CHAPTER TWO

MANAGERIAL FUNCTIONS
Learning Outcomes
By the end of this chapter, the learner should be able to:
• Describe the meaning of management
• Enumerate the features of management
• Discuss management functions
• Identify the types of organizational structures
• Examine the components of leadership
Introduction
Regardless of the type of company, all managers perform the same four basic functions of
planning, organizing, leading and controlling. There are four generally accepted functions
of management: planning, organizing, leading and controlling. These functions work
together in the creation, execution and realization of organizational goals. The four functions
of management can be considered a process where each function builds on the previous
function.
To be successful, management needs to follow the four functions of management in the
proper order. Managers first need to develop a plan, then organize their resources and
delegate responsibilities to employees according to the plan, then lead others to efficiently
carry out the plan, and finally evaluate the plan’s effectiveness as it is being executed and
make any necessary adjustments.
Peter Drucker (2005) define Management as a multi-purpose organ that manages business
and manages managers and manages workers and work.
“Management is a distinct process consisting of planning, organising, actuating and
controlling; utilising in each both science and art, and followed in order to accomplish pre-
determined objectives." George R Terry (1877 - 1955)
"Management is the art of getting things done through others and with formally organised
groups." Harold Koontz (1909-1984);
Mary Parker Follett (1933) describe management as the "art of getting things done through
people."
Management refers to the Act of getting things done through and with people
Management – is a process of planning, organizing, directing, coordinating and controlling
to achieve organizational goals using the available resources more efficiently and
effectively.

12
Manager refers to someone who works with and through other people by coordinating their
work activities in order to accomplish organizational goals
Features of Management
• Management is universal: the fundamental principles of management are applicable in
all areas of organized effort.
• Management is purposeful: management exists for the achievement of the specific
objectives.
• Management is a unifying force: the essence of management lies in the co-ordination
of individual effort into a team, management reconciles the individual goal and the
organization as a unifying force
• Management is a social process: management is done by people, through people and
for people.
• Management is a multi-disciplinary: management depends upon wide knowledge
derived from several disciplines like engineering sociology, psychology, economics
mathematics, anthropology and many other areas the vast body other field of study.
• Management is a continuous process: management is a dynamic and ongoing process.
• Management is an art as well as science: management contains a systemic theoretical
as well as the practical application of such knowledge.
Management Functions
1. Planning
2. Organizing
3. Leading
4. Controlling
1. Planning
In the planning stage, managers establish organizational goals and create a course of action
to achieve them. Planning involves deciding beforehand, what is to be done, when is it to
be done, how it is to be done and who is going to do it. During the planning phase,
management makes strategic decisions to set a direction for the organization. Managers can
brainstorm different alternatives to achieve the objective before choosing the best course of
action.

While planning, managers typically conduct an in-depth analysis of the organization’s

current state of affairs, taking into consideration its vision and mission and evaluating what
resources are available to meet organizational objectives. While planning, managers usually
evaluate internal and external factors that may affect the execution of the plan, such as

13
economic growth, customers and competitors. They also establish a realistic timeline for
achieving the goal or goals based on the organization’s available finances, personnel and
resources.
Characteristics of Planning
• Managerial function: planning is a first and foremost managerial function provides
the base for other functions of the management, i.e. organising, staffing, directing and
controlling, as they are performed within the periphery of the plans made.
• Goal oriented: It focuses on defining the goals of the organization, identifying
alternative courses of action and deciding the appropriate action plan, which is to be
undertaken for reaching the goals.
• Pervasive: It is pervasive in the sense that it is present in all the segments and is
required at all the levels of the organization. Although the scope of planning varies at
different levels and departments.
• Continuous Process: Plans are made for a specific term, say for a month, quarter,
year and so on. Once that period is over, new plans are drawn, considering the
organization’s present and future requirements and conditions. Therefore, it is an
ongoing process, as the plans are framed, executed and followed by another plan.
• Intellectual Process: It is a mental exercise at it involves the application of mind, to
think, forecast, imagine intelligently and innovate etc.
• Futuristic: In the process of planning we take a sneak peek of the future. It
encompasses looking into the future, to analyze and predict it so that the organization
can face future challenges effectively.
• Decision making: Decisions are made regarding the choice of alternative courses of
action that can be undertaken to reach the goal. The alternative chosen should be best
among all, with the least number of the negative and highest number of positive
outcomes.
Approaches to planning embraced by managers are:
(a) Strategic planning: this type of planning is often carried out by an organization’s
top management and usually creates goals for the entire organization. It analyzes
threats to the organization, evaluates the organization’s strengths and weaknesses and
creates a plan of how the organization can best compete in its environment.
(b) Tactical planning: is the shorter-term planning of an objective that will take a year
or less to achieve. It is usually carried out by an organization’s middle management.

14
 It usually aims at a specific area or department of the organization such as its
facilities, production, finance, marketing or personnel.
(c) Operational planning: Operational planning is the process of using tactical planning
to achieve strategic planning and goals. Operational planning creates a timeframe for
putting a portion of the strategic goal into practice operationally.
Importance of Planning
• It helps managers to improve future performance, by establishing objectives and
selecting a course of action, for the benefit of the organization.
• It minimizes risk and uncertainty, by looking ahead into the future.
• It facilitates the coordination of activities. Thus, reduces overlapping among
activities and eliminates unproductive work.
• It states in advance, what should be done in future, so it provides direction for action.
• It uncovers and identifies future opportunities and threats.
• It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.
• It allows organizations to be proactive rather than reactive
• It increases operational efficiency
• It helps to increase market share and profitability
2. Organizing
The purpose of organizing is to distribute the resources and delegate tasks to personnel to
achieve the goals established in the planning stage. Managers may need to work with other
departments of the organization, such as finance and human resources, to organize the
budget and staffing. During the organizing stage, managers strive to create a work
environment conducive to productivity.

Managers typically take employees’ motivation and aptitude into account to match
employees with roles and tasks that best fit their abilities. When assigning team member
roles, managers should explain and ensure that employees understand their individual
duties. To help employees feel engaged and productive, managers should ensure that
employees are assigned an appropriate amount of work and an appropriate amount of time
to complete their work.

Organizing entails determining what tasks are to be done, who is to do them, how the tasks
are to be grouped, who reports to whom, and where decisions are made

15
Organizational structure is a framework within which individual persons can perform
defined work roles
Organizational design process of developing or changing an organization’s structure
process involves six key elements.
Types of Structures
1. Formal structures-is where management define, allocate responsibilities and
formalize the inter-relationship and interaction of people at work based on
organizational objectives
2. Informal structures-is where the structure comprises patterns of social interaction
within the organization which are separate from those derived from the formal
structure
Nature of Structures
1. Mechanistic Structures (Centralized structures)
2. Organic Structures (Decentralized structures)
Centralization and Decentralization
• Centralization decisions are formulated by the top-level managers and
communicated downwards. Responsibility and authority are concentrated at the
higher level.
• Decentralization individual members /parties of the organization are given
responsibility and authority to make decisions within the organization
Advantages of Centralization
- Central authority promotes corporate integrity
- Promote conflict resolution
- Centralized authority is essential for corporate policy/strategic plans
- Promote standardized procedures and approaches /unity of style
Advantages of Decentralization
- Quality decisions generated
- Quick decision-making process
- Facilitates identification and assessment of performance
- Stimulates job satisfaction and imposes employee morale
- It fosters the development of managerial ability at lower levels
Disadvantages of Decentralization
- It is too expensive hence requires extensive training /requires competent personnel
- Duplication of work throughout a de-centralized organization can prove expensive

16
 - Decision making process is slow and time-consuming
- Lack of sense of direction towards corporate strategy
Types of Organizational Structures
Organizational Structures are categorized into two broad categories:
1. Traditional Organizational Designs
2. Contemporary Organizational Designs
1. Traditional Organizational Designs
(a) Simple Structure - low departmentalization, wide spans of control, authority
centralized in a single person, and little formalization. Commonly used by small
businesses.
(b) Functional Structure - groups similar or related occupational specialties together
(c) Divisional Structure - composed of separate divisions and each division has
relatively limited autonomy. Parent Corporation acts as an external overseer to
coordinate and control the divisions.
2. Contemporary Organizational Designs
a) Team-Based Structures - entire organization is made up of work teams and
employee empowerment is crucial.
b) Divisional Structure - composed of separate divisions each division has relatively
limited autonomy
c) Matrix Structure - assigns specialists from different functional departments to
work on projects led by project managers.
d) Project Structure - employees work continuously on projects based on their
competencies.
e) Autonomous Internal Units – independent, decentralized business units that have
autonomy.
f) Boundaryless Organization - design is not defined by, or limited to, the horizontal,
vertical, or external boundaries imposed by a predefined structure.
g) Learning Organization - an organizational mind-set rather than a specific
organizational design/system thinking.
Departmentalization
The basis by which jobs are grouped together
a) Functional - groups jobs by functions performed
b) Product - groups jobs by product line
c) Geographical - groups jobs on the basis of territory or geography

17
 d) Process - groups jobs on the basis of product or customer flow
e) Customer - groups jobs on the basis of common customers
Importance of Organizing
• Save time by not spending time looking for things.

• Save money by not buying items you already have.

• Instill confidence by knowing where things are in the home.
• Reduce stress related to lost items or lost information.
• Manage many activities and deadlines more efficiently.
• Gain valuable storage space within your existing quarters.
• Gain more energy and peace from your organized home while eliminating
unnecessary tasks.
• Have more time to do things you really want to do
3. Leading
Leading consists of motivating employees and influencing their behaviour to achieve
organizational objectives. Leading focuses on managing people, such as individual
employees, teams and groups rather than tasks. Leading is directing and motivating all
involved parties and dealing with employee behavior issues. Leadership-is the ability to
influence a group towards the achievement of group goals. Without appropriate leadership
skills, good management is impossible. Leadership is of the spirit, compounded of
personality and vision (its practice is an “art”).

Though managers may direct team members by giving orders and directing to their team,
managers who are successful leaders usually connect with their employees by using
interpersonal skills to encourage, inspire and motivate team members to perform to the best
of their abilities. Managers can foster a positive working environment by identifying
moments when employees need encouragement or direction and using positive
reinforcement to give praise when employees have done their jobs well.

Managers usually incorporate different leadership styles and change their management style
to adapt to different situations. For instance, managers can embrace the following situational
leadership styles in the organization with aim of achieving the objectives of the
organization:
(a) Directing: The manager leads by deciding with little input from the employee. This
is an effective leadership style for new employees who need a lot of initial direction
and training.

18
 (b) Coaching: The manager is more receptive to input from employees. They may pitch
their ideas to employees to work cooperatively and build trust with team members.
This style of leadership is effective for individuals who need managerial support to
further develop their skills.
(c) Supporting: The manager decides with team members but focuses more on building
relationships within the team. This style of leadership is effective for employees who
have fully developed skills but are sometimes inconsistent in their performance.
(d) Delegating: The leader provides a minimum of guidance to employees and is more
concerned with the vision of the project than day-to-day operations. This style of
leadership is effective with employees able to work and perform tasks on their own
with little guidance. The leader can focus more on high-level goals than on tasks.
Five Components of Leadership
• Authority
• Responsibility and
• Power
• Empowerment
Delegation and Empowerment
Delegation-is passing of responsibility from one level of management to lower level.
Delegation: refers to a power sharing process in which individual managers transfers their
legitimate authority to subordinates but without passing on their own ultimate responsibility
for the completion of the overall task which has been entrusted to them by their own
supervisor.
Delegation and Empowerment are centered on the following Aspects:
• Authority: refers to defined amount of power granted by an organization to selected
members.
• Responsibility: refers to the legitimate expectation of level of performance that a
senior person has over team members.
• Power: to the ability to influence workers towards common objectives.
• Empowerment: refers to the approach of managing people which permits team
members to exercise greater decision making on day to day matters in their work.
Principles of Delegation
- Set clear objectives to be achieved
- Set performance standards
- Decide what level of authority to grant

19
- Allocate adequate resources
- Ensure clear reporting arrangement are made
- Encourage subordinate to consult
- Inform subordinates that early mistakes will be used as learning opportunity
- Ensure task are completed according to agreed standards
- Provide advice where necessary
- Thank the individual for their efforts
Benefits of Delegation to an Organization
• Senior managers are retired
• Promote quick decision making/without delay
• Encourage managers to learn how to cope with responsibility
• Enable organization to adapt to changing condition
• Contribute to staff development and motivation
• Gives managers to experience consequences of their decisions
Disadvantages of Delegation
• It takes more time to explain what is expected from workers
• Subordinates may lack skills, knowledge and experience to perform well
• Lack of trust to subordinate
• Subordinate do not want additional responsibility
Power refers to the ability to influence the attitudes and behaviours of others towards a
common objective.
Types of Power
• Reward power- based on the subordinate perception that the leader has the ability to
obtain rewards for those that follow directions
• Expert power-based on the leader’s ability, skills and experience to influence others
• Connection and referent power-based on the subordinates’ identification with the
leader as being attractive and possesses charisma
• Position power-managers use their positions to influence workers
• Opportunity power-being in the right place at the right time can give one the
opportunity to exert power
Roles of Effective Leaders
• An executive-coordinate group activity and develop norms and policies
• A planner-decide way through which goals will be achieved
• An expert-source of key information and specialized skills

20
• A figurehead-representative of the group and specialized links
• An exemplar-set standards and expectations and provide a unified front
• An arbitrator-resolving conflicts
• A father figure-a focus for group feelings
• An ideologist-setting standard of behavior
Importance of Leadership to Organizations
• Helps to accomplish organization objectives
• Motivate workers
• Make key decision on behalf of the organization
• Direct group activities
• Develop talents of individuals within the organization
• Steer organizational change
• Mobilizes the workforce of higher performance within the organization
Techniques/Styles of Leadership
(a) Charismatic style of leadership
- Leaders are highly energetic and extroverts
- Leaders set initiatives
- Leaders are active and show emotional involvement to employees
- Leaders are loyal and committed to their work
- They use all ways and means to influence workers positively to goals
- Leaders depend on their personalities to get things done
(b) Democratic Style of Leadership
- Leaders give employees an opportunity to give/make decisions
- Employees express their ideas freely
- Leaders encourage group decision making and team work at the workplace
(c) Laissez-Faire leadership /Permissive
- People/employees are given freedom to do what they want
- Individual people make their decisions at their own will
- It is a dangerous style to be applied to modern organization
(d) Autocratic/Authoritative/Directive style
- Leaders dictate issues to people
- People are not given freedom to make decisions
- The chain of command is top-down approach
- Leaders are strict and final decision makers

21
Managerial/Leadership Skills
(a) Conceptual skills-involves the ability of managers to analyze the business
environment and identify internal and external forces that can influence the business.
(b) Technical skills-ability of finding methods, processes and techniques of a particular
kind of business. Is the ability of managers to use their knowledge to attain the
objectives of the company.
(c) Diagnostic skills-is the ability of managers to assess the situation and anticipate
future business trends.
(d) Interpersonal skills-is the ability of managers to work with others for the benefit of
the organization.
Difference between Managers and Leaders
S/N Managers Leaders
1. Do things right Do the right things
2. Are interested in efficiency. Are interested in effectiveness
3. Administer Innovate
4. Maintain Develop
5. Focus on systems and structure Focus on people
6. Have a short-term view Have a long-term view
7. Accept the status quo Challenge the status quo
8. Have their eyes on the bottom line Have their eyes on the horizon
9. Seek predictability and order Seek change
10. Avoid risks Take risks
11. Motivate people to comply with standards Inspire others to change
12. Use position to position (superior to Use the person to person influence
subordinate) influence
13. Require others to comply Inspire others to follow

4. Controlling
Controlling is the process of evaluating the execution of the plan and adjusting ensure that
the organizational goal is achieved. Control refers to the process of monitoring activities to
ensure that they are being accomplished as planned and of correcting significant deviations.

During the controlling stage, managers perform tasks such as training employees as
necessary and managing deadlines. Managers monitor employees and evaluate the quality
of their work. They can conduct performance appraisals and give employees feedback,
providing positive remarks on what they are doing well and suggestions for improvement.
They may also offer pay raise incentives to high-performing employees. Managers may
need to make adjustments such as:

22
 (a) Budget adjustments
Managers monitor the budget and resources to ensure that they are using the resources
available and not going over budget. Once the manager identifies the source of the
overspending, she must act to curb overall spending and make cuts as necessary to balance
the budget.
(b) Staffing adjustments
Managers may need to make challenging decisions such as whether to reassign an employee
who produces low-quality work to a different task or dismiss them from a project. They may
also need to add additional team members to meet an organizational goal if they conclude
that the team is understaffed. If this is the case, they may also need to consult with
organization executives to secure more funding.
Elements of the Control Mechanism
1. Establish standards of performance (“A standard” – is a rule for measuring work)
2. Measure/ Observe Actual Performance and Information
3. Compare Results with Objectives and Standards
4. Take appropriate action (correcting deviation and variances from established
standards).
Steps in Control Process
1. Establishing Standards

4. Take Appropriate Action 2. Measure/ Observe

Actual Performance and
Information

3. Compare Results with

Objectives and Standards

Evaluate Deviations

23
 1. Establishment of Standards
Standards serve as a yardstick against which performance is measured. They relate with
norms that spell out the dos and don’ts of the organization members. Standards are either;
Quantitative standards (they are figurative in nature)
They include:
- Time standards
- Cost standards
- Revenue standards
- Productivity standards
- Profitability standards
- Market share standards
Qualitative standards
These are ideal standards/expectations/norms
They include:
- Nature of dressing expected
- Handling customers
- Expected way of mannerism
2. Measurement of Actual Performance
Performance indicators include:
- Profits
- Customer satisfaction
- Efficient and effective internal processes
- Innovation and Learning
3. Compare Results with Objectives and Standards to Establish Deviations
Compare results against objectives and identify deviations/gaps from the required or
expected standards.
4. Taking Corrective Action
This means giving advice when necessary and making corrections where they are needed.
Types of Control
1. Feedforward Control
- Prevents anticipated problems
- Most desirable type of control
- Requires timely and accurate information that often is difficult to get

24
2. Concurrent Control
- Takes place while activity is in progress
- Corrects problem before it becomes too costly
- Best-known form is direct supervision
3. Feedback Control
- Takes place after the activity is done
- Problems may already have caused damage or waste
- The most popular type of control
- Provides meaningful information on the effectiveness of planning and enhances
employee motivation.
Self-Test Questions
1. Describe the meaning of management
2. Enumerate the features of management
3. Discuss the management functions in an organization
4. Discuss the importance of management to business entities
5. Identify the types of organizational structures
6. Examine the components of leadership
7. Describe the leadership styles adopted in organization
8. Demonstrate the control process works

25