Monday, November 9, 2009

Management Functions

Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry, “There are four fundamental functions of management i.e. planning, organizing, actuating and controlling”. According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.

1. Planning
It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing
It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.
3. Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:
• Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).
• Recruitment, selection & placement.
• Training & development.
• Remuneration.
• Performance appraisal.
• Promotions & transfer.
4. Directing
It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:
• Supervision
• Motivation
• Leadership
• Communication
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

Co-ordination means balancing and keeping the group of people together in an organization by ensuring a suitable allocation of tasks to these various persons and by looking into that these tasks are performed by each of them with due harmony, lack in proper co-ordination results to inefficiency of the management as well as failure in achieving the desired objectives. In small business as the control is in the hand of the owners themselves and the scale of business is small it does not become much of a problem but in case of a large scale business co-ordination is a big problem and needs careful consideration from the managements to achieve the desired results as different groups are entrusted with different responsibilities and work with one plan and same objectives.
6. Controlling
It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.

7.Reporting – that is keeping those to whom the executive is responsible informed as to what is going on, which thus includes keeping himself and his subordinates informed through records, research and inspections. This can include external reporting, too, meaning that a Public Information department reports operational information to the public.

8.Budgeting –All that goes with budgeting in the form of fiscal planning, accounting and control. Finance departments conduct the fiduciary activities.
(Reporting and budgeting needs no separate discussion here as Management Function’s as, Reporting is covered by the controlling functions and Budgeting is a part of planning.)

Functions of a Budget Document

  • Traditional Model
Control: using the budget document to control expenditures to maximize accountability. This function is most commonly associated with line-item budgets.
Management: using the budget document to manage organizations and personnel. This function is focused on performance and efficiency. This function is most commonly associated with performance budgets.
Planning: using the budget document as a plan to achieve some goal. The focus of this function is on the outcome and effectiveness of a program. This function is most commonly associated with program and PPBS (Program Planning Budgeting System) budgets.

  • Modern Model
Monitoring: as a response to the traditional control function, the monitoring function focuses on the consequences of expenditures.
Steering: as a response to the traditional management function, the steering function serves as a guide for managing.
Strategic Brokering: uses the budget document as a means of constantly looking for possible directions and reacting to the environment.

Importance of Business Organisation and Management

Business Organisation - A Discipline which is quite essential for all people in business who like to become a statesman to show their acumen in the business world. It is now essential for all new aspirants as well as existing businessman to equip themselves with highest qualification of this theoretical knowledge so that it becomes easier for them to tackle various principles and ethics of business, the various Policies, Plans and Laws implemented by the Government from time to time, the keen competition faced from other businessman, the challenges due to various innovations in day to day business life. Survival of a business and the businessman amidst such complexities that too with a secured stability is only possible by gathering a proper theoretical knowledge on this subject.

Again it may be said that the practical experiences cannot be ignored. We even find there are businessmen who do not have a proper specialized education of Business Organization and Management, in spite of that they have helped their business reach at a level of admiration with their inherited practical experiences. These type of person in business are treated as born businessmen and their counting is too less in the business world.
The practical experiences gained in business activities along with a proper theoretical knowledge of this subject leads a person to show his best to the business world and there is no looking back for such person when it comes to even the toughest situations in the business. Thus it is said It is now essential for all new aspirants as well as existing businessman to equip themselves with highest qualification of this theoretical knowledge along with practical experiences .

Tuesday, October 27, 2009

Various views of Management



Art is the application of practical knowledge and skill to achieve a concrete result.It is practice oriented. In practice,it involves certain skills,particularly human relation skills which cannot be reduced to a common formula.Management is an art because it requires innovation,intuition and judgement.

G.R.Terry states that art is " bringing about of a desired result through the application of skill."
Harold Koontz states, "Art is the application of knowledge to reality with a view to accomplishing some concrete results ordinarily with compromise,blend and design to get the best result."

Science means systematised body of knowledge acquired through experimentation and observation.It is a systematised body of knowledge relating to a specific field which is acquired by mankind through experimentation and observation, the validity of which can be tested and verified.The basis of Science is to search for information by means of determining the cause and effect relationship through experimentation and observation.
Prof. Keynes states, "Science is systematised body of knowledge which established relationship between cause and effect."
Koontz and O'Donnell state, "The essential feature of science is that knowledge has been systematised through the application of scientific method."

Science means systematised body of knowledge relating to a specific field which is acquired by mankind to search for information by means of determining the cause and effect relationship of two or more variables through experimentation and observation, the validity of which can be tested and verified. Art is the application of practical knowledge and skill particularly human relation skills to achieve a concrete result because it requires innovation,intuition and judgement. Management can be regarded as both Science and Arts because it combines the features of both of them. In fact, science and art are not mutually exclusive but complimentary to each other.Science without art is a waste and art without science, is misleading. Science is 'to know' Art is 'to do' hence should go hand in hand.

Management is not a pure science but a social or applied science as Principles of flexibility or the Principles of exceptions are seen there where as pure science is rigid.

Sunday, October 25, 2009

Business Letters

Writing an effective business letter is an important skill for every manager and business owner. In this brief overview we will examine the five main steps in creating an effective business letter. With this knowledge you can quickly amend and personalize business letters.
Main Steps:
• Identify your aims
• Establish the facts
• Know the recipient of the letter
• Create sample Copy
• Decide on Physical layout of letter.
Identify your Aims:
Clearly establish what you want to achieve from the letter- whether it is to win back a dissatisfied customer or to reprimand an employee. Whatever the aim, create your letter from these goals.
Establish the facts:
Make sure you have the relevant accurate facts available. For a late payer, this might include relevant invoices, complaint forms, talks with your sales department and any previous correspondence from the customer.
Know the recipient of the letter:
Write in the language of your recipient. Try to put yourself in the position of the recipient. Read it from his point of view. Is the letter clear or open to misinterpretation.
If you know the recipient, use this knowledge to phrase the letter to generate your desired
Create a sample Copy:
Having established your aims, amassed the relevant facts with a conscious view of the recipient- write down the main points of your letter.
Decide on Physical layout of letter.
The physical appearance of a letter consists of the paper and the envelope.
The first thing a recipient sees is the envelope. It is essential that it is of suitable quality with the name and address spelt correctly. Quality envelopes and paper suggest a professional company.
Technical layout of letter:
The following elements will constitute the formal outlay.
• Letterhead
• Name and address
• Date
• Reference
• Subject matter
• Salutation
• Communication
• Signature
• Enclosures
This will include your company's name, address, telephone number, fax number and email address. Include your web address if available. Other information may be required depending on the legal status of your business formation. Contact your legal adviser for exact details.
Name and address:
Always include the recipient's name, address and postal code. Add job title if appropriate. Double check that you have the correct spelling of the recipient 's name .
These are optional. They are a good idea if you have a large volume of correspondence. These days modern word processors made this an easy task to complete and maintain.
Always date your letters. Never abbreviate January to Jan. 31.This should be parallel to the Reference column.
Subject matter:
Again this is optional, but its inclusion can help the recipient in dealing successfully with the aims of your letter. Normally the subject sentence is preceded with the word Re: It should be placed one line below the greeting.
The type of salutation depends on your relationship with the recipient. Always try to personalize the letter thus avoiding the dear sir/madam situation.
This will contain a number of paragraphs, each paragraph dealing with one point and one point only.
The signature should be clear and legible-showing you are interested in the letter and consequently the recipient. Your signature should also be followed underneath by a typed version of your name and your job title.
If you include other material in the letter, put 'Enclosure', 'Enc', or ' Encs ', as appropriate, two lines below the last entry.
A letter's style:
Previously we created the main points of our letter, now we must transform this into a final version. To do this, four main considerations are necessary.
• Format
• Prose
• Manner
• Accuracy
There are three main formats: blocked, semi-blocked and indented.
The former has all entries tight against the left -hand margin. The semi-blocked format sets the references and the date to the right margin for filing and retrieval purposes, with the remaining entries placed against the left margin.
The indented format follows the same layout as either of the above, but indents each paragraph by five or six spaces.
Clarity of communication is the primary goal. Don't use technical jargon if the recipient is unlikely to understand it. Short sentences are less likely to be misunderstood or misinterpreted. Be precise, don't ramble. Check each sentence to see if it is relevant. Does it add to the point ?
Always try to personalize your letters. Always try to be civil and friendly even if the subject matter is stern and sensitive. Give the impression to the recipient that some effort and thought has gone into the letter.
Once the final version of the letter has been created, polish it off with a final spelling and punctuation check.

How to Write the body of Commercial Letters

(Type 1)

Dear Personnel Director,
Dear Sir or Madam, (Use if you don't know who you are writing to)
Dear Mr, Mrs, Miss or Ms (Use if you know who you are writing to, and have a formal relationship with – VERY IMPORTANT use Ms for women unless asked to use Mrs or Miss)
Dear Frank, (Use if the person is a close business contact or friend)
To Whom It May Concern (Very formal as you do not know the person to whom you are writing

The Reference (1 followed by any of the 2's as applicable)
1. With reference to… / Regarding to…
2. your advertisement in the Times, …your letter of 23rd March, …your phone call today, … Thank you for your letter of March 5th.

The Reason for Writing(1 followed by any of the 2's as applicable)
1. I am writing to…
2. enquire about …/ apologize for …/ confirm …

Could you possibly… ?
I would be grateful if you could …
I would also like to know…
Could you tell me whether… ?

Agreeing to Requests
I would be delighted to …

Giving Bad News
Unfortunately …
I am afraid that …

Enclosing Documents
I am enclosing …
Please find enclosed …
Enclosed you will find …

Closing Remarks
Thank you for your help
Please contact us again if we can help in any way.
there are any problems.
you have any questions.

Reference to Future Contact
I look forward to hearing from you soon.
meeting (seeing) you next Tuesday.

The Finish
Yours faithfully, (Very formal as you do not know the person to whom you are writing)
Yours sincerely, (If you know the name of the person you're writing to)
Best wishes,
Best regards, (If the person is a close business contact or friend)

Start (Type 2)

Dear Mr, Mrs, Miss or Ms (Use if you know who you are writing to, and have a formal relationship with – VERY IMPORTANT use Ms for women unless asked to use Mrs or Miss)

The Reference (1 followed by any of the 2's as applicable)
1. With reference to…/Regarding to…
2. your advertisement in the Times, …/your letter of 23rd March, …/your phone call today,
Thank you for your letter of March 5th.

Thanking the Potential Customer for His/Her Interest
Thank you for your letter of ... enquiring (asking for information) about ...
We would like to thank you for your letter of ... enquiring (asking for information) about ...

Providing Requested Materials
We are pleased to enclose ...
Enclosed you will find ...
We enclose ...

Agreeing to Requests
I would be delighted to …

Providing Additional Information
We would also like to inform you ...
Regarding your question about ...
In answer to your question (enquiry) about ...

Giving Bad News
Unfortunately …
I am afraid that …

Enclosing Documents I am enclosing …
Please find enclosed …
Enclosed you will find …

Closing Remarks
Thank you for your help
Please contact us again if we can help in any way.
there are any problems.
you have any questions.

Reference to Future Contact
I look forward to hearing from you soon.
meeting (seeing) you next Tuesday.
receiving your order
welcoming you as our client (customer)

The Finish
Yours faithfully, (Very formal as you do not know the person to whom you are writing)
Yours sincerely, (If you know the name of the person you're writing to)
Best wishes,
Best regards, (If the person is a close business contact or friend)


1. Use block style - do not indent paragraphs.
2. Keep the letter brief and to the point.
3. Do not use shortened verb forms - write them out (i.e. "don't instead of do not").
4. Always keep a copy of correspondence for future reference.

The Red Hot Stove Rule

However well you handle discipline it remains an unpleasant task that often causes resentment. The challenge to the supervisor is to apply the necessary disciplinary action so that it minimizes damage to individuals and to the manager himself.

Without the continual support of the subordinates, no manager can get things done. But, disciplinary action against a delinquent employee is painful and generates resentment on his part. Hence, a question arises as to how to impose discipline without generating resentment? This is possible through what Douglas McGregor called the “Red Hot Stove Rule”, which draws an analogy between touching a hot stove and undergoing discipline.

A really effective way to incorporate all the rules that are described above is to adopt the hot stove rule. When you touch a hot stove, the reaction is immediate, with warning, consistent, and impersonal.

According to the Red Hot Stove rule, disciplinary action should have the following consequences:

(a) Burns immediately: If disciplinary action is to be taken, it must occur immediately so the individual will understand the reason for it. With the passage of time, people have the tendency to convince themselves that they are not at fault.

(b) Provides warning: It is very important to provide advance warning that punishment will follow unacceptable behavior. As you move closer to hot stove, you are warned by its heat that you will be burned if you touch it.

(c) Gives consistent punishment: Disciplinary action should also be consistent in that everyone who performs the same act will be punished accordingly. As with a hot stove, each person who touches it is burned the same.

(d) Burns impersonally: Disciplinary action should be impersonal. There are no favorites when this approach is followed.

The result is consistent; whoever touches a hot stove will always get burned

The result is impersonal because whoever touches a hot stove is burned. The burn was caused by the act of touching the stove, not because of who the person is. Discipline should be directed against the act and not against the person.

The comparison between the "hot stove rule" and disciplinary action is obvious.

Universal Principles of Management by Henri Fayol

Fayol's career began as a mining engineer. He then moved into research geology and in 1888 joined, Comambault as Director. Comambault was in difficulty but Fayol turned the operation round. On retirement he published his work - a comprehensive theory of administration - described and classified administrative management roles and processes then became recognised and referenced by others in the growing discourse about management. He is frequently seen as a key, early contributor to a classical or administrative management school of thought.
His theorising about administration was built on personal observation and experience of what worked well in terms of organisation. His aspiration for an "administrative science" sought a consistent set of principles that all organizations must apply in order to run properly.
F. W. Taylor published "The Principles of Scientific Management" in the USA in 1911, and Fayol in 1916 examined the nature of management and administration on the basis of his French mining organisation experiences..
Both Fayol and Taylor were arguing that principles existed which all organisations - in order to operate and be administered efficiently - could implement. This type of assertion typifies a "one best way" approach to management thinking. Fayol's five functions are still relevant to discussion today about management roles and action.
1. To Forecast And Plan - Prevoyance
examine the future and draw up plans of action
2. To Organise
build up the structure, material and human of the undertaking
3. To Command
maintain activity among the personnel
4. To Co-Ordinate
bind together, unify and harmonise activity and effort
5. To Control
see that everything occurs in conformity with policy and practise

Fayol also synthesised 14 principles for organisational design and effective administration. It is worthwhile reflecting on these are comparing the conclusions to contemporary utterances by Peters, Kanter and Handy to name but three management gurus. Fayol's 14 principles are:

Specialisation/Division Of Labour
This principle is the same as Adam Smith's 'division of labour'. Specialisation increases output by making employees more efficient.A principle of work allocation and specialisation in order to concentrate activities to enable specialisation of skills and understandings, more work focus and efficiency.

Authority With Corresponding Responsibility
Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised.
If responsibilities are allocated then the post holder needs the requisite authority to carry these out including the right to require others in the area of responsibility to undertake duties.
A manager should never be given authority without responsibility--and also should never be given responsibility without the associated authority to get the work done.

The generalisation about discipline is that discipline is essential for the smooth running of a business and without it - standards, consistency of action, adherence to rules and values - no enterprise could prosper.Employees must obey and respect the rules that govern the organisation. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organisation's rules, and the judicious use of penalties for infractions of the rules.

Unity Of Command
The idea is that an employee should receive instructions from one superior only. This generalisation still holds - even where we are involved with team and matrix structures which involve reporting to more than one boss - or being accountable to several clients. The basic concern is that tensions and dilemmas arise where we report to two or more bosses. One boss may want X, the other Y and the subordinate is caught between the devil and the deep blue sea.

Unity Of Direction
Each group of organisational activities that have the same objective should be directed by one manager using one plan.The unity of command idea of having one head (chief executive) with agreed purposes and objectives and one plan for a group of activities is clear.

Subordination Of Individual Interest To The General Interest
Fayol's line was that one employee's interests or those of one group should not prevail over the organisation as a whole. This would spark a lively debate about who decides that the interests of the organisation as a whole are. The interests of any one employee or group of employees should not take precedence over the interests of the organisation.

Remuneration Of Staff
" The Price Of Services Rendered".

The general principle is that levels of compensation should be "fair" and as far as possible afford satisfaction both to the staff and the firm (in terms of its cost structures and desire for profitability/surplus).

Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralised (to management) or decentralised (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation.

Scalar Chain/Line Of Authority
The scalar chain of command of reporting relationships from top executive to the ordinary shop operative or driver needs to be sensible, clear and understood.The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties and superiors are kept informed.

People and materials should be in the right place at the right time.The level of generalisation becomes difficult with this principle. Basically an organisation "should" provide an orderly place for each individual member - who needs to see how their role fits into the organisation and be confident, able to predict the organisations behaviour towards them. Thus policies, rules, instructions and actions should be understandable and understood. Orderliness implies steady evolutionary movement rather than wild, anxiety provoking, unpredictable movement.

Equity, fairness and a sense of justice "should"pervade the organisation - in principle and practice.Managers should be kind and fair to their subordinates.

Stability Of Tenure
High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.Time is needed for the employee to adapt to his/her work and perform it effectively. Stability of tenure promotes loyalty to the organisation, its purposes and values.

Employees who are allowed to originate and carry out plans will exert high levels of effort.At all levels of the organisational structure, zeal, enthusiasm and energy are enabled by people having the scope for personal initiative.

Esprit De Corps
Here Fayol emphasises the need for building and maintaining of harmony among the work force , team work and sound interpersonal relationships.Promoting team spirit will build harmony and unity within the organisation.