BUS208: ELEMENTS OF MANAGEMENT

Management Defined
The process of effectively planning, organizing, staffing, leading and controlling
organizational resources efficiently in a changing environment towards achieving
organizational goals or objectives. It is simply, a social process of getting things done
effectively, efficiently and economically. Management is also taken to be a set of activities
directed at the resources of an organization with the aim of achieving organizational goals in
an efficient and effective manner. Management is viewed as a function, a process, a
profession and a discipline.
 As a function, management involves planning, organizing, leading and controlling
the people working in an organization to achieve organizational goals.
 And as a process it is the series of systematic, sequential, overlapping and
interdependent steps by which goals of an organization are achieved.
 Like law and medicine, management is also considered a profession and a discipline
offered in Universities and polytechnics.
 The group of people directing the affairs of an organization is also referred to as
management.
Management Process
The process of management is fundamentally a planning process. The process begins by
aligning itself with the identified managerial objectives, appropriate steps and strategies are
then devised or adopted to:
i. Outline a managerial organizational structure
ii. Recruiting personal to occupy these structures
iii. Spell out clearly the leadership skills and style for controlling the organization
towards effectively, efficiently and economically achieving managerial goals
and objectives.
Managers plan and make decisions, organize, lead and control the resources of the
organization; that is human, financial, physical and information. At any time, the manager

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is involved in several activities simultaneously. The functions do not occur in a tidy step by
step fashion.
Scope of Management
In order to understand the scope of management, there is the need to discuss its
characteristics.
i. Management is multifaceted: The process depends on many different
talents, qualities or features to achieve its objectives or goals
ii. Management is dynamic: The process changes over time by aligning itself
with current trend at any point in time
iii. Management is universal: The process is used or understood by everyone. It
is a process that is relating to or affecting, or accepted by the whole world.
Also all organizations irrespective of their sizes or goals must be managed
effectively if they are to survive.
iv. Management is nonmaterial: The process is an intangible asset that can be
quantified through the results of its efforts, like operational and financial
performance.
v. Management depends on human capacity: Though the process is an
intangible asset it is quantifiable through its efforts. These efforts lie solely on
the human beings that engage the process. Achieving operational and financial
performance are basically the functions of human beings.
The scope of management is drawn from its:
i. Function: It involved planning, organization, and staffing, leading and
controlling people towards achieving managerial objectives or goals.
ii. Process: It involved series of methodical and organized manner of getting
thing done as well as doing things in a chronological order.

Management and the need for it are not limited to profit seeking organizations. It is an
important part of any organization- big or small, profit seeking or not-for-profit. Though
each organization has its own unique goals and mission, good management

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Is management a science or an art?

A recurring question among academic; Management is both a science and an art

Science is a systematic study of the environment through observation, experimentation and

reasoning. A manager systematically studies his environment (internal and external) and
observes what is around him. He experiments by trying different ways of doing things, thus
monitoring results and note of happenings, and then he takes an informed decision based on
the information gathered. To this extent then management is a science

Art, on the other hand is the employment of certain skills to achieve goals. Again managers
employ various skills to accomplish organizational goals.

Managerial Functions

Manger is a person who allocates human and material resources and directs the operation of
a department or the entire organization; to make the best use of organizational resources in
achieving it goals, managers perform essentially five major functions of planning
organization, staffing, leading and coordinating.

i. Planning: This is the first function of managers. It is the formal process of setting
objectives and determining the means of accomplishing them.
ii. Organizing: This is the process of grouping activities among people and
resources and systematically integrating the division into a unified system.
iii. Staffing: This logically follows organizing. This creates positions in the
organizational chart to be filled. It is very essential for managers to recruit
qualified man power for the organization in attainment of the predetermined
goals.
iv. Leading: This requires managers to mentor their subordinates by ensuring that;
(i).They informs them on what to do (ii). They know what is expected of them
(iii). They help them improve on their skills and competence

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 v. Coordinating: This is the frame work of leading. It is a process of integrating
organizational activities into a unified system. The need for coordination arises as
a result of division of labor and interdependence of subunits. Coordination can be
achieved through well designed plans, communication, policies, rules and
discipline.

Levels of Management

Managers in any organization can be differentiated by their levels in the organizational

hierarchy or the area in which they work within the organization. Organizations generally
have three levels of management; top, middle and first-line managers.

a) Top Managers: this is a relatively small group of executives who manage the overall
activities of the organization
 They develop the organizational goals, strategy and policies.
 Represent the organization externally
 Undertake investment in research and development
 Work long hours and spend most of their time in meetings
 They are well paid.
b) Middle managers: the largest group of managers in many organization
 Responsible for implementing the policies and plan developed by top
managers
 Supervise and coordinate the activities of lower level managers.
 Serve as bridge between the upper and lower levels of the organization.
c) First-line Managers: this level coordinates the activities of the operating employees
 They spend a lot of time supervising the work of subordinates.

Managers may however, work in different areas within an organization. This is

regardless of the level. Some organizations also have some specialized management
positions in addition to the ones discussed above.

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Managers at all levels need of combination of three basic skills: technical, human and
conceptual.

 Technical skills
o These are the skills required to undertake specialized tasks;
o the know-how for performing activities in different functional areas,
activities dictated by job description
o Such activities involve methods, procedures and techniques
 Human/Interpersonal skills
o Necessary for communication and interaction with colleagues
o It is the ability to motivate, manage conflicts and build teams
o Technical skills emphasize working with “things” human skills focus
on people
 Conceptual Skills
o Ability for innovativeness, imaginativeness, creativity and abstraction
o Ability to diagnose and assess different types of management problems
and come out with possible solutions
o Ability to distinguish between cause and effect, root causes and
symptoms, between minor and major issues
o Organization and its relationship with external environment
o Understanding how the whole system works

Skill Mix;

 Lower level managers: substantial technical, moderate human and small

amount of conceptual
 Middle level managers: substantial human, moderate technical and conceptual
 Top level managers: substantial conceptual, moderate human and less
technical

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Development of Management Theories

Theories are perspectives with which people make sense of their world experience. Theories
provide a stable focus for understanding what we experience

The evolution of management theories was propelled by the search for better ways to use
organizational resources to produce goods and services. Advances in management thoughts
occur as mangers and researchers find better ways to perform the principal management
tasks.

Evolution of modern management thought began at the end of the 19th century after the
industrial revolution. In the closing decade spf the century, mangers were trying to find
better ways to satisfy customers’ needs as many technical, economic and cultural changes
were taking place during the period.

Adam Smith, an economist, was one of the first people to investigate the advantages
associated with production of goods and services in factories. Adam Smith found that
performance in factories in which workers specialized in few tasks was greater than the
performance in factories in which each worker performed all the tasks in the production
process. Workers who specialized became more skilled at their specific tasks (The Wealth of
Nations, 1776).

The development of management and management theories went through four periods:

1. Pre-Scientific Management, Before 1880

 Pre-Scientific Management School
 Evidence of the use of principles of management can be found in the
organization of public life in Greece, the organization of Roman Catholic
Church and the organization of military forces,. However they were not
much use in business affair.

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  In the later period Robert Owen and Charles Babbage made valuable
contributions to the development of management concepts
 Robert Owen (1771-1858) made some remarkable observations
concerning the factors which influenced the productivity of the personnel
in his plants. He believed and practiced the idea that workers should be
treated as human beings.
 Charles Babbage (1729-1871) advocated the use of accurate observations,
measurements and precise knowledge for taking decisions in business
concerns.
2. Classical Management Era, 1880 – 1930
The classical management focused on achieving efficiency and productivity in an
organization. The main characteristics are:
i. Emphasis was placed on economic rationality of the individual employee.
Provision of monetary incentives to encourage employees to work hard to
realize their potential is advocated.
ii. Have negative views about human nature with respect to performance of role
and responsibility in an organizational setting
iii. They recognized that humans have emotions but the emotions could be
controlled by logical and rational structuring of the jobs

The classical school is classified into three

 Scientific Management School

Scientific management school arose from the need to improve productivity
and efficiency.
 Advocates the development of standard method for performing each job
 Section of workers with appropriate abilities for each job
 Training workers in standard method
 Supporting workers by planning work and eliminating interruptions
 Providing wage incentives to workers for increase input.

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  Major contributors to scientific management are:
 Frederic Taylor (Mechanical Engineer) published Principles of
Management, (1911) – the fundamental of his work are: find the best
practice and use it to benchmark the task, decompose the task into its
components (business process design) and get rid of all things that do
not add value.
 Frank and Lillian Gilbreth ( Husband and wife team); used time and
motion studies as the science of eliminating wastes resulting from
unnecessary, ill directed and inefficient motion. The steps are:
1. Break up each job action into its components, 2. Find better ways to
perform the action and 3. Recognize each job action to be more
efficient.
 Henry L Gantt (charts for planning and monitoring and The concept of
group incentives). His work formed the basis of CPM, PERT (project
evaluation and review techniques) and Gantt Charts. He focused on the
importance of motivational schemes by laying emphasis on rewards for
good work rather than penalties for poor work. He advocated that
provision of rewards is relatively more effective than threat of penalty

Contributions of Scientific Management School

 Demonstrated the importance of compensation for performance

 Initiated the careful study of tasks and jobs
 Demonstrated the importance of personnel and their training

Criticisms of the Scientific School:

 Did not appreciate social context of work and the higher needs of workers
 Did not acknowledge individual differences
 Tended to regard workers as uninformed and did not consider their ideas as
important

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 Administrative Theory
 Grew out of the need to find guidelines of managing complex
organizations; the most prominent contributor to this school was Henry
Fayol.
 He identified 14 principles that he believed were essential to improve
efficiency of the management process.
 These principles are still considered relevant today as they were; in some
cases they have been modified to suit contemporary conditions.
 Bureaucratic Management (Max Weber, 1864 – 1920)
 Max Weber ( German Sociologist) described goal oriented large
organizations as bureaucracy – defined as an administrative system which
is deliberately designed for accomplishment of large scale tasks through
coordination of individual efforts in a rule bound, fair and efficient manner
 According to Weber, bureaucracy should have:
 System of written rules and standard operating procedures that specify
how employees should behave
 Clearly defined hierarchy of authority
 Clear system of tasks and role relationships
 Selection and evaluation system that rewards employees fairly and
equitably.
 Although the term Bureaucracy has been used popularly to refer to
government organizations, it is being practiced in virtually every large and
formal organization.
 Weber’s concept of bureaucracy is a lot similar to Taylor’s scientific
management. Both emphasize rationality, predictability, informality,
technical competence and authoritarianism

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3. Neo-classical management era, 1930 -1950
Neo-classical theory modified, improved and extended the classical theory. While
classical theory concentrated on job content and management of physical resources,
neo-classical gave greater emphasis to individual and group relationship in the work
place. It point out the role of psychology and sociology in the understanding of
individual and group behavior.
Two schools are identified in this era:
 Human Relation School
 This school of thought emerged in 1920 in reaction to limitations of the
classical theories that ignored the “human aspect” in organizations. The
main postulations of this school are:
 Employees are social beings and hence could respond to purely
rational rules, chain of authority and economic incentives
 Employees bring their social needs along with them to the
organization; consequently effective management requires a more
human orientated approach
 Emphasis is required on the social needs drives and attitude of the
individuals to motivate them to perform to their true potential.

Hawthorne Studies (Western Electric Co. 1924 – 33)

• Elton Mayo established relationship between social environment

(redesign of job, changes in work day and work week length, rest
periods, individual versus group pay etc.) and work output through a
series of experiments known as Hawthorne Studies (Illumination
experiment).
• He concluded that behavior and sentiments were closely related, that
group influences significantly affected individual behavior, group
standards established individual worker output and money was less a
factor in determining output than were group standards, group
sentiments and security.

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 • These studies established that employees were different from the
machines and would need to be treated differently and deferentially.
 Behavioral Science School
 Behavioral science movement started after 1940. It is a refinement of the
human relation movement and had drawn heavily on the work of Maslow
to explain human behavior and the dynamic of the motivational process.
 The knowledge drawn from behavioral sciences like psychology,
sociology and anthropology is applied to explain and predict human
behavior.
 F. Herzberg, V Vroom and D. McGregor are the other important
contributors to the field
 While the human relation school emphasized the importance of individuals
and their interpersonal relations, behavioral scientists focused on human
behavior and laid emphasis on the study of motivation, leadership, group
dynamics, and participative management, etc.
 The contribution of behavioral scientists to management practices consists
primarily of producing new insights rather than new techniques.
 The various propositions of this school are:
 An organization is a socio-technical system
 Individuals differ with regards to attitudes, perceptions and value
system; they behave differently under different situations.
 Individual needs may differ from organizational needs; attempts should
be made to achieve fusion between organizational goals and human
needs.
 People’s interpersonal and group behavior in an organization depend
upon a wide range of factors

4. Modern Management Era, 1950 – Date

 management Science School

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  At the beginning of WW2 Britain needed to solve a number of new
complex problems in the war
 Operational research (OR) teams were formed pooling expertise of
mathematicians, physicists and other scientists; breakthrough were
achieved. Americans also set up OR teams
 The teams used early computers to perform the calculations involved in
mathematical modeling.
 After the war, OR was gradually applied to industry due to new
industrial technology and the fact that transport and communication
were becoming more complicated.
 Problems brought about by these developments could not be solved
easily by conventional means
 Development of high speed computers and communication between
computers provided the means of tackling complex and large scale
organizational problems
 Management science offered a whole new way to think about time;
with sophisticated mathematical models and computers to crunch the
numbers forecasting the future became popular.
 Robert McNamara implemented management science approach at Ford
Motors Company in the 1950s and 1960s.
 System School
 The system school of management theory views organization as a
unified purposeful system composed of interrelated parts
 System theory tells us that the activity of any segment of an
organization affects in varying degree the activity of every other
segment
 The approach gives managers a way of looking at the organization as a
whole and a part of a larger external environment

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 Contingency School
 Contingency theory was developed in the 1960s (Burns and Stalker
(1961) the management of innovation. London: Tavistock; Lawrence
and Lorsh (1967) Organization and environment. Boston: Harvard
University)
 Contingency theory posits that there is no best way to organize;
organizational structure and control system chosen by managers
depend on the environment in which an organization. Characteristics of
the environment affect the organization’s ability to obtain resources.
 Environmental factors include changes in technology, demographic
shifts, economic conditions, cultural factors and government and
legislations.
 To determine most effective management approach, each situation
must be evaluated separately.

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PLANNING AND DECISION MAKING

1. PLANNING

Nature of Planning

 Planning is the beginning of the management process. It is basically a method

of doing something that is worked out in advance.
 It involves choosing appropriate organizational goals and courses of action to
achieve those goals.
i. Planning is primal: Planning is the most significant and primary objective
used to achieve other spelt out objectives.
ii. Planning is pervasive: Planning is present throughout the management
process. It spreads widely from organizing, staffing, leading control and
coordinating towards achieving managerial goals.
iii. Planning is a contributory factor of purpose: planning drives purposeful
leadership. It anchors the management process towards achieving its set
objectives.
iv. Planning is efficient: planning attracts maximum benefit in the
implementation of objective from a minimum cost.
v. Planning is flexible: planning is sensitive to changes in environmental
activities that affect an organization; hence planning promotes flexibility of
purpose towards establishing managerial goals.
vi. Planning recognizes trend analysis: Planning permit budgeted objectives to
be compared with actual objectives in order to establish a trend in the
activities towards achieving managerial objectives.

The Planning Process

This is the effective manner or ways of identifying how managerial goals and
objective would be accomplished.

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Goal Setting and the Planning Process

Goal setting implies, having a strongly motivated and highly organized management
process that achieves tasks that are specified in advance. This further means that, the
planning process is only effective when goals are clear and attainable. Also goals
must be well articulated in the light of the organizations strength, weakness
opportunity, threats (SWOT).

Organizational Planning

 Organization simply means a group of people identified by a shared interest or

purpose. It is also the coordination of separate components into a unit or structure or
the relationship that exists between separate components in a coherent whole.
 Organizational planning means the implementation of the plan through coordinating
efforts among all organization’s personnel to ensure optimal results in achieving
organizational objectives.
 The major steps in the planning process:
 Deciding which goal to pursue
 Deciding what courses of action to adopt
 Deciding how to allocate resource
 Time frames for planning: these vary widely from industry to industry:
 Long-range:
 Long-range plans cover many years, sometime decades.
 Due to volatility in contemporary environment, it is difficult to plan
too far ahead, though some large corporations still make plans for
10 – 20 years
 Any plan that extends beyond five years is considered long-range.
 Intermediate-range
 usually covers periods from one to five years
 in many organizations, it is the central focus of planning activities

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  it is especially important for middle and first – line managers
 Short- range
 It has time frame of one year or less; greatly affects managers’ day-
to-day activities.
 There are two basic time frames of short range plan:
 Action plan – operationalizes any other plan. Action plan
coordinates actual changes at a given firm.
 Reaction plan – a plan designed to allow a company to react to
unforeseen circumstance.
 Organizations develop many different kinds of plans; these include strategic,
tactical and operational plans:
o Strategic plans
 General plans outlining decisions on resource allocation, priorities
and actions to be taken that are necessary to achieve strategic goals
 They are set up by the board of directors and top management and
have extended time frame.
 They address questions of scope, resource deployment, competitive
advantage and synergy
o Tactical plans
 Developed to achieve specific part of a strategic plan
 Involve upper and middle management and have shorter time
horizon and more specific and concrete focus
o Operational plans
 Focus on implementing tactical plans to achieve operational goals
 Have short term focus and are relatively narrow in scope; each one
deals with a fairly small set of activities
 Organizations also have some other types of plans which are developed
to enhance the operational efficiency of the organization:

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 o Standing plan
 Developed for activities that occur regularly over a period of time
 Help enhance efficiency by routinizing decision making
 Policies, standard operating procedures and rules and regulations
are types of standard plans
o Single use plan
 Developed to carry out a course of action that is not likely to be
repeated in the future.
 The two most common type of single use plan are programs and
projects
o Contingency plan
 Determination of alternative courses of action to be taken if an
intended plan is unexpectedly disrupted or rendered inappropriate
 Contingency planning is increasingly becoming important inmost
organization especially for those operating in complex or dynamic
environment
 Contingency planning helps managers cope with uncertainty and
change

2. DECISION MAKING

Nature of Decision Making

Decision making is the process of making choices or reaching conclusions, especially on

important activities that relate to the organization. Decision is a conscious choice among
analyzed alternatives followed by action to implement the choice. Decision making is
simply seen as the selection of alternative course of action from available alternatives in
order to achieve a given objective. It is the process through which a course of action is
selected as the solution to a specific problem.

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It is the process of identifying and selecting course of action to solve a specific problem or
take advantage of an opportunity.

Decision making is situational, different situations call for different decisions. The different
types are as follows:

i. Routine Planning Decisions: These relates to budgeting decisions where by

fixed and variable costs are analyzed together with revenue over a given
period of time.
ii. Short-Run Problem Decisions: This refers to unforeseen decisions of a non-
recurring nature, so that revenue and costs are obtained within a relative short
time.
iii. Investments or Dis-Investments Decisions: These are decisions that have
implication on the liquidity and profitability of the organization. For example
working capital investment decisions. Also these are decisions of long-term
consequences.
iv. Long –Range Decisions: These relates to infrequently reviewed decisions.
They are made once, and meant to provide a continuing solution to recurring
problem.
v. Control Decisions: These are cautious decisions with a view to evaluate the
benefits expected from an action such that they exceed the cost of investment.

Approaches to Decision Making

Approaches to decision making entails going through a process that identifies the
problem or objective, develops alternatives strategies, analyses these strategies,
choose the best alternative, implement the choice and assess the result. The whole
process is in two phases:

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1. The planning phase: It involves:
 Identify and establish specific objectives or problem: This involves
specifying objectives or goals for the organization according to the specific
nature or endeavors of individual organization. Some of these objectives
include; profit generation or maximization, market leadership, product
innovation, product quality, workers welfare, social responsibility and so on.
On the other hand problems could be loss or reduction in revenue generation,
poor product patronage, inefficient management as a result of technological
obsolesce, inadequate policies on staff welfare package, and so on.
 Determine priority reference of objectives or causes of problem: This
involves prioritizing objectives from the most to the least important, as well as
articulating causes of problems from the most to the least pressing.
 Develop strategies to achieving objectives or solve problem: This involves
developing strategies based on information gathered from past experience,
current trend in business, government regulations and so on. Strategies are
developed to help achieve identified objectives at a minimum cost yielding
maximum benefit. On the other hand marketing strategy that involves rigorous
interactive advertisement solves the problem of poor product patronage or
sales, reduced revenue generation.
 Select the most suitable strategy to achieve objective or solve the
problem: This involves selecting from the most to the least suitable strategy
for achieving the objective or curbing the problem. Such a selection must be
reflected in the future budget.
 Implement objective or solve problem: The budgeting process involves
implementation of identified objectives.

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2. The controlling phase:
 Evaluate actual achievement against expected outcome: This involves
comparing expected out come with actual achievement of the identified
objectives or solved problem.
 Response to divergence from evaluation: This involves modification or
repositioning of the identified objectives where expected outcome did not tally
with the actual.

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ORGANIZING PROCESS

Nature and Elements of Organizing Process

Organizing is all about forming, establishing a group like an association or firm, by

coming together or bringing people together into a structured group. It also means,
coordinating something or overseeing the coordination of the various aspects of
something.

 Organizing process simply means to analyses the components of an

establishment in a way that creates a particular structure for the establishment
and execution of managerial goals and objectives.
 Organizing is a process itself that assigns duties and coordinates efforts
among all organizational personnel to ensure maximum efficiency in the
execution of goals and objectives.
 It is also a process that directs the way in which work is arranged and
allocated among members of the organization, so that the goal of the
organization can be effectively achieve.
 There are six building blocks managers can use in constructing an
organization: designing jobs, grouping jobs, establishing reporting
relationships between jobs, distributing authority among jobs, coordinating
activities between jobs and differentiating between jobs.
 Structure of the process is dynamic and sensitive to changes within and
outside its environment
 Designing Jobs

This is the determination of individual’s work related responsibilities.

The following principles assist the manager in designing jobs or creating new jobs:

i. Scalar principle: This principle emphasized the need for a job to have
specific limit and authority, besides it being defined to accept competency and

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 professional expertise. This simply means that every employee in the
organization understands the flow of authority (hierarchy of a authority)
ii. Span principle: This principle articulates the number of workers that one
manager is considered to be able to supervise effectively in a particular
situation.
iii. Parity of authority principle: This principle directs that on the job schedule
must emphasize the relationship between authority and responsibility. This
implies the need to back every responsibility with adequate authority to
carryout assigned task.
iv. Clarity of command principle: The need to have clearly defined supervisory
and subordinating capacities is emphasized by this principle. This means that
every subordinate in the organization knows who he reports to.
v. Functional principle: Every job must be designed clearly to reveal schedules
or responsibilities to the understanding of the employee

Approaches to job Design:

 Job Specialization
 Evolved from the concept of division of labor
 Tasks are broken down into smaller component parts; individual
employee specializes in doing part of a job rather than the entire job in
order to increase work out put.
 Each employee is trained to perform a small part of the job in the best
way.
 Job Rotation
 It involves systematically moving employees from one job to another
to promote experience and variety
 Job Enlargement
 It involves increasing the total number of tasks workers perform;
workers perform a wide variety of tasks

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  The scope of a job is increased through extending the range of its job
duties and responsibilities generally within the same level.
 Various activities at the same level are combined and added to existing
job within the organization.
 This means the employee will do more different activities in his current
job
 Job Enrichment
 Attempts to increase both the number of tasks a worker performs and
the control the worker has over the job
 Some control, by manager on the job, is removed and more authority is
designated to the employee.
 The work is made more stimulating and employees are motivated to
work better.
 Job Characteristics Approach
 This is an approach to job design which takes into account both the
work system and employee preference.
 Jobs are improved along five dimensions:
- Skills variety: number of tasks employee does in the job
- Task identity: the extent to which a worker does a complete or
identifiable portion of the job
- Task significance: perceived importance of the job
- Autonomy: the degree of control the worker has over hoe the job is
performed
- Feedback: the extent to which the worker knows how well the job is
being performed.
 These five dimensions may lead to critical psychological state that in
turn may enhance motivation, performance and satisfaction while
reducing absenteeism and turnover.

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  Work Team Approach
 Under this approach a group is given the responsibility for designing
the work system to be used in performing an interrelated set of jobs
 The group decides how jobs will be allocated, monitors and controls its
own performance and has autonomy over work scheduling.
 Grouping Jobs
 As an organization grows, supervising all employees becomes more and more
difficult, as a result new managerial positions are created to supervise the
employees.
 Jobs are grouped according to some logical arrangement and assigned to
employees who are subsequently assigned to particular manager to supervise
 The process is called departmentalization
 Common basis for departmentalization are:
a. Functional departmentalization
 Jobs involved in the same or similar activities are grouped together
 Each department can be staffed by experts in that functional area.
 Supervision is greatly facilitated and coordination of activities within
each department is made easier.
b. Product departmentalization
 Activities are grouped around products or product groups
 All activities associated with the product or product group are
integrated and coordinated; the speed and effectiveness of decision
making is thus enhanced.
 Performance of products or product groups can be assessed more easily
and objectively. Accountability of departments for the results of their
activities is improved.
 But product departmentalization can lead managers to focus on their
own products or product groups to the exclusion of others.

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 c. Customer departmentalization
 Grouping activities to respond to needs of and interact with specific
customers or customer groups
 This approach allows the organization to use specialists to deal with
unique customers or customer groups.
d. Location departmentalization
 Grouping jobs based on defined geographic sites or areas
 This approach enables the organization to respond easily to unique
customer and environmental characteristics in the various regions
e. Other forms of departmentalization
 Some organization group certain activities by time – hospitals,
airlines
 Departmentalization by sequence – insurance claims by policy
number.
 Reporting Relationship
 The establishment of reporting relationship is one of the basic elements of
organizing. An organization with an effective reporting relationship has the
followings:
 A good management process that is baked by efficient coordination and
effective control
 A good management process that is based on purposeful activities that are
geared towards accomplishing identified goals.
 It involves clarifying the chain of command and the span of management.
o Chain of command:
 Clear and distinct line of authority among all positions in an
organization. It has two components.
i. Unity of command – a person within an organization
having clear reporting relationship to one person only

25
 ii. Scalar principle – a clear and an broken line of authority
from the lowest to the highest position in the organization
o Span of management (also called span of control)
 The number of persons who report to each manager.
 Authority
 Another element in the organizing process is the determination of how
authority is distributed among positions in the organization.
 Authority is power that has been legitimized by the organization. It defines
how tasks are accomplished and the extent to which the management process
is coordinated. It establishes the reward and punishment process in the
organization.
 When distributing authority, the issue of delegation and decentralization of
authority must be addressed.
 Delegation is the process by which a manager assigns portions of his work
to others. Through this managers get more work done.
 Decentralization and centralization
 Decentralization is of delegating power and authority throughout the
organization to middle and lower manager; while centralization is the
process of retaining power and authority in the hands of managers at
the top level.
 Decentralized organization is one in which decision making power and
authority are delegated as far down the chain of command as possible
while in a centralized organization decision making power and
authority retained at the top level of the management.
 The nature of the environment in which the organization operates,
history of the organization and the nature of the decisions being made
are some of the factors that influence an organization’s position on
decentralization and centralization.

26
 Coordinating Activities
 This is the process of linking the activities of the various departments of the
organization
 The departments of the organization are interdependent on each other in the
performance of their tasks. The greater the interdependence the more
coordination the organization requires.
 Forms of interdependence are:
 Pooled interdependence – departments operate with little interaction; their
output is simply pooled at the organizational level
 Sequential interdependence – output of one unit becomes the input of
another unit in a sequential fashion.
 Reciprocal interdependence – activities flow both ways between units

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STAFFING

It is the management function that deals with the recruitment, placement, training and
development of employees to fill in positions in the organizational structure. Staffing,
therefore involves a series of steps that are performed on a continuous basis to keep the
organization supplied with the right people in the right position at the right times. The steps
include human resource planning, recruitment, selection, compensation and training and
development.

 Human Resource Policy and Planning

 Human Resource Policy
 Every organization should have human resource policies in order to
accomplish the objectives of the human resource as well as the organization.
Organization needs human resource policies in order to;
a. Consider the basic needs of the organization and the employees.
b. Minimize favoritism and discrimination in treating employees.
c. Ensure that the action will be continued through the managers in key jobs
d. Have standards of performance. Actual results can be compared with the
policy to determine the level and nature of implementation.
e. Create and develop employee enthusiasm and loyalty.
Human resource policies cover a number of areas which are:

1. Social responsibility:
a. Equity: treating employees fairly by adopting an even handed approach.
b. Considerate: considering individual circumstances when decisions affect
the employees’ prospects, seniority or self-respect.
c. Quality of work life: increase the interest in the job and organization by
reducing monotony, increasing variety of responsibilities, avoiding stress
and strain.
d. Working conditions: provide healthy, safe and conducive working
conditions.
2. Employment policies: provision of equal employment opportunities; selecting
the candidates based on job requirements; encourage the employees on the job
and in the organization.
3. Promotion policies: promotion policies should attempt to reconcile the
demand of employee for growth and organizational demand for fresh and

28
 blood with high potential. Promotion policies should also be fair and just to
all.
4. Development policies: policies should cover the kind of employees to be
trained, time span of training programs, techniques, rewarding and awarding
system, qualifications and experience of the trainer, encouraging the
employees for self-advancement. These policies should cover areas such as
career planning, and development; performance appraisal; organizational
change and organizational development.
5. Relations policies: this covers areas of human relations such as policies
regarding motivation, morale, communication, grievance procedures,
discipline procedures, employee counseling etc. The policies also cover areas
of industrial relations like union recognition, union representation, collective
bargaining, preventing and settlement of industrial disputes and participative
management

 Human Resource Planning

 The success of any organization ultimately depends on having the right
people in the right job at the right time. Organizational goals have
meanings only when people with the appropriate talent, skills and desire
are available to execute tasks needed to realize goals.
 Human resource planning is the process of determining future human
resource needs relative to an organization’s strategic plan and devising the
steps necessary to meet those needs. It is a step by step procedure designed
to ensure that the personnel needs of the organization would be constantly
and appropriately met.
 Human resource planning is a process by which an organization moves
from its current manpower position to its desired manpower position.
Through planning management strives to have the right number and right
kind of people at the right places at the right time doing things which will
result in both the organization and the individual receiving long run
benefits

 Recruitment and selection

 Recruitment
 Recruitment refers to those set of activities an organization uses to attract
job candidates possessing the appropriate characteristics to help the
organization achieve its objectives. It involves seeking and attracting a

29
 pool of people from which qualified candidates for job vacancies can be
chosen.
 It is the process of attracting qualified job applicants to fill specific jobs
that are open in the organization or deem to be open by management
judgment. The main aim of recruitment is to develop and maintain a
reservoir of manpower upon which an organization can depend when it
needs additional employees.
 When a person is needed to fill a vacant organizational position, the
individual may come from inside or outside the company. This implies that
candidate for recruitment can be sourced either from internal or external
sources.
 Various techniques are used to attract recruits. Recruitment techniques are
the means or media by which management contacts prospective employees
or provide necessary information or exchanges ideas or stimulates them to
apply for jobs. Techniques used to stimulate candidates include promotion,
transfers, recommendation of present employees and advertisement.

Getting large number of qualified applicants is one of the most critical aspects of
recruiting.

 Internet is now used for job posting. It has, in most cases, replaced traditional
recruitment methods such as newspaper advertisement.
 Jobs are now posted on company websites and job search website.
These help HR managers reach larger number of potential job applicants. Technology
makes it easier for HR managers to determine the suitability of the applicants as quickly
as possible.

 Selection
 After identifying the sources of manpower, searching for prospective employees
and stimulating them to apply for jobs in an organization, the management has to
perform the function of selecting the right employees for the job. The obvious
guiding policy in selection is the intention to choose the best qualified and
suitable candidates for each unfilled spot and to avoid commitment to those who
will not work well.
 The main objective of selection is to choose the individual who can most
successfully perform the job from the pool of qualified candidates. This is done
through the selection procedure.

30
  There is no standard selection process to be followed by all companies.
Organization will follow procedures based on size, nature of business, number
of persons to be employed, government regulations to be followed, etc.
 Selection procedures follow several methods of collecting information about the
candidate’s qualifications, experience, physical and mental ability, nature and
behavior, knowledge, attitude to judge whether a given candidate is suitable for
the job. Therefore the selection procedure is not a single act but a series of
methods or stages by which different types of information can be secured through
different selection techniques.
 Employees are required to have unique technical and professional skills to
operate effectively today’s technology based environment. Individuals with these
skills are in short supply; competition for these individuals is therefore intense.
 Many internet tools make background searches of applicants quick and easy.
These tools help HR managers to select people who have the required skills.
People who do not have what is required are easily identified and dropped.

 Placement

The assignment of a worker to the job for which he has been employed and which he
can do best is placement. Placement is the determination of the job to which an
accepted candidate is to be assigned and his assignment to that job. It is a matching
of what the superior has reason to think the employee can do with the job demands
(job requirements). It is the matching of the working conditions and what the
employer offers in the form of compensation, companionship with others,
possibilities of promotion. The new employee is put on probation for a period of
time.

 Training and development

 Human resource Development: it is the process of improving, molding,
changing and developing the skills, knowledge, creativity, ability, value,
commitment etc. The activities include;
I. Performance appraisal: A systematic evaluation of individuals with
respect to their performance on the job and their potential development.
II. Training: it is a systematic process by which employees learn skills,
knowledge, abilities, or attitudes to further organizational or personal
goals.
III. Management development: A process of designing and conducting
suitable executive development program so as to develop managerial
and human relations skills of employees.
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 Compensation
Compensation: it is the process of providing equitable and fair remuneration to
the employees. Activities relating to this include;
 Job evaluation: the process of determining the relative worth of jobs.
 Wages and salary administration: the process of developing and operating
a suitable wage and salary program.
 Incentives: formulating, administering and reviewing the financial
incentives schemes in addition to regular payment of wages and salary.
 Bonus
 Fringe benefits: in addition to compensating employees fairly and
adequately for their contribution in the performance of their jobs,
organizations pay a wide variety of supplementary benefits often termed
“fringe benefits”
 Social security measures: managers provide social security to their
employees in addition to fringe benefits.

LEADERSHIP

 Meaning of Leadership

32
 Leadership is both a process and a property. As a process, focusing on what leaders
actually do, leadership refers to the process of influencing people in a planned
direction by inspiring, motivating and directing their activities to help in the
attainment of group’s or organizational goals through non –coercive means. As a
property, it is the set of characteristics attributed to individuals who are perceived to
be leaders.
Leaders are people who can influence the behaviors of others without having to rely
on the use of force.
Leadership and Management Process
Leadership and management are related but not the same. The management process
is a broad concept that encompasses activities such as planning, organizing, staffing,
coordinating and controlling as well as leading.
Leadership on the other hand, focuses almost exclusively on the people aspect of
getting a job done, inspiring, motivating, directing and gaining commitment to
organizational activities and goals. Leadership is part of management but not
all of it. Leadership is the ability to persuade others to seek defined objective
enthusiastically. It is the human factor, which binds a group together, motivates it
towards goals.
 Theories of Leadership

The following are some of the approaches to explaining what makes an effective leader:

(1) Universal Personality Traits that leaders have to some greater degree than non-
leaders- social physical or intellectual traits e.g. intelligence, charisma, bravery etc.
(trait theories). Trait theories of leadership personal qualities and characteristics.
(2) Behavioral Theories – Try to explain leadership in terms of behavior that an
individual engages in. Leader behavior affects group effectiveness.
(3) Contingency Models try to explain the inadequacy of the previous leadership
theories. Leadership style should match the situation at hand.
Many studies attempt to isolate critical situational factors that affect leadership
effectiveness. Some of the factors identified are:
 The degree of structure in the task being performed

33
  Quality of leader-member relations
 The leader’s position power
 Subordinate role clarity
 Group norms
 Information availability
 Subordinates’ acceptance of leader’s decisions
 Subordinates’ maturity
Examples of contingency leadership theories are: Fiedler model, Hersey-Blanchard
Situational Leadership Model,.

1. Fiedler contingency theory of leadership

 Developed by Fred Fiedler, A Theory of Leadership Effectiveness. NY:
McGraw-Hill, 1967.
 The Fiedler Contingency Model proposes that effective performance depends
upon the proper match between the leader’s style of interacting with his
subordinates and the degree to which the leader is given control and influence
 The Model isolates three situational criteria: leader-member relation, task
structure and position power
 The three criteria can be manipulated to create proper match with the
behavioral orientation of the leader
 Fiedler assumes that individual leadership style is fixed
 Where a situation requires different leadership style than the one possessed by
the leader, it is the situation that needs to be modified or the leader replaced, if
optimum effectiveness is to be achieved.
 The key situational factors are defined as:
- Leader-member relation: the degree of confidence, trust and respect
the subordinates have in their leader
- Task structure: the degree to which job assignments are structured
- Position power: the degree of influence the leader has on issues such
as hiring, firing, discipline, promotions and salary increases.
 Situations are evaluated in terms of these three contingency variables: No1
as either good or poor, No. 2 high or low and No.3 as strong or weak.
 Reviews of studies testing the validity of the model led to generally
positive conclusions
 Additional variables might however be needed to improve the model
 Fiedler has made important contributions towards understanding leadership
effectiveness.
2. Hersey-Blanchard Situational Leadership Theory

34
  Developed by Paul Hersey and Ken Blanchard, ‘so you want to know your
leadership style?’ Training and Development Journal, Feb. 1974, pages 1-15.;
Management of Organizational Behavior: Utilizing Human Resources, 4th Ed.,
Englewood Cliffs, N.J. Prentice Hall, 1984, pages 150-61.
 The model focuses on followers
 Successful leadership is achieved by selecting right leadership style which is
contingent on the level of followers’ maturity
 Followers accept or reject leader hence their importance in leadership
effectiveness. Leader’ effectiveness depends on the action of his followers.
 Maturity is defined as the ability and willingness of people to take
responsibility for directing their behavior.
 Maturity has two components:
- Job maturity which encompasses employee’s knowledge and skills.
High on this gives the individual the knowledge, ability and experience
to perform job tasks without direction from others.
- Psychological maturity- willingness or motivation to do something.

Leadership Skills

Skills are required naturally by a leader. They attract a number of attributes that
should be properly applied to the particular group task at hand. Tery (1964) outlined
some of the following leadership skills:
a) Knowledge of Human Relation: A leader needs to know as much as possible
about human behavior, how certain individual feel toward certain activities and
other individuals and how they react to various situations.
b) Emotional Stability: The effective leader is relatively free from bias and is
consistent in his actions and refrains from the use of anger. He respects authority
and is understanding in all dealings with his subordinates.
c) Communication Skill: A leader should be able to talk and write clearly and
forcefully. He must have an ability to brief accurately the opinions of others and
to pick out the real essences from the statement of others.

35
d) Technical Competence: The ability to plan, organize delegate, analyze, seek
advice, make decision, control and cooperation requires the use of important
abilities which constitutes technical mastery of leadership

Leadership Styles

Three major leadership styles namely autocratic, laisez-faire and democratic are
identified:

 Autocratic
Autocratic leader is seen as a leader who commands and expects compliance;
gives orders and demands that they be carried out. No questions asked and no
explanation given. He leads by the ability to give or withhold reward and
punishment.
 Laisez-faire
Laisez-faire leader gives subordinates high degree of independence in their
operations. The leader perceives self as a facilitator of organizational
operations by furnishing subordinates with information and serving as contact
with external environment
 Democratic
Democratic leader consults with subordinates on proposed actions and
decisions and encourages participation from them. The leader and
subordinates share decision making; where leader takes certain decisions,
basis for such decisions are explained.

Individuals in the Organization

Exchange relationship exists between individuals and the organization in which they
work. Individuals expect reward from an organization to be more than their
contribution, at the same time; the organization expects the individual contribution to
outweigh cost of retention. A successful relationship exists between individuals and

36
organization when both perceive the benefits of the association as outweighing their
costs.

Employee Motivation

This simply means the biological, emotional, cognitive or social forces that activate
and direct the behavior of employee. It can also be seen as, the act of giving an
employee a reason or incentive to perform his schedule of duty well. It is the feeling
of enthusiasm, interest, or commitment created by the management process that
makes employees want to do their jobs well. It is an internal driving force that results
in the direction, intensity, and resistance of behavior.

From the definitions presented so far, it is not out of place to surmise that
management process relies on its motivational system to achieve its overall goals and
objectives. Such motivational system takes into cognizance the following factors
that influence individual motivation:

i. Individual Nature: Every individual has his or her peculiar nature. This
nature can be seen in their personal needs, value attitude, interests and abilities
they exhibit on their jobs. In this light, motivation differs in everyone. An
employee may be attracted to job that pays higher salary while another
employee may be attracted to a lower salary job with job security.
ii. Defining Feature of a Job: This is the quality that makes the job
recognizable to an individual. This recognition could be the particular skill
required for the job, the time period attach to the job, the extent to which the
job can satisfy employee needs (psychological and social needs). For example,
individuals stay put on jobs that can pay their bills, build houses and go for
holy pilgrimage or holidays with their families. As such, employees who find
satisfaction on their job based on it defining feature are sensitive to the
motivational system of management than those employee who do not find
such satisfaction.

37
 iii. Organizational Culture: This can be seen as the shared attitude of the
organization or a particular set of attitudes that characterized the organization,
like its policies on reward and disciplinary actions. Policies on reward are
motivational to employees, they are capable of retaining and attracting new
employees especially when they are designed to monitor performance of
employees.

Qualities of a Motivational System

i. A motivational system must be persuasive enough to influence

employees to be efficiently productive
ii. A motivational system must be sensitive to the diverse needs of the
employees, for example some employees are satisfied when they are
published as employee of the year in the organization, while other are
better satisfied with a raise in their pay.
iii. A motivation system must be detailed and inclusive towards satisfying
the needs of all the employees
iv. A good motivational system allows employees to be shareholders in the
organization.
v. A good motivational system offers on the job security to the
employees.
Theories of Motivation

Many theories have been developed which can be grouped into two categories;
Content theories and Process theories.

 Content Theories of Motivation

Content theories of motivation focus on the goals we set and explore situations to
achieve them. These goals trigger behavior. Main theories in this group are:
 Maslow’s hierarchy of needs theory
 Alderfer’s existence, relatedness and growth (ERG) theory.
 Herzberg’s two factor theory
38
  McGregor’s theory X and Theory Y

1. Maslow’s hierarchy of needs theory

Identifies five needs- physiological, safety, social, esteem and self-actualization.
 Physiological Needs: These are basic needs that include hunger, thirst, shelter
and other bodily needs.
 Safety: security and protection from both physical and emotional harm.
 Social Needs: This includes affection, acceptance and friendship.
 Esteem: Self-respect, achievement, status recognition and attention.
 Self-actualization: the drive to be what one is capable of becoming; growth,
self-fulfillment.
The theory is influential and relevant to management studies and employee behavior.
Some management practices today such as TQM, Business process re-engineering,
job enrichment, employee empowerment and self-managed teams have their roots in
Maslow’s ideas on motivation.
(Buchanan, D. and Huczynski, A. (2004) Organizational Behavior: An Introductory
Text. (5thEd.) Harlow: Prentice Hall; Herzberg, F., Mauser, B. and Snyderman, B.
(1959). The Motivation to Work. New York: John Wiley)

2. Aldefer’s ERG Theory

Alderfer modified Maslow’s hierarchy of needs and grouped them into three needs:
 Existence needs : Maslow’s physiological and safety needs
 Relatedness needs: Maslow’s social needs and some of the esteem needs
 Growth needs: self-actualization needs in Maslow’s hierarchy of needs
Alderfer believes that it is not necessary that one level of needs to be satisfied before
another need emerges, and that different needs can be active simultaneously.

(Alderfer, C. P. (1969) An Empirical test of a new theory of Human needs.

Organizational Behavior and Human performance, 4: 143-175)

3. Herzberg two factor theory

Herzberg develops his theory based on two factors: Hygiene and motivator.
 Hygiene factors- are extrinsic to the work, example money. Status, job
security, quality of management. They determine the work environment, the
adequacy or inadequacy of the work place. Hygiene factors do not produce
job satisfaction; they simply produce good working condition.
 Motivators- these are intrinsic and are associated with the work. When absent
work is regarded as unsatisfactory and when present work is satisfactory.

39
 Their absence may not necessarily make employee dissatisfied. Absence of
satisfaction is not dissatisfaction, it is simply no satisfaction. (Rollinson, D
(2008) Organizational Behavior and Analysis: An Integrated approach. 4th
Ed. Harlow; Pearson Educational Ltd.)
Dissatisfaction occurs when hygiene factors are absent and satisfaction occurs
when motivational factors are present. In a situation where hygiene factors are
present and motivational factors are absent the will simply be neither
dissatisfaction nor satisfaction.

4. McGregor’s Theory X and Theory Y

Motivated by Maslow’s hierarchy of needs theory, McGregor comes up with two
assumptions claiming that managers’ opinion about people influences the way they
manage. (McGregor, D. (1960). The Human Side of Enterprise. New York: McGraw-
Hill)
 Theory X - people are assumed to be motivated only to satisfy their basic
needs and not to contribute to the satisfaction of organizational needs. People
work for money, they are unreliable, and prefer to do as little as possible at
work. To motivate them to work, managers must try to change the employees
to fit the organizational needs through rewards, punishment and control.
 Theory Y – assumes that people are motivated for growth and fulfillment and
can be trusted to contribute to the achievement of organizational goals.
Managers’ responsibility is to enable employees to develop and grow at work
through creating an appropriate work environment. To develop an appropriate
work environment, managers should provide training and development
opportunities, modifying job design and changing certain job tasks.

 Process Theories of Motivation

Process theories concentrate on the choices individuals make to achieve their goals.
There are three groups: expectancy theories, equity theory and goal-setting

1. Expectancy theories (Vroom, V.H. (1964) Work and Motivation. John

Wiley)
The best known of the expectancy theories is that developed by Vroom who
posits that the strength of a tendency to act in a certain way depends on the
strength of the expectation that the act will be followed by a given out come
and on the attractiveness of that outcome to the individual. This has three
dimensions/variables, (Robins, S. P. (1991) Organizational Behavior:

40
 Concepts, Controversies and Applications. 5th/Ed. New Jersey: Eaglewood
Cliffs; Prentice-Hall.):

 Attractiveness: The importance the individual places on the potential

outcome or reward that can be achieved on the job.
 Performance Reward linkage: the perception by individual that a
certain level of performance will lead to attainment of a desired
outcome.
 Effort-Performance linkage: the perception that exerting a given effort
will lead to desired performance
2. Equity theory
Equity theory focuses on the assumption that individuals’ perception of how
fairly they are treated when compared to others will determine their
motivation. Individuals can only be satisfied at work if they believe that others
are sharing the same conditions.
- Salary is compared with other colleagues
- Efforts evaluated in comparison with others.
Values are placed on various inputs and outputs if employee thinks the input
(time, efforts etc.) she puts into a job exceeds the output (e.g. salary,
acknowledgement etc.) then the employee would be dissatisfied and will be
motivated to change the situation by either working less or asking for a pay
raise. (Adam, J. S. (1965) Inequity in Social Exchange, in L. Berkowitz (ed.)
Advances in Experimental Social Psychology. New York: Academic Press).
The theory has implication in areas of job design and reward system.

3. Goal-setting theory
The theory assumes that the employee goals determine their behavior and
decisions at work. (Lock, E. A. (1968) Towards a Theory of Task Motivation
and Incentive, in, Organizational Behavior and Human Performance. May:
157-189)
Employees will be satisfied if they achieve their goals. Achieving difficult
goals lead to more satisfaction and goals with clear and explicit outcomes lead
to higher performance. In all cases clear and effective feedback system is
required. Employee involvement in setting the goals is also necessary this can
be very motivating.

CONTROLLING PROCESS

Nature of Control in an Organization

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 Control in an organization simply means, the exercise of power or authority by
superiors over the affairs of the organization. Control in an organization, creates
restrictions to permit flow of authority so that every individual on the organization
understands the limit of his or her job schedules. Control is further used, to regulate
the human and financial affairs of an organization. It is also used to examine and
verify account. Controlling is defined as determining what is being accomplished.
This implies, the performance, examining and judging the performance, applying
corrective measures, where necessary to ensure performance occurs as planned. It is
considered to be the regulation of organizational activities so that some targeted
element of performance remains within acceptable limits.

Control can be defined in three ways;

i. As a System: System theorist in management referred to it as a management control

system, that is a cybernetic problem in which information is obtained from sources
within the system feedback and which makes possible the alteration of the system
towards its goals
ii. As a Function: As managerial function control seeks to anticipate, plan and take
corrective action as needed.
iii. As a Process: Makes sure that intended results are consistently achieved.
Control consists of verifying whether everything occurs in conformity with adopted
plan, the instructions issued and principles established. Control is the process
through which mangers ensure that actual activities conform to planned activities.
From the explanations given so far, we can define controlling process as the tool
used by the management process to set standards, monitor these standards and
evaluate these standards to ensure, they being about good outcomes. These standards
includes but not limited to human, financial and operational standards.
Purpose of Control
Control is one of the four basic management functions in the organization. It has
four basic purposes:

42
 i. Adopting to environment
Contemporary business environment is complex and turbulent which makes it
necessary for organizations to have a properly designed control system to
help managers anticipate, monitor and respond to changing circumstances.
ii. Limiting Errors
A well designed control system helps organization detect and correct errors
which if not corrected early may accumulate and pose serious problems to the
organization.
iii. Coping with organizational complexity
As organization grows and becomes more complex, an appropriate control
system is required to meet the demand of the emerging structure
iv. Minimizing costs
If properly developed, control system can help control costs and boost output.

Types of Control

Every organization has control measures put in place. The most common is the
internal control system. Organizations have further designed control for various
situations:

i. The pre-Situational Control: These are controls around financial or

operational activities ear marked to take place. An example is the budget
document in every organization. The budget is used as a control mechanism to
identify sources of revenue and the expenditure profile of an organization.
ii. The post-Situation Control: These are controls around monitoring and
evaluating, the implementation process of the budget of the organization. This
is done to establish variance by comparing budgeted resources with actual
committed resource so that corrective measure can be taken.

Control can focus on any area of an organization. Most organizations focus control
on the four basic resources of the organization:

43
 1) Physical resource
 Inventory control
 Quality control
 Equipment control
2) Human Resource
 Selection and placement
 Training and Development
 Performance appraisal
 Compensation
3) Control of information
 Sales forecasting
 Environmental analysis
 Public relations
 Production scheduling
 Economic forecasting
4) Financial control
 Debt management
 Cash flow management
 Receivable collection
 Bills payment

Control of financial resources is the most important area because financial resources
are related to the control of all other resources in an organization.

Levels of Control

Managers institute controls at different levels of the organization. The most basic
levels of control in organization are: strategic, structural, operation and financial
control. For control to be effective each level must be managed properly.

44
  Operations control – focuses on the processes the organization uses to
transform resources into products or services
 Financial control – concerns with the organization’s financial resources
 Structural control – concerns with how the elements of the organizational
structure are serving their intended purposes.
 Strategic control – focuses on how effectively the organization’s corporate,
business and functional strategies are succeeding in helping the organization
achieve its goals.

Designing the Control Process

The purpose of control is to measure activities and take actions to ensure plans are
accomplished. It is necessary to know when deviations occur, and who is responsible
for taking corrective actions. It is important to note here that, planning precedes
control, as there is no control without planning as it entails the activities that control
measures. Control process is affected by planning and organizing

` Steps in a Control System

The following are very basic steps for a control system

i. Establishing standards
ii. Measuring actual performance
iii. Comparing actual performance against chosen standards of performance
iv. Correcting undesired deviations from standards and plans

Managing Control

Effective control system successfully monitors and regulates organizational

activities. To be effective, control system must be;

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i. Integrated with planning: control system should be linked with
organization’s planning. The way to do it is to ensure that as plans are
developed standards are set that will show how well the plan will be realized.
ii. Accurate: All information or data on performance must be accurately
communicated otherwise inaccuracy can influence bad decision, or problem
creation or lack of problem correction.
iii. Flexible: control system should be flexible enough to accommodate changes
iv. Timely: All information must be communicated on time in real time, as often
as is necessary.
v. Objective and Comprehensive: Control system must emphasize objectivity
of purpose and this position must be comprehended by all employees
otherwise the system will labor in efficient and in effective labor force.
vi. Strategic control points (risk management): The system should focus on
areas where deviations from standard are most likely to occur. Otherwise this
could result to great harm to the organization.
vii. Open Communication: The system should include the use of multiple
approaches such as both financial and non-financial performance targets and,
in corporate preliminary, concurrent feedback control.

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