January 20, 2017

Process and Functions of Management

Functions of Management or Process of Management

Koontz and O'Donnell's Description of Management Process

Koontz and O'Donnell classified the functions of management or process of management into PLANNING, ORGANIZING, STAFFING, LEADING AND CONTROLLING.

Management is an art and it is doing things in the light of realities of a situation. The organized knowledge underlying this practice is referred to as science and this body of knowledge can be expressed through principles of management. This is the thought of Koontz and O'Donnell. Principles are identified for each function of management.

Also, the functions of managers provide a useful structure for organizing management knowledge that is expanding with the more and more research being carried out in the  management field under various approaches to study of management. All new ideas, research findings, and techniques can be placed in the classification of  PLANNING, ORGANIZING, STAFFING, LEADING AND CONTROLLING.

Professor Narayana Rao suggests planning, organizing (Material and Human), resourcingexecuting and controlling as the appropriate steps for operational approach.


Every manager has to select objectives for his enterprise, department, section, unit or group. Based on the objectives he has to set goals for a specific period and make plans that contain ways of reaching the set goals. Planning in general is explained as generating alternatives and selection of the most suitable alternatives from among them for solving a problem. The problem in this context has positive connotation also. How to achieve growth is a problem which has a positive implication only.

Therefore planning is deciding in advance what to do, how to do it, when to do it, and who is to it. Planning bridges the gap from where we are to where we want to be in a desired future.

Planning involves decision making. It is selecting the courses of action that a company or any other enterprise, and every department of it, will follow.

Types of Plans


Objectives are the ends toward which the activity of an organization is aimed.

Goals represent the rate at which objectives of an organization are achieved. Goals quantify the objective with a time frame. For example, if a country has the objective of switching to unconventional sources of energy, the goals could specified as so many gigawatts of energy by end of year 2018. 
Grand strategies
According to R.N. Anthony strategies result from the processes  of deciding "on objectives of the organization", "on changes in these objectives", "on the resources used to attain these objectives", and "on policies that are to govern the acquisition, use, and disposition of these resources." The main meaning and usefulness of grand strategies are to describe a type of planning program of a broad nature which gives over-all direction to the other and more detailed programs of an enterprise.

Competitive strategies

Competition exists where two or more persons strive for the same goals under conditions in which not all can gain from them. Competitive strategy is a plan made in the light of the plans of a competitor. The competitive strategic plans are made either with an estimate of plans of competitors or the plan is a reaction to the strategic move of competitor either announced or executed.

Policies are general statements which guide or channel thinking in decision making of subordinates. Policies delimit an area within which a decision is to be made and assure that the decision will be consistent with and contribute to objectives. Policies tend to pre-decide issues, and avoid repeated analysis. Polices are based on analysis made by higher level managers and once pronounced avoid repeated analysis.

Procedures are plans and they establish a method of handling activities. They specify a chronological sequence of required actions.

A rule is the simplest type of plan. A rule requires that a specific and definite action be taken or not taken with respect to a situation.

A program is a complex of policies, procedures, rules, task assignments assembled to carry out a given course of action. A program is supported by necessary capital and operating budgets.

budget is a plan for a specific period. We can say it is a period plan. It is goals of a period expressed in terms of resources required and output expected and authorized or agreed by the organization. It is a statement of expected results expressed in numerical terms


Organization as envisaged by Fayol is the plan for material organization and people organization required to achieve the objectives of the organization. It could have been a part of the planning process. But it is a complex step and hence it is given as a separate function. Subsequent to Fayol, in the management text books material organization was not given any attention. All the attention has gone to people organization. This is a shortcoming of the management theory at this stage (2014).

Organizing is explained currently as  the grouping of activities necessary to attain the objectives, the assignment of each grouping to a manager with authority necessary to supervise it,and the provision for coordination horizontally and vertically in the enterprise structure.

Formal Organization and Informal Organization

Formal organization means the intentional structure of roles specified through  a formal organization structure chart.

Informal organization is any joint personal activity without conscious joint purpose, even though contributing to joint results (Chester Barnard).

Important concepts in organizing

1. Principles of span of control
2. Departmentation: By numbers, by time (shifts), by function, by territory, br product, by customer segment, by maketing channels, by process (in manufacturing).
3. Line and staff relationships
4. Delegation


The managerial function of staffing is defined a filling positions in the organization structure through identifying work force requirements, inventorying the people available, recruitment, selection, placement, promotion, appraisal, compensation, and training of people.


The managerial function of leading is defined as the process of influencing people so that they will strive willingly and enthusiastically toward the achievement of organizational goals.

Important Concepts

Behavioral model of man
Maslow's hierarchy of needs
McCleland's needs
Vroom's Expectancy Theory of Motivation
Reinforcement theory
Job enlargement
Job enrichment
Styles of leadership
Managerial grid
Situation leadership or contingency theory of leadership


The managerial function of controlling is the measurement and correction of performance in order to make sure that enterprise objectives and plans devised to attain them are accomplished. The control actions include planning once again, reorganization, new staffing decision and leading activities.

Control of overall performance refers to the assessment of higher level managers, managers of departments and profit centers.

Control also includes ensuring that all persons in the organization work towards the same ultimate purpose, follow procedures and display acceptable behavior.

Henri Fayol's Description of Management Process

Planning – Foresight is Essential Part of Management

The maxim “Managing means looking ahead.” gives some idea of the importance attached to planning in the business world. To foresee in this context means both to assess the future and make provision for it.

Planning is manifested in variety on a variety of occasions in managing  a concern, its chief manifestation, apparent sign and most effective instrument being the plan of action.

The plan of action is, at one and the same time,  the result envisaged, the line of action to be followed, the stages to go through, and methods to use.

Plan of Action

Plan of action depends upon what is wanted and what is possible.

In the plan of action, proximate events are outlined with some distinctness, whilst remote events appear progressively less distinct, and it entails the running of the business as foreseen and provided against over a definite period.

Plan of action rests:

1. on the firm’s resources
2. on the nature and importance of work in progress
3. on future trends which depend partly on technical, commercial, financial and other conditions all subject to change, whose importance and occurrence cannot be pre-determined.

Line of Conduct

In line of conduct it is not only imperative that nothing should clash with principles and rules of good management, but also that the arrangement adopted should facilitate application of these principles and rules.

Broad Features of a Good Plan of action

  • Unity of plan
  • The guiding action of the plan must be continuous.
  • The plan should be flexible enough to bend before such adjustments, as it is considered well to introduce, whether from pressure of circumstances or from any other reason.
  • Plan must have as much accuracy as is compatible with the unknown factors bearing on the fate of the concern.


To organize a business is to provide it with everything useful to its functioning: raw materials, tools, capital, personnel.

*All this may be divided into two main sections, the material organization and the human organization.
*The latter only is dealt with in this paper (This is a statement by Fayol).

Managerial Duties of an Organization

1. Ensure that the plan is judiciously prepared and strictly carried out.
See that the human and material organization is consistent with the objective, resources, and requirements of the concern.
3. Set up a single, competent energetic guiding authority.
4. Harmonize activities and co-ordinate efforts.
5. Formulate clear, distinct, precise decisions.

6. Arrange for efficient selection: Each  department must have an employees in places where they can render greatest service.
7.Define duties clearly.
8. Encourage a liking for initiative and responsibility
9. Have fair and suitable recompense for services rendered.
10. See to the maintenance of discipline.

11. See to the maintenance of discipline.
12. Ensure that individual interests are subordinated to the general interest.
13. Pay special attention to unity of command
14. Supervise both material and human order.
15. Have everything under control.
16. Fight against excess of regulations, red tape and paper control


The mission of command is set the organization going.
For every manager the object of command to get the optimum return from all employees of his unit in the interest of the whole concern.

Precepts that Facilitate Command
1. Have a thorough knowledge of personnel.
2. Eliminate the incompetent.
3. Be well versed in the agreements binding the business and its employees.
4. Set a good example.
5. Conduct periodic audits of the organization and use summarized charts to further this.
6. Bring together chief assistants by means of conferences at which unit of command and focusing  of effort are provided for.
7. Do not become engrossed in detail.
8. Aim at making unity, energy, initiative and loyalty prevail among the personnel.

4. Co-ordination

To co-ordinate is to harmonize all the activities of a concern so as to facilitate its working, and its success.
It is to keep expenditure proportional to financial resources, equipment and tools to production needs, stocks to rate of consumption, sales to production.

In a Well Co-ordinated Enterprise

1. Each department works in harmony with the rest.
Production knows its target, Finance provides necessary funds and stores procures what is needed.
2. In each department divisions and sub-divisions are precisely informed as to the share they must take in the communal task and the reciprocal aid they are to afford one another.

Weekly Conference of the Departmental Heads

Its main aim is to inform the management about the running of the concern.
To make clear co-operation to be expected as between various departments, and
To utilize the presence of departmental managers for solving various problems of common interest.
Importance of Co-ordinating Conference
The co-ordinating conference is to co-ordination what the plan of action is to foresight, what summarized charts of personnel are to the human organization.


In an undertaking, control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established.

It has for its object to point out weaknesses and errors in order to rectify them and prevent recurrence.
It operates on everything, things, people, actions.

Control  by Supervisors and Control by Internal Control Specialists

Head of business and his assistants along the scalar chain do a lot control activity. But there is a need for specialist controllers and inspectors. Properly carried out, this specialist control is precious auxiliary to management and can afford it certain data which official supervision might at times fail to furnish.

Joint Revision Article - 23 January
Planning - A Management Process

January Month Management Revision starts from 15 January Monday

MBA Core Management Knowledge - One Year Revision Schedule

Updated on 23 January 2017,  26 Jan 2016, 27 Jan 2015, 8 Jan 2015

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