UNIT I

INTRODUCTION
 
 
“A country’s development may be limited by a relative shortage of this critical
resource (managers). In many countries, management is an even more critical
factor in industrialization than capital, and it is almost always more vital to
develop than either labor or natural resources.”
 
Herbison and Myers
 
 The practice of management is as old as mankind itself. Over the years, people
have joined with others to accomplish goals. The first social organization is the
family; and later, more sophisticated political and civil organizational units. The
importance of management as a tool of accomplishing goals is specifically
charged with making resources productive. Management is considered as the
people working together and is responsible for the actions and results in the
organization.
Objectives:

At the end of the unit, students should be able to:

1.define management and give its importance;
2.describe managers in terms of their skills, types and functions.
Management, defined.
Management is defined in various ways.
•It is the process of designing and maintaining an environment in
which individuals, working together in groups, efficiently accomplish
selected aims.
•Management is a process or form of work that involves the guidance
and direction and direction of people toward organization goals and
objectives (Terry & Rue)
•Management is the process of planning, organizing, leading and
controlling business financial, physical, human, and information
resources in order to achieve its goals. (Pride, et al)
•Management is a process imbedded in a system of patterned
relationships.
•Management is the process of working with and through others to
effectively achieve organizational goals by effectively using limited
resources in a changing environment (Krietner).
•Management is the coordination of all resources through the process
of planning, organization, directing and controlling in order to attain
stated objectives.
•Management is the process by which a manager of an organization
efficiently utilizes resources to achieve its overall goals at minimum
cost and maximum profit (Lorenzana).
 Manager, defined

The word “manager” is another widely used term. It

refers to those persons who are responsible for directing the
activities of other people, as the definition of management .
“the art of getting things done through other people”.
Although people also manage materials, machine and other
physical resources, for purposes of this discussion, manager
refer to “a person who has responsibility for the activities of
other people in an organization”.
TASKS OF MANAGERS
Although there are many other tasks a manager can do, there are five
essential functions. All the five functions are closely inter-related,
each of these functions can be analyzed as a process.
•Planning – this is the process of setting the objectives to be
accomplished, the means to achieve them, and allocating the
resources of the organization.
•Organizing – this is the process of identifying, subdividing,
grouping, assigning and coordinating the various activities required
and providing the necessary authority to carry out the activities
needed to achieve the objectives of the organization.
•Staffing – this involves the process of recruiting, selecting,
assigning and developing human resources required by the business
firm. Simply stated, this is the task of filling positions in the
organization with the most qualified people available.
•Directing – this is the process of communicating with and
influencing people towards the achievement of goals of the
organization.
•Controlling – this is the managerial activity for monitoring
performance and undertaking necessary corrective actions to ensure
achievement of organizational objectives.
SKILLS OF MANAGERS

•Technical Skill – this refers to manager’s knowledge of and proficiency

in activities involving tools, methods, procedures and processes
appropriate to the activities which they manage.

•Human Skill – the focal point of the manager’s job is directing the
activities of other people, thus they need to be skilled in human relations.
A good manager needs the ability to work with and for people, to
communicate with others, and to understand others’ needs

•Conceptual Skill – the ability to see the over-all picture, to identify

important elements in a situation, and to understand the relationships
among the elements is another skill needed by managers since
organizations usually perform many different types of activities and
functions which are interrelated in many ways.
OTHER SKILLS NEEDED BY MANAGERS:
•Design skill – this refers to the ability of a manager to solve problems
in different ways that will benefit the organization. Managers must
have the skill of being able to design a workable solution to the
problem.
•Communication skills – communication is essential for the success of
the organization. Without communicating with other people in the
organization, a manager cannot bridge the gap between top higher
level management and the subordinates, and he cannot plan, explain,
motivate or lead subordinates.
•Motivation – is the process of getting people to contribute their
maximum effort toward the attainment of organizational objectives.
Since management is working with and through people to attain
organizational goals, managers must be able to motivate people.
•Decision-Making – is a conscious act of choosing from among a
number of courses of action. All managers are bound to make
decisions. To help them make decisions, they must be aware of
different ways to thinking and approaching decisions and how varying
conditions can alter decision-making.
•Time Management – As managers move up to the organization, they
tend to spend more time in managerial tasks, delegating
responsibility, and less time in operating or technical tasks.
•Dealing with conflict – a good manager should have the ability to
resolve conflict – whether the conflict is between individuals or
groups or between two or more points of view.
TYPES OF MANAGERS
There are many ways of describing managers. The real executive has
the skill to balance the concern for people and the tasks or objectives
of the business. The managerial grid is a widely used management
tool that relates the two major concerns of management, people and
production, in a matrix or grid. Managers are classified by their
emphasis on people and/or production, the ideal being equal
emphasis on each develop committed workforce leading to both high
production and high personal satisfaction. They may be using:
•Laissez-faire management. This management style is characterized
by minimal concern for people and minimal concern for production.
Such managers pass along orders and lack initiative. This style is
sometimes known as impoverished.
•Country Club management. These managers show a high concern
for people but give little attention to production. They are too-person
oriented that they could accomplish very minimal task or not
accomplish anything at all.
•Task management. A management style characterized by high
concern for production and low concern for people. Such managers
typically set high production quotas for their subordinates.
•Middle-of-the-road management. This style is characterized by an
adequate concern for both people and production and an attempt to
balance the two.
•Democratic (team) management. Managers show high concern for
people and production. This is considered to be as the ideal style.
QUESTIONS:
1.What is management? Does your definition differ from the one given in this book? Explain your answer.
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2.Is the purpose of management common in all types of organizations, whether business, military, church, school or
government? Justify your answer.
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3.Give the skills a manager should have and explain their importance.
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 UNIT II
MANAGEMENT CONCEPTS
Introduction

Some management authorities regard management as an

art because it involves the “proficiency in the practical
application of knowledge acquired through study, experience
and observation”. It also involves the application of skills and
techniques to achieve desirable results. It is highly practical,
production-oriented, societal concern that depends ultimately
upon the human personality.
On the other hand, management scholars regard
management as a science, since it is a body of knowledge
dealing with a body of facts or truths systematically arranged
and showing operation of acceptable standards and laws.
 Unquestionably, management research has produced definite
precepts and hypotheses that are applicable to concrete situations;
but what management experts visualize as particularly valuable
goes beyond that. They are interested in the techniques of
synthesizing the process of securing and shifting relevant
information so that the factors involved in arriving at a policy
decision can be stated and the consequences of alternative can be
analyzed and balanced.
Where management possesses conformities that are similar to
the developed sciences, it is more of an art until its principles are
empirically tested and verified to be for universal application. It is
more responsible for the attainment of organizational objectives
through execution of work done by the application of human
resources.

Objectives:
At the end of the unit, students should be able to explain the
origin of contemporary management thought.
 SCHOOLS OF THOUGHT IN MANAGEMENT
From the practice and study of management, there are different schools of
thought that evolved and developed.
1. The Human Behavior School. Views management from the aspect of
interpersonal relations of men in organization. This school is anchored on the
principle of “getting things done through others”. The primary focus of the school
is the individual, and motivation is considered an important function of
management, that is, to understand and get the best from the people by meeting
their needs and responding to their aspirations. This approach is referred to as
“organizational behavior”.
2.The Social System School. Considers management as a social system
and the organization as a social organism that is subject to pressures and conflicts
from the social environment. Practitioners of this school believe in the concepts of
cooperation, adaptation, segregation and differentiation. Cooperation is the
primary thrust in the organization where people work together for a common
good. Organization is a “system of inter-dependent activity, encompassing at least
several primary groups, by a high degree of rational direction of behavior toward
ends that are objects of common knowledge.
3. The Systems School. A system maybe defined as a set of interacting
elements bound together by a common objective and operating within a given
environment. Systems may be physical, biological, chemical or mechanical. This
school is an assembly of concepts,
principles, theories, techniques, procedures and approaches operating within an internal and
external environment. Management is divided and composed of subsystems; e.g., the systems
of planning, organizing, controlling, monitoring, staffing, budgeting and decision-making.
The various tasks in an organization constitute a system.
4. The Empirical School. This school examines management through experience by
using cases and incidents in its study of management. There is a common saying that
“experience is the best teacher”. Principles are formulated from management experiences
and are used as guides for future actions.
5. The Socio-technical Systems School. This school emphasizes that management
should not only be preoccupied with the people and their behavior but should also consider
the technical working environment and the technology the workers used for operation. The
application of technological devices should be used to make the task easier in case of
operational difficulties. The application of the socio-technical systems school is common on
the production and/or operations department.
6. The Situational School. This school claims that the practice of management largely
depends, to a certain extent, upon existing set of circumstances. This is the contingency
approach. It considers the operating variables and formulates which would effectively and
efficiently run the organization to achieve the desired results. In this school, management is
situation-bound where management principles become situational. A typical example of this
is a family-owned business which is managed by a group of different people such as a large
corporation.
7. The Managerial Roles School. This school focuses on the various activities that
managers perform in the organization. This was popularized by Henry Mintzberg (1973). He
analyzed the various roles and activities of five chief executives and found out that they do
not really act on the basis of the functions of management but are actually engaged in the
different roles and resource allocation.
8. The Operational Roles.Looks at management as a universal process and analyzes
management functions – planning, organizing, staffing, directing, motivating and
controlling. This school is eclectic in character for it uses other fields of knowledge like
mathematics, social sciences physical and biological sciences. It makes use of some
information that are directly relevant to the manager’s task and discards unnecessary bits of
information which are considered “non-managerial” in character.
9. The Mathematical School. Claims that management is a system of mathematical
models and processes which expresses management problems into goals and objectives and
derives factor relationship and combinations that may likely optimize the stated goals and
objectives of the organization. This school is usually applied by operation researchers and
analysts. The mathematical model has been used extensively through the computer system in
modern management.
10. The Decision Theory. Considers management that is confronted with several
problems and therefore, a series of decisions should focus on the central function of
management. It emphasizes the important of the type of decision made and its
implementation. In this school, the manager needs thorough understanding of the basic
nature of decision-making processes and the attendant requirements that are involved.
QUESTIONS:
1.Why does management resort to the systems approach? Explain your answer.
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2.Among the schools of thought in management, which do you think is preferably and widely used? Support your answer.
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3.At present, do you think business organizations still consider these concepts and principles in the practice of
management?
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 UNIT III
THE FIRM AND ITS ENVIRONMENT
Introduction

No business establishment is self-contained or existing in

a vacuum. All business organizations relate to and are
affected by their environment, both their internal and their
external environment. How an organization relates to social
and public concerns in its external environment has long been
and continue to be a subject of interest and controversy.

Objectives:
At the end of the unit, students should be able to describe
the firm and its environment.
Environment, defined

Environment refers to all elements and forces

present in the immediate and remote surroundings
which may affect the firm’s ability to achieve its
objectives.

Types of Environment:
•External Environment
•Internal Environment
EXTERNAL ENVIRONMENT
External environment includes those factors outside the organization that
affect its capability and are therefore relevant to its operation. This may include:
•Political Factors. In all countries, government units issue various laws,
ordinances and regulations which directly and indirectly affect the operations of
business firms.
•Sociological Factors. The values and culture of a community or country affect
the way people feel about the organization they are in and about work itself.
Added to this are individual values and work ethics. Changes in the demographic
profile of community such as levels of education, lifestyles, tastes and preferences,
age profile and the movement of people to different parts of the country are also
important sociological factors.
•Economic Factors. Business organizations, being economic institutions, are
directly and indirectly influenced by various economic forces in their environment.
Economic factors having a direct and immediate effect on a business are number
and actions of competitors, availability and costs of supplies, number and behavior
of target market, actions of shareholders in the company and relationships with
financial institutions. On the other hand, inflation or recession rate, interest rates,
unemployment, gross national product (GNP) and standard of living are some of
the economic factors which have direct or less immediate effect on business
operations.
•Technological Factors. Technological developments continuously occur
throughout the world and can have a profound and immediate effect on business.
INTERNAL ENVIRONMENT
Internal Environment refers to the resources within an organization
used to achieve its goal.
•Financial Resources. A business organization must obtain funds to
support its operation or sustain its growth. Funds are usually obtained
through borrowing, selling of shares of stock of the company, or through
retaining funds already earned.
•Technological Resources. The technology and skills of the employees
in a business are used to transform raw materials to finished goods or
goods for sale. Management should carefully decide on the appropriate
level of technology and innovation for its particular business.
•Human Resources. The business must hire the required workers, and
then assign, train and motivate them to attain the objectives set by
management.
•Physical Resources. These include the plant, manufacturing and
production equipment, office space, distribution and sales facilities, and
inventory or raw materials. Availability of raw materials, work force, and
market accessibility must be considered in the location of resources.
LEVELS OF A FIRM’S ENVIRONMENT
•Industry Environment. This is the immediate
environment of a firm and is made up of its customers,
competitors, suppliers and other entities which have direct
and continuing interaction with the firm.
•Country Environment. Beyond the industry
environment is the national environment. As in other levels,
this can be viewed in terms of political, sociological,
economic and technological factors.
•Global Environment. Events occurring in other parts of
the world may pose issues and concerns which may have
significant or immediate impact on business operations in
the Philippines.
 UNIT IV
BUSINESS ORGANIZATIONS
Introduction

In the Philippines, there are three commonly used forms of

business organization such as:
•Sole proprietorship
•Partnership
•Corporation
Gradually gaining popularity is the Cooperative form which
has received incentives under RA 6934, otherwise known as the
Cooperative Act.
As a small business grows in size and requires a large number
of owners to provide the necessary capital, the business evolves
from the sole proprietorship form to other forms, i.e., cooperative
or corporation.
Objectives:
At the end of the unit, students should be able to distinguish forms of business
organizations in the Philippines; their advantages and disadvantages.
Single or Sole Proprietorship
Sole proprietorship is a business owned by a single individual. It is a one-man
enterprise because the owner shoulders all the losses when the business fails but
all profits accrue to him if the business prospers.
From his own resources, the owner provides the necessary funds for operating the
business. Decision-making is monopolized by the owner.
Advantages
•Ease and low cost of formation
•Presence of the personal element
•Ownership of all profits and gains
•Freedom and promptness of action
•Tax savings
•Minimum legal requirements
•Secrecy
•Ease of dissolution and liquidation
•High credit standing
Disadvantages
•Lack of continuity
•Unlimited liability of the owner
•Limited capital and size
•Lack of opportunities for employees
•Management difficulties
PARTNERSHIP
A partnership is formed by two or more persons binding themselves together to
contribute money, property or industry to a common fund with the intention of
dividing profits among themselves.
A partnership begins from the time the contract is executed. The articles of
partnership must be registered with the Securities and Exchange Commission (SEC).
A partner maybe:
1.A general partner
2.A limited partner
3.An industrial partner
Advantages
•Definite legal status
•Personal interest in the business
•Retention of valuable employees
•Larger amount of capital
•Combined judgment and managerial skills
Disadvantages
•Managerial difficulties
•Limitation in size
•Lack of continuity
•Frozen investment
•Unlimited liability of one or all the partners
CORPORATION
A corporation is an artificial being having the rights of succession and the
powers, attributes and properties expressly authorized by law or incident to its
existence.
The Corporation Law (Act 1459) which took effect on April 1, 1906 governs the
corporate form of business ownership in the Philippines. It provides the requisites
in forming/organizing corporations, defines their powers, fixes the duties of
directors and officers, prescribes the rights and liabilities of stockholders and
members as well as the conditions under which corporations may do business.
Attributes of a Corporation:
•It is an artificial being
•It is created by operation of law
•It has the right of succession
•It has the powers, attributes, and properties expressly authorized by law or
incident to its existence
Components of a Corporation:
1.Corporators
2.Incorporators
3.Members
4.Stockholders or Shareholders
 UNIT V
PLANNING
Introduction
Planning is prepared for tomorrow today; it is the activity that allows managers to
determine what they want and how to get it: they set goals and decide how to reach
them. Some goals such as personal goals are developed as a result of independent
action. Other goals are established through the planning of others. A superior’s plans
directly affect a subordinate’s plans and planning efforts, as well as some of the means
of approach. Planning, obviously, is not done in a vacuum. Additionally, planning
does have limitations placed on it – of funds and of other available resources.
Planning answers six basic questions in regard to any intended activity – what,
when, where, who, how and how much. The “what” is the goal or goals, the
things or states of being we do not now have. These may be long-term or short-term
goals.
The question of “when” is a question of timing; each long-term goal may have a
series of short-term goals that must be achieved before the long-term goal can be
reached. The “where” issue concerns the place or places where the plans and
planning will reach their conclusion. The question of “who” asks which specific
people will perform specific tasks essential to the plans. The “how” issue involves
methods of short- and long-term goals: what specific steps are to be taken in what
sequence; the answer will outline a path to be taken by personnel involved in the
planning. The question of “how much” is concerned with the expenditure of
resources that are determined to be essential to reach goals.
Objectives:
At the end of the unit, students should be able to:
1.define and describe planning as a management process; and
2.explain the different issues in planning.

Planning, defined.
•The process of setting objectives to be accomplished by an organization
during a future time period and deciding on the methods of attaining
them.
•Choosing an organizational mission and over-all objectives both for the
short-run and long-run.
•Devising divisional, departmental, and even individual objectives based
on organizational objectives.
•Choosing strategies and tactics to achieve those objectives; and
•Deciding on the allocation of resources to the various objectives,
strategies and tactics.
•The process of designing and maintaining an environment in which
individuals work together in groups to accomplish efficiently and
effectively desired objectives. (Zulueta, et al, 1999)
 IMPORTANCE OF PLANNING
Today’s managers operate in a highly dynamic environment
where chance is the rule. Everything is constantly changing. Thus,
if the manager is totally satisfied with the operation of his
organization, some planning will still be necessary to keep it in its
present state. Planning by its nature helps achieve goals, i.e.,
setting objectives, determining the course of action to follow to
achieve objectives.
The essence of planning is best seen when one designs an
environment for effective performance of individuals working
together in groups, the manager’s task is to see to it that everyone
understands the group’s purposes and objectives and the methods
of attaining them.
The essential nature of planning comprises four major features:
(1) its contribution to purpose and objectives; (2) its primacy
among the manager’s tasks; (3) its pervasiveness, and (4) the
efficiency of resulting plans.
 Most managers find planning a very powerful tool, thus planning is
deemed significant because it brings about the following values:

•The achievement of the objective of the organization in the most

efficient and economical manner, thus, maximizing profit.
•The effective utilization of resources (men, machines, materials and
methods) the best use of what is available.
•The use of efficient methods and the development of standards
necessary for accurate control.
•Integration of the activities of the different units in the organization
toward goal-directed actions.
•Understanding environmental constraints, the competition and
critical factors, threats, and opportunities for future decisions.
•The reduction of emergency and unexpected problems.
•Planning helps managers attain confident leadership.
•Planning forces managers to think through issues and alternatives.
•Without planning, an organization may be overwhelmed by
competition or find its position overtaken by new ideas, markets or
products.
THE PLANNING PROCESS

Steps in Over-all/Master Planning:

1.Scan and analyze the environment
2.Prepare a mission statement
3.Set goals and objectives
4.Develop action plans
5.Establish control systems

Basic steps in the planning process for existing business

organizations:
6.Clarify the problem
7.Obtain complete information about the activities involved
8.Analyze and clarify the information
9.Establish planning premises and constraints
10.Determine alternate plans
11.Select a proposed plan
12.Arrange detailed sequence and timing of the proposed plan
13.Evaluate and check proposed plan
On the other hand, a comprehensive planning process involves the following steps:
•Be aware of opportunities. The real starting point for planning is an awareness of the opportunities
and the possible problems in the environment. Setting realistic objectives depends on this awareness.
•Establish objectives. The second step is to establish objectives for the entire organization and its
subordinate work unit. Objectives specify the expected results and indicate the end points to be done.
Objectives are established from year to year. These are also necessary to refer to performance indicators
to see whether the objectives are being accomplished as planned.
•Develop premises. The third step is to develop the critical premises for planning; e.g. forecast,
applicable basic policies, and existing agency plans. They are the assumptions about the environment in
which the plan is to be carried out. Forecasting is very important in premising. What kind of markets will
there be? What are the prices? What are the long-term trends?
•Determine alternatives. The fourth step is to look for and examine critically alternative courses of
action, especially those that are nor apparently seen. The common problem is not to find alternative but
to reduce the number of alternatives so that the most promising one may be scrutinized very well.
•Evaluate alternative courses of action. When the alternative courses have been sought and their
strong and weak points have been examined, the next step is to evaluate the alternatives by weighing them
in terms of premises and goals. There are so many alternative courses of action available in most
situations and many variables and limitations to be considered that the process of evaluation may be
difficult.
•Select a course of action. This is the crucial point when the plan is to be adopted. This, in essence, is
the importance of decision-making.
•Implement the plan. After the decision has been made on the best option, the selected alternative is
now programmed for implementation. It may be a project plan matched with a budget plan.
•Evaluation. Once the plan is implemented, it may even undergo some revisions and other
adjustments. Close monitoring and control are extremely necessary so that proper evaluation can be
made to see the gaps between plans and execution.
 TYPES OF PLANS
•Strategic Plans. In business enterprise, a strategic plan is one concerned with the
entire operation. It requires multilevel involvement. Top management develops the
directional objectives for the entire organization, then progressively lower level of
management develop compatible plans to achieve them. As the planning process moves
down the organization, the topics of the objectives and measure of success become more
specific.
•Tactical Plans. A tactical plan is concerned with what the lower level units within
each division must do, how they must do it, and who will have the responsibilities for doing
it. Tactics are the means needed to achieve a strategy, to activate it and make it work. An
example of this is to achieve a college degree; your tactical plans to achieve the strategic plan
will include successfully completing a series of courses that will earn that degree.

Tactical plans are concerned with shorter time frames and narrower scopes than strategic
plans; they usually span one year or less and represent the short-term efforts required to
reach long-term goals, one after another, until the strategic objective is reached

•Operating Plans. An operating plan is one that a manager uses to accomplish her or
his job responsibilities. It can be a single-use plan or an ongoing plan.
Single-use plans apply to activities that do not recur or repeat. Once the activity is
accomplished, the plan is no longer needed. An example of a single-use plan is one to deal
with the movement of furniture from one location to another. Once the move is completed,
the plans for it are fulfilled. The goal is achieved and the plans have little or no value in the
future.
BENEFITS AND COST OF PLANNING

•Planning helps us avoid errors, waste and delays, and it aids or efforts at
becoming both effective and efficient.
•Planning provides direction and a common sense of purpose for the
organization.
•It helps to determine the operations and how those operations will affect
the organization before commitments are made.
•Planning provides the guidelines for directing the employees and for
what is communicated to them.
•Planning establishes the foundations for the control function because it
specifies what is to be accomplished and provides a standard for
measuring progress.
•Planning allow managers the opportunity to adjust the organization to
the environment instead of merely to react to it.
WHO SHOULD PLAN?
All managers engage in planning their activities and the activities of
others. They all plan basically the same way, but the kinds of plan they
develop and the amount of time they spend on planning are different.

•TOP LEVEL MANAGERS are concerned with longer time periods and
with plans for larger organizational units as divisions. Their planning
includes developing the mission for the organization, organizational
objectives and major policy areas. Top level managers concentrate on the
questions of “what” and “how much”.

•MIDDLE LEVEL MANAGERS are responsible on transplanting the

broad objectives of top level management for their work units. These level
managers are concerned with the “where” and “when” of plans.

•FIRST LEVEL MANAGERS are involved in the scheduling employees,

deciding what work will be done, and developing procedure to reach these
goals. These managers concentrate on the “who” and “how” of planning.
 UNIT VI
ORGANIZING
Introduction

Once plan have been completed, it is necessary to organize all

required resources, primarily people, so that the needed tasks can be
successfully accomplished. Organizing tasks clarifies individual
performance expectations and focuses effort on the task needs to
accomplish the company’s objectives. Good organizational skills are
necessary for managers to accomplish objectives by bringing together
people and resources productively. Organizing defines authority, divides
work and allocates resources efficiently.
Organizing helps managers bring order out of chaos, removes conflict
between people over work or responsibility and establishes an
environment suited for teamwork. As essential aspect of organizing is to
develop a structure for a company that coincides with its technology and
work environment.
Objectives:

At the end of the unit, students should be able to:

1.describing organizing as a management process;
2.illustrate the different organizational structures and
principles; and
3.explain the different issues in organizing.
Organizing, defined.

The term “organizing” came from the word “organism” which means
“to create a structure with fully integrated parts that are related to each
other and is governed by their relationships to the whole. The word
“organization” refers to “a structure or a network of relationships among
individuals interacting with one another”.
Therefore:
•Organizing requires managers to establish patterns of relationships
(structures, hierarchies) among people to accomplish a common objective.
•It is concerned on how work flows in the organization through
supervision.
•It involves assigning responsibilities through division of labor and
coordination.
•It requires established authority structure that clearly defines decision-
making powers.
•It requires placement of the right people to the right positions.
 THE ORGANIZING PROCESS
The following are the steps in the organizing process:
1.Establishing the objectives of the organization.
2.Formulating objectives, policies and plans.
3.Identifying the activities necessary to accomplish these.
4.Grouping these activities in the light of human and material resources
available and under the circumstances, the best way of using them
5.Delegation to the head of each group the authority necessary to perform the
activities.
6.Tying the groups together horizontally and vertically, through authority
relationships and information flows.
FORMAL HIERARCHIES
The formal hierarchy reflects the system of superior subordinate relations
(chain of command) in the organization. This however, is not its only function.
The hierarchy also represents the formal channel of communication in the
organization. This means that directives from the top are generally transmitted to
the bottom through the formal hierarchy and vise versa. To do otherwise would
constitute “bypassing” which, could cause confusion and undermine the superior
subordinate structure.
 SPAN OF CONTROL

Span of control is also called Span of Management, refers to how

many subordinates a manager can effectively and efficiently supervise.
There is no correct number for the span of control, it is determined for
each manager based on the interplay of the complexity and variety of the
subordinate’s work, the ability and training of the subordinates, the ability
of the manager, and the company philosophy for centralization or
decentralization of decision making
As a general rule, the more complex a subordinate’s job, the fewer
should be the manager’s number of subordinates. Another predictable
guide is that the more routine the work of subordinates, the greater the
number of subordinates that can be effectively directed and controlled.
Because of these general rules, organizations always seem to have narrow
spans at their tops and wider spans at lower levels. The higher one goes
up in the organization’s hierarchy, the fewer will be his or her
subordinates.
BASIS FOR GROUPING DIFFERENT
ACTIVITIES IN AN ORGANIZATION:
1. Narrow Span of Control

President

Vice President Vice-President Vice-President

Marketing Production Personnel
2. Wide Span of Control

Production
Supervisor

Employee Employee Employee Employee Employee Employee Employee

1 1
2 3 4 5 6 7
 ORGANIZATIONAL STRUCTURES

Structure defines the formal relationship and use of people in organizations.

Different jobs are required to accomplish all of organization’s activities. There are
managers and employees, accountants and assemblers. These people have to be
related in some structural way so that their work can be effectively coordinated.
These relationships create complex problems of cooperation, negotiation and
decision-making.
Organizational structures refers to the networked arrangement of positions and
departments through which the essential task of an enterprise is subdivided and
grouped linkages that carries out business strategies to create the systems and
decision centers.
 UNIT VII
STAFFING

Introduction
An organization structure is composed of various positions
designed to accomplish systems, goals and objectives. This proves
that staffing is one of the most important functions of management.

A variety of managerial activities is essential to keep those

positions staffed with personnel who have the knowledge, the skills,
and the motivation to perform the roles effectively. It is becoming
clear that considerate confusion emerges in an organization when
the activities are performed independently. What is needed is an
integrated system designed to deal with the total array of personnel
activities. These include human resources planning, recruitment,
selecting, induction, training and development, the intent of which
is to attract in the organization personnel conceptualized in the
design of the various positions to be filled.
 Staffing is the process of supplying the organization with
the needed personnel to achieve the objectives for which it
has been established. Many scholars and practitioners in the
field of management believe that if an organization would be
very careful in its staffing efforts, management would be less
problematic, and more fulfilling.

People are vital components for the effective operation of

the organization; as a matter of fact, managers often say that
people are the most important assets. The human assets are
never shown on the balance sheet as distinct category. The
importance of staffing as a tool of management cannot be
over-emphasized because it is a crucial function of managers,
one that will determine the success or failure of the
organization.
 Objectives:
At the end of the unit, students should be able to:
1.describe staffing as a management function; and
2.identify the different issues in staffing.

Staffing, defined.
“Staffing refers to the task of filling position in the
organization with the most qualified people available”. This
managerial function looks into the positions in the
organizational structure to be done by identifying work force
requirements. Careful staffing efforts leads to less
problematic and more fulfilling functions of motivating,
leading and controlling.
 RECRUITMENT
Recruitment is a human resource management practice
designed to locate and attract job applicants for particular
positions.

A recruitment program has five goals:

1.Achieve cost efficiency.
2.Attract highly qualified candidates.
3.Help ensure that individuals who are hired will stay in
the company.
4.Assist a company’s efforts to comply with non-
discrimination laws.
5.Help a company create a more culturally diverse
workforce.
 JOB ANALYSIS
Job analysis is the process of determining by observation and study and
reporting pertinent information about a specific job. It includes the
identification of the tasks performed; the machines and utilized; the materials,
products, services involved; and the training, skills, knowledge, and personal
traits required of the worker. Simply stated, job analysis is a procedure for
obtaining pertinent job information. The analysis specifies what the worker
does, the work conditions, and the worker qualifications necessary to perform
the job successfully.
JOB DESCRIPTION
Job description is a short (one or two-page) written summary of job
analysis findings. The particular information included varies depending on
company preference and the intended use of the instrument. A typical job
description contains the following sections: job identification, job summary,
essential functions, and job specifications, that is, worker requirements.
JOB SPECIFICATION
Job specification is a statement of qualifications and traits required of
the worker so that he may perform the job satisfactorily. It describes and
specifies the type of employee which the job calls for in terms of skills,
experience, training and other qualifications.
 Selection is a human resource management practice in which companies assess
and choose from among job candidates. To be effective, selection process must be
technically sound (i.e., accurate) and legal. During the selection process, a firm decides
which of the recruited candidates will be offered the position.

To obtain a good selection, the information about the applicant should be

valid and reliable. There are certain steps that should be observed in the selection
process:
1.The selection criteria should be established on the basis of current and future job
requirements. The criteria should include education, knowledge, skills and experience.
2.The candidate is requested to fill out an application form for record purposes.
3.A screening interview is conducted to identify the most qualified candidate for
the position.
4.Additional information may be obtained by testing the candidate’s qualifications
for the position.
5.A formal interview is conducted by the manager or his authorized
representative.
6.The information given by the candidate is checked and verified.
7.The physical examination is conducted to determine the physical fitness of the
candidate.
8.On the basis of the results of the previous steps contained in the selection
process, the candidate is either offered the job or informed that he has not been
selected for the position.
The selection process includes the following:

1.Interview. Before an employee is hired by the

organization, an interview by the Human Resource
Development Officer is conducted. Various interviews may
take place to obtain the needed information about the
educational qualification, training, and experience of the
applicant to make a final judgment. During the interview
portion, there are certain questions the interviewers may ask.

The interview is just one aspect of the selection process. It

should be supplemented by data and other information from
the application form and the results of various tests.
Reference checks and letters of recommendation may be
necessary to verify the information given by the applicant.
For a reference to be useful, the person must know very well
and give a truthful and complete assessment of the applicant.
1.Test. The primary aim of testing is to obtain information about
the applicant that will help predict his capability for the job. The
most commonly used tests are:

•Intelligence tests. These are tests designed to measure the

mental capacity and to test memory, speed of thought, and ability to
see relationships in complex problem situations.

•Proficiency and aptitude test. These tests are conducted to

discover certain interests, existing skills, and potential for
acquiring skills.

•Vocational tests. These tests are designed to show a candidate’s

most suitable occupation in which his interests match the interests
of people working in those areas.

•Personality tests. These are tests designed to reveal the

candidate’s personal characteristics and the way he may interact
with others.
 Tests have a number of limitations. There are competent
industrial psychologists who agree that tests may not be
accurate enough to be used as the sole measure of candidates’
personal abilities and characteristics but must be interpreted
in the light of each individual’s entire history. It has been
observed that one of the major limitations is uncertainty
about whether tests are really applicable.
 ORIENTATION
The selection of the best applicants for the job is only
the first step in building an effective management team in the
organization. The first weeks can be crucial for integrating
the new employees into the enterprise. Orientation is, of
course, necessary for new employees to be acquainted with
the new environment – the functions, the tasks and the
people.

For a large organization, a formal orientation program is

held. This explains the features of the organization – its
philosophy, vision and mission, history, products and
services, general policies, institutional culture, organization
and other regulations. Although these may be described in
detail in a brochure form, the orientation meeting gives new
employees an opportunity to ask questions.
 Orientation refers to “the assistance given to the newly hired
employee in adjusting to the new work environment which
encompasses the people around him, the facilities of the
organization, the programs and services, and technology used in
the production of goods and delivery of services.”

Orientation is the induction of the new employee to his job.

This may include introduction of the policies, rules and regulations
of the company to the new employee.

There is another important aspect of orientation which is

the socialization process of new employees with the heads of
different divisions and departments. Organizational socialization
provides the new employees an opportunity to acquire work skills
and abilities, appropriate role behavior, and adjustments to the
various and values of the work group.
 PERFORMANCE APPRAISAL

Performance appraisal is one of the major keys to effective

management. It is the basis of determining who should be
promoted to higher positions. It is also important to
management development; because, if an employee’s
strengths and weaknesses are not established, it is quite
difficult to determine whether development efforts of the
organization are aimed in the right direction.

Performance appraisal is “the assessment of

employees’ job performance levels”. Performance appraisals
should accurately assess the quality of employee job
performance. It is the systematic evaluation of individuals
with respect to their performance on the job and their
potential for development.
Effective performance appraisal should be focused on the
legitimate desire of employees for progress in their
professions. One way of integrating organizational demands
and individual needs is through career management, which
can be part of the performance appraisal. Appraisals serve
different organizational and individual needs.

There is a need to appraise the performance of employees

from time to time. The systematic performance appraisal is
called “merit rating” or “employee rating” and this has been
used to help supervisors evaluate the work of every employee.
These appraisals have been used to select candidates for
promotion.
 TRAINING AND DEVELOPMENT
Training and development are planned learning experiences
that teach workers how to perform their current or future jobs
effectively. Training and development practices are designed to
improve organizational performance by enhancing the knowledge
and skills of employees.

•Training – planned learning experiences that teach workers

how to effectively perform their current jobs. It is the organized
procedure by which people learn knowledge and/or skills for a
definite purpose. The objective of training is to achieve a change in
the behavior of those trained.

•Development – A planned learning experience that prepare

workers to effectively perform possible future jobs.
 Training provides instruction in any organizational setting and was
found to have an important role in enhancing the productivity level of
employees. Training has been a common term in any organization.
Where a new employee is hired, he needs training. When an employee’s
performance is not satisfactory based on the organization’s standard, he
needs training.
Training and development is a program designed by many organizations
purportedly premised to improve the present and the future performance.
This is done through a variety of teaching and learning approaches,
methodologies and techniques primarily intended to influence the trainee
towards adopting a desired level and kind of knowledge, skills, desirable
habits and attitudes to help the trainee translate all of what is learned into
a practice or use of productive work and harmonious relationships.
Training provides the employee with a systematic way of doing his job and
preparing for future assignments that may require higher responsibilities
within the organization.
Training and development programs may be in the form of seminars,
workshops and other professional conferences, the emphasis of which is
to help the employees become better persons and productive members of
the organization.
 TYPES OF TRAINING
To meet the needs of new workers, HR departments
typically offer three types of training such as:

1.Technical training – individuals hired or fill entry-

level jobs are not always expected to possess needed technical
knowledge and skills because the employer assumes training
responsibilities.

2.Orientation training – a training designed to inform

new employees about their jobs, the company, its policies and
procedures

3.Literacy training – often provides individuals with

abilities they will need to benefit from more advanced
training, such as learning how to operate a new piece of
technical equipment.
 In increasing the competence of current workers, they may
also require certain types of training or retraining classified as
remedial, change-related and developmental instruction.

1.Remedial training – Training designed to correct

deficiencies in employee skill or knowledge levels or to
improve employee attitudes.

2.Change-related training – a training that enables

employee to keep up-to-date with various types of changes
dealing with technological advances, new laws or procedures,
or a change in the organization’s strategic plan.

3.Developmental instruction – this provides

employees with the appropriate skills needed for higher level
positions to which they may eventually be promoted.
THE TRAINING AND DEVELOPMENT PROCESS
A systematic arrangement of the parts of a training and
development program are the following:

•Analysis of training needs. At the outset, a committee

composed of supervisors and other members of the
enterprise will identify the problems that are felt and what
alternative solutions may be recommended. What changes in
the employee’s knowledge, skills, attitudes and habits should
take place to arrive at desirable results? Are the intended
participants interested and trainable in joining the training
program? How do they perform at present, and how should
they perform after training? These questions should be
answered clearly in the next step of the training program.
•Formulation of training design. When the needs have been
identified, a plan can be drafted on how the training program should be
conducted. The design should specify the objectives of the training
program in behavioral terms; that is, defining the specific set of behaviors
that the participants should acquire and manifest after completing the
course.

•Materials development. This includes the required training

materials; e.g., handouts, reading materials, worksheets, audio-visual
materials like films, slides and video tapes.

•Venue, food, participants and resource speakers. These are the

four concerns of the training program that also require extra care in the
preparation an implementation. The venue refers to the place where the
training program will be held. Enough time should be allotted to reserve
the place and to arrange the room layout, decorations and streamers.
Food must suit the budget. The participants and the resource speakers
must be properly invited and be given ample time to prepare themselves
for the training. If the venue is out of the organization’s premises or out of
town, transportation should be properly arranged.
•Formulation of training design. When the needs have been
identified, a plan can be drafted on how the training program should be
conducted. The design should specify the objectives of the training
program in behavioral terms; that is, defining the specific set of behaviors
that the participants should acquire and manifest after completing the
course.

•Materials development. This includes the required training

materials; e.g., handouts, reading materials, worksheets, audio-visual
materials like films, slides and video tapes.

•Venue, food, participants and resource speakers. These are the

four concerns of the training program that also require extra care in the
preparation an implementation. The venue refers to the place where the
training program will be held. Enough time should be allotted to reserve
the place and to arrange the room layout, decorations and streamers.
Food must suit the budget. The participants and the resource speakers
must be properly invited and be given ample time to prepare themselves
for the training. If the venue is out of the organization’s premises or out of
town, transportation should be properly arranged.
 • Documentation. The whole proceedings of the training
program may be documented in writing in photographs and
in the media. The importance of documentation is to
determine properly what was accomplished and how many
were benefited; what subject areas of concern were covered
and how they were delivered; how many resources had been
put to use compared to the budget prepared for such purpose;
and finally, what the recommendations to the management
will be incorporated into the programs report.

The training and development program is ultimately

premised on the genuine interests of management in helping
people in the organization to become productive members.
THE STAFFING PROCESS

•Human Resource Planning

•Recruitment
•Selection
•Induction and Orientation
•Training and Development
•Performance Appraisal
•Rewards, Promotion, Transfer, Demotion
•Separation
ROLE OF THE PERSONNEL DEPARTMENT

The personnel (or industrial relations) department

operates in an auxiliary, advisory, or facilitative relationship
to other departments in the organization. Any staff unit,
whether it be personnel or otherwise, exists to help the line or
operating departments do their work more effectively.
The personnel department generally performs the following roles:
•Policy Initiation and Formulation – the executive in charge of the
personnel department (who may be called the personnel director, the
industrial relations director, or the vice-president in charge of personnel)
is the one individual most actively involved in policy creation.

•Advice – a major portion of the activities of those engaged in staff

personnel work is in the nature of counsel and advice to line managers.
The directors and their staff are expected to be fully familiar with
personnel policy, the labor agreement, past practice, and the needs and
welfare of both the company and the employees in order to develop a
sound solution.

•Service – the service responsibilities of the personnel department are

apparent when one examines such things as the employment, training,
and benefits functions.

•Control – the personnel department carries out important control

functions. It monitors the performance of line departments and other
staff departments to ensure that they conform to establish personnel
policy, procedures and practices.
REASONS FOR PROPER SELECTION OF
EMPLOYEES

1.An incompetent worker is a liability to the company.

2.Personnel requirements vary from job to job.

3.Labor laws protect employees making it difficult to the

incompetent and problem employees.

4.Individuals have different interests, goals and objectives in

life.
 UNIT VIII
REWARDS AND COMPENSATION SYSTEM

Introduction
Money is any circulating medium that has a social value. Money is
important to employees for a number of reasons. It is very valuable for the
goods and services that it will purchase to make one comfortable. Money has
status value when it is being received and when it is being spent. It is an
indication of one employee’s status relative to that of other employees.
It is a fact that no matter how closely management attaches pay to
performance, pay is still something that originates outside the job and is useful
only away from the job. Sometimes it tends to be less immediately satisfying.
While it may be true, to a certain extent, that the personal satisfaction of a job
well done is a powerful motivator for many people, economic rewards, by
contrast, cannot provide all the necessary rewards for a psychologically healthy
individual. The important task of management is to integrate extrinsic and
intrinsic rewards successfully.
 Objectives:
At the end of the unit, students should be able to describe the system
of inducements, that is, the reward and compensation systems provided
by the firm to obtain the human resources that they need.

Rewards, defined.
Rewards is defined as a work outcome of positive value to the
individual. It is a means of paying attention to people and their work.
This includes:

1.Pay
2.Praise
3.Promotion
4.Special work assignment
5.Recognition
6.Time-off
7.Training opportunities
Two Types of Rewards

•Intrinsic Rewards – include worker’s involvement in

decision-making, greater job freedom and discretion, more
responsibility, interesting and challenging work,
opportunities for personal growth and diversity of activities.

•Extrinsic Rewards – these are administered by managers

or supervision (i.e., job security, working conditions and
fringe benefits), these are areas managers can influence to
satisfy physiological and safety needs. Money us essentially
an extrinsic reward. It is easily administered in behavior
modification programs, although it also has some limitations
of extrinsic benefits.
Compensation
Compensation is defined as the total rate of pay or award
given to employees for performing work or providing
services. It is adequate and equitable remuneration of
personnel for their contribution to organization objectives.

It is the equivalent in any form that is given to the

individual for his work. This recompense is also called job
reward.
 Purpose of Rewards and Compensation System
An organization pays and reward systems served several
purposes. When properly designed and implemented rewards
and compensation system may:
1.Attract people to organization.
2.Help motivate them to exert maximum effort in their
work.
3.Signify for them the value of their contribution to
organizational performances.

With good wages accompanied by standards of

accountability, a company is in position to:
4.Attract better employees, pay them better than average
wages and expect more from them.
5.Motivate people to produce because they want to produce.
6.Insist on high productivity and refuse to tolerate anything
but good overall quality and performance.
Direct Monetary Compensation
Employees should be compensated fairly for the services
that they render to the firm. Compensation is remuneration
or reward given to an employee for the performance of a
specific job in the form of cash and non-cash benefits. Cash
compensation are usually in the form of salary, piece work
pay, hourly rate, bonus, share in the profit. While non-cash
compensation are fringe benefits, tuition-assistance plans,
vacation time, retirement pension contributions, etc. Total
compensation earned by employees may consist of wages,
salaries, fringe benefits and a form of profit-sharing.
 Incentive Plans

A plan has to be evolved in order to put the compensation

administration program on a secure and stable footing. The
following steps maybe followed in its formulation:

1.Determine a clear-cut philosophy for the program.

2.Make a study and analysis of each job including job
description and job specification.
3.Determine the money worth of each job by doing job
evaluation.
4.Conduct a local, national and, if possible, an
international survey of pay policies.
5.Determine supply and demand of labor.
6.Formulate overall compensation policies.
Developing an Incentive Plan
In developing an incentive plan, the following should be considered:
1.The Supervisor’s Role – The supervisors must understand the plan
thoroughly. He must know how it operates, as he is the most concerned in
its implementations. He must be able to explain how the plan works and
defend the standard arrived. He must assume the responsibility with
respect to the quality of production since without proper supervision;
employees may sacrifice the quality of work for volume of output.
2.Training – Provisions should be made for the training of employees
who will be placed under incentive wage plan. The training should be
given until the employee has acquired the skin to meet the minimum
requirements or standards level.
3.Accurate Studies of Past and Present Performance – Employee
confidence in the incentive wage plan is a must for its success. One way to
establish this confidence is by accurate studies of present and past
performance in order to arrive at the right rate. The success or failure of
the plan depend upon the level of performance to be regarded as standard
or minimum requirement if the standard of production is too high, the
employees become discourage if it is too low, the labor per unit becomes
too high.
4. The Plan must be simple – Whatever explanation is made of the
plan, if it is too complicated and difficult to understand, the plan is not
likely to succeed because it would be difficult to convince the employees of
its benefits.
5.Failure of Incentive Plans – There have been cases of failure of
incentive systems. Some of these failures are due to management and to
resistance or lack of confidence of the union or informal groups in the
system. Others are due to failure in establishing reasonable production
standards and accuracy in determining time standards.
6. Selecting the type of incentive plan – The choice of the
appropriate method of payment is determined by several factors, such as
traditional considerations in the area or industry, the practicality of the
measurement of production, the simplicity and acceptability of the plan,
and the collective bargaining agreement.
7. Selecting the incentive plan – The plan need the cooperation of all
employees. Supervisor would like to know how the plan operates, as they
are the most concerned in its implementation. It is their task to explain to
the workers how it works. If they do not understand, they have no fear
that they may not get what is justly due them. Their fear will create
distrust between management and employees
 Job Evaluation
Definition of terms:
•Job – a collection of tasks performed in support of
organizational objectives
•Job Evaluation – is the costing of each job attaching
to its proper money value. It is also called job rating or job
valuation.

Job evaluation serves as a tool for compensation system.

The job rating plan provides information and clues that can
be used as a framework for the entire organization’s
compensation administration program which should be
reviewed periodically. Fringe benefits and other schemes
could be added if the basic worth of jobs may not constitute
adequate motivation or incentive to employees. Job
evaluation assists management in determining an equitable
pay system.
 Benefits and Services

Firms vary in their programs for employee benefits and

services. The scope and number provided depend upon such
factors as the firms, concern for the employee’s welfare, its
financial capacity, the size, location, and type of industry, the
provisions of the collective bargaining agreement, if any; and
existing laws and government regulations.

Employee benefits are a supplemental compensation,

which employees receive, aside from their direct wages on
incentives pay – those benefits represent the labor cost over
and above straight time earning.
Five Major Categories of Employee Benefits and Services

1.Economic and Financial Benefits – this includes cash incentives

like bonus, merit pay, 13th month pay and the like

2.Recreational, Social and Athletic Services – to help the

employees get the most out of their leisure hours, most employers now
provide recreational facilities

3.Health and Medical Services – this includes Phil health, SSS and
Medicare

4.Professional Services – includes employee educational and

vocational guidance, employee counseling, legal and tax aid, are rendered
to the employees by the professional staff

5.Services for Employee’s Family Welfare and Convenience –

some companies provide certain services for the welfare and convenience
of the families of their employees, such as health and medical services,
commissary and housing.
 Benefits, its types and manner of administration

Benefits include the optional fringes, the form, content

and administration of which should be seriously considered.
For instance, the cafeteria style compensation which allows
the workers to select (turo-turo or pointing style) the type of
reward has been preferred to that which is offered without
considering whether they need it. While older workers prefer
security plans like retirement and pension programs,
younger employees need educational reimbursement
programs or direct take home pay. Single workers opt for
socio-cultural-recreational activities; the married ones would
rather have medical plans.
Individual and Group Benefits

Benefits which reward everybody in the system like ten

percent across-the-board salary increase, Christmas bonus,
13th-month pay do not discriminate good from bad
performance. They are maintenance factors; they are not
motivators. In the strictest sense, only reward based on
individual performance can be called merit pay. Individual
reward should take precedence over group reward although
the latter, being supportive could be a group morale booster.
In economies where the need revolves strongly around
economic struggle and where rewards come sparingly, group
reward is a very welcome support.
 UNIT X
LEADERSHIP
Introduction

Management people not only manage; they also lead. As

leaders, they take initiative and engage their followers in
interactions toward the achievement of certain goals. Over a
period of time, leaders and followers could transform each
other toward a higher level of expectations and achievement.
The leadership process thereby provides an avenue for growth
not only for the leader but for the followers as well. According
to John P. Kotter, “Management produces orderly results.
Leadership creates useful change. You need both to be
effective.”
It does not mean only willingness to work but also willingness to
work with zeal and confidence. Leadership is the influential
increment over and above mechanical compliance with the routine
directives of the organization. This means that an organizational
role may encompass different objectives, but become non-personal
so that in order to become effective, a personal touch must be in it.
Leadership and motivation are closely interrelated. By
understanding motivation, one can appreciate better what people
want and why they act as they do.

For n organization or group to exist, to survive and to function,

effective leadership plays a crucial role. Although leadership is
highly related to and vital to management, leadership and
management are not similar concepts. One can serve as an effective
manager but lacks skill of a leader or the opposite. Today, many
organizations are putting a heavy premium on managers who also
possess leadership skills.
Objectives:

At the end of the unit, students should be able to:

1.define leadership as a management function; and
2.describe theories of leadership.

Leadership, defined.
Leadership is a very important aspect of management which has
various meanings to different authors. It is defined as:

•A state where the person or a group of persons is able to influence

others to agree on a goal and work towards it .(Martires, 2002)
•The process of influencing and supporting others to work
enthusiastically toward achieving objectives. (Flippo)
•The catalyst that transforms potential into reality. (Plunkett and
Attner)
•The art or process of influencing peoples so that they will strive
willingly and enthusiastically toward the achievement of group
goals. (Zulueta, et al)
 With these, we can also define:
•Leader – is the individual in the group given the task of
directing and coordinating relevant group activities or who, in the
absence of designated leader, carries the primary responsibility of
performing these functions in the group.
•Leading – a central function of managing in an organization,
involves influencing the behavior of other people.

Leadership Style: Definition

Leadership style is the total pattern of explicit and implicit
leaders’ actions as seen by employees. It represents a consistent
combination of philosophy, skills, traits and attitudes that are
exhibited in a person’s behavior.
Each style also reflects a manager’s beliefs about a subordinate’s
capabilities. Employee perception of leadership style is all that
really matters to them. Employees do not respond solely to what
leaders think and do but to what they perceive leaders are.
Leadership is truly in the eyes of the beholders.
There are several theories in leadership behavior and styles.
The two major styles of leadership are:

1.Task-oriented leadership – the leader gains satisfaction

from seeing the task performed

2.People-oriented leadership – the leaders looks toward

achieving good interpersonal relations by way of attaining a
position of personal prominence in the organization.

Leadership performance depends as much on the

organization as it depends on the leader’s own attributes. A
leader can be effective in one situation and ineffective in
another.
THEORIES OF LEADERSHIP
The essence of leadership is followership (Treedy Heller, 1982).
It is the willingness of people to follow that makes a person a
leader. Leaders must exercise all the functions of their role to
combine human and material resources to achieve objectives.

1.Trait Theory (or Great Man theory). This theory suggests

that leadership ability is innate and is determined by certain
individual personality traits, social traits and significant
characteristics. This theory follows the cliché “Like father like son”.
However, this theory fell in popularity after a study of world
leaders showed that many of them were far from being tall or good
looking nor did they have characteristics taken after their family
members. A leader must possess the charisma to effective
leadership. He motivates followers to perform better.
2. Environmental Theory. While the trait theory states that
leadership traits are born, the environmental concept posits that
leadership skills are acquired. Whatever leadership potential one is
born with, gets only dissipated when it is not given the chance to
flourish and develop. Even if an individual were not born into a
family of leaders, or may not possess the physical attributes of a
leader, the proper environment is a strong force that spots,
identifies, supports and develops leadership potential. A person is
trained and developed as a leader through seminars, travels, actual
immersion in leadership roles like being assigned or elected head of
an organization. The truism, “Leaders are made, not born”, may
apply.
3. Behavioral Theory. The behavioral approach postulates that
leaders adopt a particular leadership style which exerts tremendous
impact over individual and group behavior. The four types of leader
are:

•Dictatorial leader – one with absolute authority and utilizes

threats and punishments to induce compliance.
•Authoritarian leader – one who claims covenant sourced from
authority to exact obedience
•Democratic or Participative Leader – one who involves
subordinates in considering organizational matters giving them
guidance in their work problems and goal achievement
•Laissez-faire or Free-rein leader – one who offers information to
the members but shows little involvement and participation is
group activities.
 4.Situational or Contingency theory. The situation
calls for the emergence of a leader. During an accident or
during wartime, a leader emerges to handle the critical
situation. President Corazon Aquino is a very apt example of a
political leader who was “pushed to save the situation”.

Fred E. Fidler proposed the contingency model and stated

that “the most effective leadership style depended on the
nature of the situation”.

This theory proposes that a given pattern of leadership

behavior will lead to effective group performance in some
circumstances and ineffective, in some cases.
5. The Theory of Shared Leadership. Responsibility for the
success of the group rests upon all the members, not only upon the
designated leader. Leadership functions can be performed by any
member of a group, as well as by the designated leader for the group
to achieve its goal.

6. Personal-Environment Theory. This theory maintains that

characteristics of a leader, the followers and the situations that
interact determine who will be the leader.

7. Exchange Theory. This theory suggests that group interaction

represents an exchange process in which leadership in conferred
upon the members for their effort on behalf of the group.
8. Humanistic Theory. This theory is based on the
hypothesis that groups will be more effective and members
will be better satisfied when the leader allows freedom to
satisfy their needs for achievement and self-actualization.
9. Exceptional Theory. This theory maintains that
leadership is most likely to be achieved by the member who
succeeds in initiating and reinforcing the expectations that he
will maintain the role structure a d goal direction of the
group.
10. Path-Goal Theory. This theory suggests that certain
patterns of leader behavior facilitate the clarification of the
group goals while other patterns of behavior stimulate
effective instruments and responses on the follower group.
 UNIT XI
CONTROLLING

Introduction

Unlike in the past, control today is exercised over every

aspect of an organization’s functions from top management all
the way down to rank and file to ensure that efforts produced
from all levels are commensurate with those required to
achieve the objectives of the organization.

Through control process, managers ensure that the actual

actions and functions of the organization conform to and
further the organization’s planned goals. Specific control
processes vary in different organizations, but all involve setting
standards, measuring achievement, and taking corrective
action.
Controlling is the managerial function of measuring and
correcting performance in order to make sure that
organizational objectives and plans that were deliberately
devised to be attained are being accomplished. Planning and
controlling are closely related that some writers and
management practitioners think that their functions are also
closely related. Planning and controlling is viewed as a blade
of a pair of scissors; the scissors cannot function unless there
are two blades. Objectives and plans are very important and
control is not possible, because performance has to be
measured against some established criteria.

Controlling, as a management tool, is the function of every

manager from president to supervisor. While the range of
control varies among managers, those at all levels have the
responsibility for the effective implementation of plans.
Objectives:

At the end of the unit, students should be able to:

1.define control and illustrate the control process;

2.describe control tools and techniques and their
usefulness to management; and
3.describe the different issues in control
 Control, defined.

A management process in which:

1.the actual performance is compared with the planned performance,
2.difference between the two is measured,
3.causes contributing to the difference are identified, and
4.corrective action is taken to eliminate or minimize the difference

Controlling, definition.

Controlling refers to the managerial activity for ensuring the

achievement of organizational objectives. Controlling is checking to
determine whether plans are being observed and suitable progress toward
the objectives is being made and acting if necessary to correct deviations.
Personal Goals
Goal setting is a powerful process for thinking about your
ideal future, and for motivating yourself to turn this vision of
the future into reality.
The process of setting goals helps you choose where you
want to go in life. By knowing precisely what you want achieve,
you know where you have to concentrate your efforts. You will
also quickly spot the distractions that would otherwise lure you
from your course.
More than this, properly-set goals can be incredibly
motivating, and as you get into the habit of setting and
achieving goals, you’ll find that your self-confidence builds
fast.
People join an organization because they believe that by doing
so they can achieve one or more personal goals. Once they
have joined, their decision to contribute to the work of the
organization is based on their perception that this will help
them achieve their personal goals.

An individual personal goal can be expressed as needs.

Some of these needs are material and is satisfied by the money
earned on the job. Other needs are psychological. People
need to have their abilities and achievements recognized:
1.They need social acceptance as members of a group.
2.They need to feel a sense of personal growth.
3.They need to feel secured.
4.They need to be able to exercise discretion.
5.They need to feel good about themselves.
 Organizational Goals
Since an organization does not have a mind of its own, it
literally has goals. It is actually the goals of the board of
trustees and senior management. Senior management wants
to attain these goals, but the organization’s goals are not
always congruent with the personal goals of operating
managers and participants.
Because participants tend to act in their self interest, the
achievement of organizational goals may be frustrated.
Managers can easily assign individual goals to one or
several employees and link them to corporate goals.
Employees can also easily link individual goals to corporate
goals and track their status year-round. Employees clearly
understand how their productivity contributes directly to the
success of their team, business unit and the organization.
 HR leaders, managers, and senior leaders up to
the CEO, also have continuous “line-of-sight”, up or
down the reporting chain, on how each individual is
supporting and working towards divisional and
organizational goals.
Leaders are equipped with powerful goal
management tool for ensuring each employee is
working on the “right things” to move the
organization forward.
 Control Process Basic Activities
Control is a process of assuring management that organization plans,
programs, and specific tasks are carried out effectively and efficiently.
Basically, the control process involves the following steps:

1.Establishing standards – It is the responsibility to set performance

standards such as specific objectives against which results can be
compared.
2.Measuring Performance – A unit of measure must be established
and performance must be observed.
3.Comparing Measured Performance to Standards – A standard
is the level of activity established to serve as a model for evaluating
performance.
4.Taking Corrective Actions – Correcting deviations or straightening
up what is crooked is the last step in the initial cycle of the control process.
To take corrective action is to bring performance up to standard.
Management Control versus Operating Control

•Management control is a systematic effort to set

performance to standards with planning objectives, to design
information, feedback systems, to compare actual performance
with these predetermined standards, to determine whether
there are any actions required assure that all corporate
resources are being used in the most effective and efficient way
possible in achieving corporate objectives.

•Operating control assesses how efficiently and effectively

an organization’s transformation process creates goods and
services. Methods of transformation controls include total
quality management statistical process control and the
inventory management control.
Control Techniques

1.Production and Operation Control Tools

a. Management by exception
b. Break-even analysis
c. Material requirements planning and control
d. Quality control

2.Human Resource Controls

a. Compensation and benefit management
b. Human resource performance control

3.Marketing Controls
a. Sales and service records
b. Sales forecast

4.Financial Controls
a. Financial statement
b. Financial ratios
Classifications of Control

1.Pre-action Control or Preliminary Control – controlling

by means of personal supervision and utilizing control checks
consisting of procedures for any given task or function.

2.Concurrent Control – this form of control endeavors to

monitor the operation in progress. Work may not proceed to the
next step unless it passes a screening test.

3.Post-action Control – control is carried out after the event.

Controlling as the task or function is being performed or may have
been performed and corrects deviations from standards or plans.
Post control methods include analysis of budget, financial
statements and quality control.
Management Control Strategies

Managers can use one or a combination of three control

strategies or styles: market, bureaucracy and clan. Each serves a
different purpose. External forces make up market control.
Without external forces to bring about needed control, managers
can turn to internal bureaucratic or clan control. The second
relies on employees wanting to satisfy their social needs through
feeling a valued part of the business.

Self-control, sometimes called adhocracy control, is

complementary to market, bureaucratic and clan control. By
training and encouraging individuals to take initiative in
addressing problems on their own, there can be a resulting sense
of individual empowerment. This empowerment then benefits the
organization and increases the sense of worth to the business in
the individual.
Cost Implication of Control

Cost implication of control would not use methods if there

weren’t some belief that they could be effective. Theory and logic
suggest the techniques used should work, and some successes
have been supported empirically. However, prescription
expenditures continue to increase and have been the most rapidly
growing component of health care expenditures in recent years.
This indicates that cost control mechanism is not successful as
desired, or that other factors and forces overshadow success.
Dangers of “Remote Control “

“Remote control” is controlling by using reports as the only control

device. Reports may be useful to monitor progress but explaining
deviations from plans by the use of reports only and consequently reward
or punish personnel on this basis could be dysfunctional. In planning,
some environmental variables that affect the firm might be uncontrollable
by company personnel. In addition, changes in planning premises, e.g.,
death of a super Vice-President for sales might not be reflected in reports
in balance sheets and income statement.
If the only bases used for control are reports, the time lag could delay
corrective actions which could be costly in a dynamic environment. For
example, if reports show that raw materials cost increased drastically
during the month and it was explained by an artificial shortage, losses
could have been minimized if this was discovered even before the report
was submitted.
To complement control reports, management can perform the control
function by conducting regular staff meeting to formally monitor progress
and discuss problems.
 UNIT XII
THE MANAGEMENT PROCESS
Introduction
In most business establishments, management functions
are performed and are often organized in separate areas or
departments.
The functional area of business management is divided
into four, namely: personnel management, financial
management, production and operations management and
marketing management. Thus, management process applies
in the performance of all business management functions in
none-business organizations such as government units,
military organizations and the like.

Objectives:
At the end of the unit, students should be able to describe
the management process in the areas of business
management functions.
Personnel Management
Personnel management, now popularly called human
resource management is concerned with:

•The recruitment, selection and hiring processes which

involve preliminary screening interviews and tests for job
openings.
•Placement and orientation of new employees on company
policies, personnel policies, company background, product
lines and other information pertinent to the company and the
employees’ job.
•Maintenance of personnel records ranging from application
letter, personal data sheet, training records, employment
history, promotion, suspension, etc.
•Training, development and maintenance of employees. This
is concerned with the enhancement of employees’ knowledge,
attitude and skills in order to make him fit for the job.
The planning function is implemented in personnel
management in such activities as recruitment, performance
evaluation and training. Recruitment of new personnel
should be scheduled at an appropriate time during the year.
Performance evaluation must be scheduled in such a way that
company operations will not be disrupted by negative
employee reactions since this process results in either
rewards or punishments. Training programs should be
planned in advance so that line managers will have the time
to make arrangements for substitute employees to take the
place of staff who will be required to attend the training
program.
 Financial Management

Financial management is a business management

function which involves planning the procurement and
utilization of funds and controlling the financial operations
to assure effective utilization of funds.
Jucios (1955) defined financial management as the
function of obtaining and using of both money and credit
resources of a business enterprise according to a plan and a
procedure.
Thus, financial managers must be familiar not only
with finance, but also with economic and business operations;
changes in monetary and economic policies affect the
purchasing power not only of individuals but of every
business organization as well.
Finance is interrelated with other functional areas of business
management – purchasing, production, marketing, service and personnel.
Decisions regarding any of these functions should be made with proper
emphasis on their effects on the finances of the business. Acquisition of
more property, hiring of more personnel, and even improvements in the
work processes require the use of funds. Thus, it is imperative for all
decision-makers to be familiar also with the complexities of financial
management.
In a limited science, the finance function is simply the task of
providing funds needed by the enterprise in terms that are most favorable
in the light of the objective of the business. In a broader sense, the finance
function is concerned with the effective management and utilization of
funds in the business. Decisions in the firm that involve a need for funds
should take into account the cost and problems involved in getting the
funds and the necessity of balancing these.

With the added profits or other advantages that can be gained through
the use of the added money. The successful financial man in business
must not only be money man; he must also be a business man. (Martinez,
1983)
Financial analysis.

To keep tab of the financial status of an enterprise, an

analysis of the firm’s financial record must be made. Usually
this consists of determining groups of specific ratios from
selected items in the balance sheet and the income statement.
Quite a number of different ratios are required to gain a
complete picture of the financial status of the enterprise.
Also, it is necessary to consider the individual characteristics
of the business, seasonability of its activities, and the
customary manner in which transactions are carried out in its
particular field.
Production and Operations Management

Production management deals with the planning, control, and

decision-making necessary for carrying out production process. While the
production process includes carrying out activities in factories, hospitals
and institutional buildings, its functions in the factory is what most of us
are familiar with and what provided us with the most concrete picture.
Production managers are concerned with the design and
implementation of processes and systems for getting work done. They are
responsible for transforming input resources into desired outputs of some
specified quality at a minimum cost. They must examine the objectives of
the firm and work within the constraints of the system to operate most
effectively and efficiently.
In the performance of production management functions, the
production manager applies the management process of planning,
organizing, staffing, controlling and directing.
Production planning and control typically consists of five functions:
routing, loading, scheduling, dispatching and expediting.
Production planning and control typically consists of five
functions: routing, loading, scheduling, dispatching and
expediting.

•Routing determines the operations to be performed and

their sequence.
• Loading is the function of assigning work to a machine or
department in advance.
•Scheduling determines the time at which each operation is
to take place.
•Dispatching authorizes the actual start of operations; and
•Expediting monitors the execution plans.
The first three functions are planning functions – they are
done before any production occurs. The last function is a
control function since it monitors performance against plans.
Marketing Management

Marketing today generally follows the concept that it is a

managerial function. Thus, this major activity must be
skillfully directed or managed by the businessman. Among
the many business activities, marketing should receive first
attention because the survival of the enterprise depends upon
the market acceptance of the company’s products or services.
The marketing plan, essentially based on the sales objectives
of management, is also the basis of all other business plans
like those of production, buying, financing and personal
acquisition.
Marketing management is generally concerned with:

1.analyzing marketing opportunities;

2.planning marketing programs;
3.formulating product strategies;
4.administration of the marketing program.
Marketing management consists of the acquisition, organization,
direction and control of economic resources to the end that the excess
product or service sales income over and above outgo (expenses) is
maximized. In plain business language, marketing management
organizes and directs its assets to the end that sales exceed cost and yield
maximum profit.
The specific challenges which face the marketing manager are:

1.Balancing cost with satisfaction in order to achieve maximum favor with

consumers.
2.Administering the “marketing mix” in order to build satisfactory
volume.
3.Understanding the nature of the job market and some of the mechanics
involved in marketing processes.
4.Examining charges that have taken place in the marketing management
during the past two decades.
UNIT XII
THE MANAGEMENT PROCESS