
CONTROL METHODS AND SYSTEMS METHODS OF CONTROL
There are two (2) control techniques or methods that a firm may apply, these are the following:
A.Quantitative Methods
➢ It makes use of data and different quantitative tools for monitoring and controlling production output.
The chart is the most widely recognized quantitative. Charts used as control tools normally contrast time and performance. The visual
impact of a chart often provides the quickest method of relating data. A difference in numbers is much more noticeable when displayed
graphically.
Two common quantitative tools are (1) Budgets and (2) Audits.
1. BUDGET ➢ It is considered the best-known control device. Budgets and control are, in fact, synonymous. An organization’s budget
is an expression in financial terms of a plan for meeting the organization’s goals for a specific period. A budget is an instrument of
planning, management, and control.
Budgets are used in two (2) ways:
a. To establish facts that must be taken into account during planning;
b. To prepare a description and financial information to be used by the chain of command to request and manage funds.
2. AUDITS
➢ Internal auditing involves the independent review and evaluation of the organization’s non-tactical operations, such as
accounting and finances.
➢ As a management tool, audit measures and evaluates the effectiveness of management controls.
B. Non- Quantitative Methods
➢ These refer to the overall control performance instead of only those of specific organizational processes.

➢ These methods use tools such as inspections, reports, direct supervision, and on-the spot-checking and performance
evaluation or counseling to accomplish goals.
Types of Non-Quantitative Methods
1. FEEDFORWARD CONTROL
➢ A control method that prevents problems in a firm because managerial action is taken before the actual problem occurs.
2. CONCURRENT CONTROL
➢ It is a method that takes place while work activity is happening. Example: Direct supervision or management by walking around.
3. FEEDBACK CONTROL
➢ It is a control that takes place after the occurrence of the activity. It is disadvantageous because, by the time the manager receives
the information, the problem had already occurred.
Note: When the above three control methods are compared, managers choose the feedforward method as the most desirable because
of its preventive action. The concurrent control’s advantage is that it can help managers’ correct problems before they become too costly
or damaging. Feedback Control’s advantage is the exhibiting of variance between the standard and the actual work performance. Little
variance indicates that planning is successful while significant variance may give managers an idea of how to plan better.
4. EMPLOYEE DISCIPLINE
➢ It is a control challenge for managers, for enforcing discipline in the workplace is not easy.

➢ This includes workplace privacy, employee theft, and workplace violence, among others, are some of the concerns in employee
discipline.
➢ From simple monitoring of employees’ computer usage at work to protecting employees at work from psychologically unstable workers
who may have hidden desires to harm them, managers need discipline control to ensure that tasks can be efficiently and effectively
carried out as planned.
5. PROJECT MANAGEMENT
➢ It ensures that the task of getting a project’s activities done on time, within the budget, and according to specifications, is successfully
carried out.
➢ Project Managers need technical and interpersonal skills to control the implementation of the project efficiently and efficiently.

Project Planning Process Controls include the ff:

a. Defining objectives
b. Identifying activities & resources
c. Establishing sequence & estimating time for activities
d. Determining the project completion date
e. Comparing with objectives and determining additional resource requirements.

APPLICATION OF MANAGEMENT CONTROL IN ACCOUNTING AND MARKETING CONCEPTS AND TECHNIQUES

Management control in accounting and finance is the control that makes use of the balance sheet, income statement, and cash flow
statement to analyze and examine financial statements in order to determine the company’s financial soundness and viability, as well as
financial ratios to determine the company’s stability. On the other hand, management control in marketing is the control that makes
use of projected sales or forecast, statistical models, econometric modeling, surveys, historical demand data, and actual consumption of
their products. Sales is considered to be the “lifeblood of the business”. No matter how good the product is, it is not sold in the market,
there is no way that business can survive. Thus, the projected sales often guide the sales manager or the marketing head on how much
the target or the quota must be. In a way, this will also serve as a guide for the operations manager in determining the number of units
to be produced. Excess production may mean cost, and unsold items may resort to inventory expenses or worse, the obsolescence or
degradation of the product. Indeed, the sales forecast requires consideration. A firm may generate a set of assumptions regarding the
macroeconomic environment to which all divisions must adhere as their guide, but forecast can still be generated from the customer level
and taken into account. Macroeconomic Environment is a business environment that includes or considers economic aggregates such
as national income, total volume, total volume of savings, and money supply.
Two (2) Sets of Forecast used by some firms:
a. Top-Down Sales Forecast – relies heavily on macroeconomic and industry forecast with the use of statistical models thru econometric
modelling to achieve the firm’s grown target.
b. Bottom-Up Sales Forecast – it begins by talking with customers in a form of survey or ‘traffic count’, by assessing the demand in the
coming periods.
The goal of business is to gain profit. To achieve this, managers need accounting/financial controls. Managers must also analyze the
organization’s financial condition, which is done with the help of the following financial ratios.
1. LIQUIDITY RATIO – test the organization’s ability to meet short term obligations; it may also refer to acid tests done when inventories
turn over slowly or are difficult to sell.
current ratio = current assets / current liabilities
Example: Compute the liquidity ratio of a fast-food restaurant. Its
current assets amount to ₱ 3 million while its current liabilities are at Php 2 million.
Solution:
current ratio = ₱ 3,000,000/₱ 2,000,000
current ratio = 1.5 Thus the restaurant’s liquidity ratio is 1.5 meaning the restaurant’s current assets are higher than its current liabilities,
and it shows that the firm can easily pay all its current liabilities. That for every Php 1 of current liability, the company has Php 1.5 of
current assets available to pay for it.
2. LEVERAGE RATIO – determines if the organization is technically insolvent. Meaning that the organization’s financing is mainly coming
from borrowed money or the owner’s investments.
debt-to-assets ratio = total debt / total assets
Example: Compute the leverage ratio of a fast-food restaurant. Its
Total debt amount to Php 60,000 while its total assets are at ₱ 300,000.
Solution:
debt-to-assets ratio = ₱ 60,000/₱ 300,000
debt-to-assets ratio = 0.2
Thus the restaurant’s leverage ratio is 0.2 meaning for every ₱ 1 total asset of the company there is a ₱ 0.02 debt. This means the debt
is not quite high in Company Zing’s capital structure. That means it may have a solid cash-inflow.
3. ACTIVITY RATIO – determines if the organization is carrying more inventory than what it needs; the higher the ratio, the more efficiently
inventory assets are being used.
Inventory turnover = cost of goods sold / average inventory
Example: Compute the activity ratio of a fast-food restaurant. Its cost of goods sold amounts to ₱ 3 million while its average inventory for
the year is at ₱ 2 million.
Solution:
Inventory turnover = ₱ 3,000,000/₱ 2,000,000
Inventory turnover = 1.5
Thus the restaurant’s inventory turnover is 1.5 which means that the restaurant has very good inventory control and that at 1.5 Inventory
turnover shows how easily the firm turns its inventory into cash.
4. PROFITABILITY RATIO – determines the profits that are being generated;
Profit Margin Ratio= Net profit after taxes/ total sales
Example: Jinsha’s XYZ Shop is an outdoor fishing store that sells lures and other fishing gears. Last year, Jinsha had a net profit after
taxes of ₱ 300,000 and her Total Sales is ₱ 1,000,000.
Solution:
Profit Margin Ratio = ₱ 300,000/₱ 1,000,000
Profit Margin Ratio = 0.3 or 30 %
Thus Jinsha converted 30% of her sales into profits or for ₱ 1 sale, there is ₱ 0.3 profit.
Or it measures the efficiency of assets to generate profits.
Return on Investment = net profit after taxes/ total assets
Note: The return on assets ratio measures how effectively a company can earn a return on its investment in assets. In other words, ROA
shows how efficiently a company can convert the money used to purchase assets into net income or profits.
Example: What is the return on investment if a jewelry store’s net profit after taxes is ₱ 6,000,000 and its total assets are ₱ 100,000,000.
Solution:
Return on Investment = ₱ 6,000,000/₱ 100,000,000
Return on Investment = 0.06 or 6 %
Thus, the jewelry store converted only 6% return on investments out of its total assets of ₱ 100 million or for every ₱ 1 there is a 0.06
ROI.

STRATEGIC CONTROL
➢ It is systematic monitoring at control points that leads to change in the organization’s strategies based on assessments done on the
said strategic plans.
➢ This control provides a chance for comparing the plan’s intended goals with the actual organizational performance, and this becomes
the basis for modifications in the firm strategies.
BENCHMARKING
➢ It is an approach or process of measuring a company’s services and practices against those of recognized leaders in the industry to
identify areas for improvement.
➢ It is a widely used and well-accepted approach because it helps organizations gather data and information against which performance
can be measured and controlled.
Three (3) Types of benchmarking according to Weihrich and Koontz (2005):
1. Strategic Benchmarking ➢ It compares various strategies and identifies the key strategic elements of success.

2. Operational Benchmarking ➢ It compares relative cost or possibilities for product differentiation.

3. Management Benchmarking ➢ It focuses on support functions such as market planning and information systems, logistics, and human
resource management, among others.
Many companies used benchmarking. Some prefer to benchmark only the top 10% or the best companies in their particular industry.
Other benchmarks best global practices and go further away from their own industry and reason out that their goal is competitive
superiority and not just competitive parity.
The benchmarking process begins with determining which company functions are to be benchmarked and the key performance indicators
to be measured. Then, the best industry performers have to be identified. Data gathering and analysis follow and these become the
foundations for performance goals. New programs are implemented, and during this step, performance is measured at regular intervals.
Corrective actions are taken to close the gap between the organization and the best-in-class companies. The monitoring of results must
be continuous to ensure benchmarking success.