UNIT III
ORGANIZING AND
CONTROLLING
It is the basic function of management. It deals with
chalking out a future course of action &
deciding in advance the most appropriate course of actions
for achievement of pre-determined
goals. According to KOONTZ, “Planning is deciding in advance
- what to do, when to do & how to
do. It bridges the gap from where we are & where we want
to be”. A plan is a future course of
actions. It is an exercise in problem solving & decision
making. Planning is determination of
courses of action to achieve desired goals. Thus, planning
is a systematic thinking about ways &
means for accomplishment of pre-determined goals. Planning
is necessary to ensure proper
utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks,
wastages etc.
1. Organizing
It is the process of bringing together physical, financial
and human resources and
developing productive relationship amongst them for
achievement of organizational goals.
According to Henry Fayol, “To organize a business is to
provide it with everything useful or
its functioning i.e. raw material, tools, capital and
personnel’s”. To organize a business
involves determining & providing human and non-human
resources to the organizational
structure. Organizing as a process involves:
* Identification of activities.
* Classification of grouping of
activities.
* Assignment of duties.
* Delegation of authority and
creation of responsibility.
* Coordinating authority and
responsibility relationships.
2. Staffing
It is the function of manning the organization structure and
keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement
of technology, increase
in size of business, complexity of human behavior etc. The
main purpose o staffing is to put
right man on right job i.e. square pegs in square holes and
round pegs in round holes.
According to Kootz & O’Donell, “Managerial function of
staffing involves manning the
organization structure through proper and effective
selection, appraisal & development of
personnel to fill the roles designed un the structure”.
Staffing involves:
* Manpower Planning (estimating man power
in terms of searching, choose the person
and giving the right place).
* Recruitment, Selection & Placement.
* Training & Development.
* Remuneration.
* Performance Appraisal.
* Promotions & Transfer.
3. Directing
It is that part of managerial function which actuates the
organizational methods to work
efficiently for achievement of organizational purposes. It
is considered life-spark of the
enterprise which sets it in motion the action of people
because planning, organizing and
staffing are the mere preparations for doing the work.
Direction is that inert-personnel
aspect of management which deals directly with influencing,
guiding, supervising,
motivating sub-ordinate for the achievement of
organizational goals. Direction has
following elements:
* Supervision
* Motivation
* Leadership
* Communication
Supervision- implies overseeing the work of subordinates by
their superiors. It is the act of
watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the
sub-ordinates with zeal to
work. Positive, negative, monetary, non-monetary incentives
may be used for this purpose.
Leadership- may be defined as a process by which manager
guides and influences the work
of subordinates in desired direction.
Communications- is the process of passing information,
experience, opinion etc from one
person to another. It is a bridge of understanding.
4. Controlling
It implies measurement of accomplishment against the
standards and correction of deviation
if any to ensure achievement of organizational goals. The
purpose of controlling is to ensure
that everything occurs in conformists with the standards.
An efficient system of control
helps to predict deviations before they actually occur.
According to Thea Haimann,
“Controlling is the process of checking whether or not
proper progress is being made
towards the objectives and goals and acting if necessary, to
correct any deviation”.
According to Koontz & “Controlling is the
measurement & correction of
performance activities of subordinates in order to make sure
that the enterprise objectives
and plans desired to obtain them as being accomplished”.
Therefore controlling has
following steps:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and
finding out deviation if
any.
d. Corrective action.
influence refers to the processes by which power and
authority is exercised and authority is
legitimated. Power is defined in terms of potential or
capacity for action.
Together, power and authority determine the resources and
perceptions that under-gird
social interaction. Between two capacities of effective
power; access to resources and the ability to
obtain cooperation, second capacity refers to the exercise
of influence.
Influence if determined by, but not identical to, power and
authority. Yuk l has called the
study of influence the “bridge between the power approach
and behavior approach to leadership.”
Influence behavior is enacted to change the behavior,
beliefs and/or values an individual or
group. In each case, some sort of power/authority dynamic
exists between the agent and the target
of the influence attempt.
Influence behavior is exerted in one of their
directions-upward, downward or lateral where
as power and authority is exerted in two directions upward
and downward.
Direction of influence – directed outward to those outside
of one’s own organization. On
the other hand, power can be used beyond the organization
but authority is only exercised within
the organization or limited area.
The various types of organization structures include -
functional, divisional, matrix, horizontal, and
hybrid structures. The functional structure is characterized
by grouping people based on their
expertise and skills. In the divisional structure, the
divisions are formed based on an organization's
product range, the specific markets the organization caters
to, or the geographic locations in which
it operates. The matrix organization tries to integrate the
desired features of both the functional and
divisional structures. In this structure, an employee
reports simultaneously to two different
supervisors. One of these supervisors represents a
functional department and the other represents
the division, product, market, geography, or project. The
horizontal structure prevents the rigidity
and departmentalization existing in a vertical system by
grouping the managers and employees into
synergistic teams for problem solving. When organizations
use a combination of any two structures
(say, functional and divisional or functional and
horizontal), the resulting structure is called a
hybrid structure. It combines the strengths of the
structures being merged.
A responsibility structure is a collection of responsibility
centers. A responsibility center is a
function, division, or unit of an organization under a
specified authority with a specified
responsibility. Responsibility accounting can be defined as
a system of management accounting
under which accountability is determined according to the
responsibility allotted to various levels
of management. In an organizational setting, it is necessary
that the performance measurement
systems are designed to be fair. Two major aspects to be
considered are control ability and goal
congruence. The control ability principle says that each
manager should be assessed and rewarded
only for those factors that are under his/her control. Goal
congruence is achieved when managers
(and employees), while working toward their best
self-interest as perceived by themselves, take
decisions that are successful in attaining the overall goals
of the organization. This happens when
their individual objectives are aligned with the
organizational goals. Transfer pricing is a tool used
in responsibility accounting to assign monetary values to
transactions taking place between two or
more responsibility centers.
According to the nature of monetary inputs and outputs,
responsibility centers can be classified into
four types. They are cost centers, revenue centers, profit
centers, and investment centers. Cost
centers are further divided into standard cost centers and
discretionary expense centers.
Designing an optimal management control system involves
determining the specific control
measures to be used and the degree of tightness or looseness
of control required to provide the
desired level of certainty of achievement of objectives. An
organization may choose any one or a
combination of action control, results control, and personnel/cultural
control. The decision on the
choice and degree of tightness of control is made on the
basis of a cost-benefit analysis. Costs
include the consumption of available resources, harmful
behavioral side-effects, and the
development of negative attitudes among employees. Benefit
refers to the level of certainty that the
organization is able to achieve by implementing the control
system.
Complexities and uncertainties in the business environment
make it necessary to design the
organization structure and management control system in such
a way that the benefits earned from
operating in numerous countries are higher than the costs
incurred. Three main aspects have to be
considered for designing the organization structure of an
M NC. These are the strategy of
international business, extent of centralization, and the
division of an M NC into subsidiaries based
on product, operational location, or function.
Organizations can choose from one of the following four
strategies for doing international business
- international strategy, multi-domestic strategy, global
strategy, or transnational strategy. This
strategic choice depends on the pressure on cost
competitiveness, pressure for local responsiveness,
and the need for worldwide learning. The extent of
centralization of decision-making in different
areas such as product development, marketing, production,
etc., depends on the choice of strategy
for doing international business. In terms of organization structure
of the M NC, global structures
based on area or product, are common. Limitations in these
structures resulted in M NCs adapting
the transnational strategy which uses a global matrix
structure. A flexible matrix structure can be
used to overcome the rigidities of a global matrix structure
through the use of informal networks
between managers.
The control ability of a subsidiary's results goes from high
to low as we move from the multi domestic
strategy to international strategy to global strategy to transnational
strategy, as the
inter dependencies and the costs of control go from low to
high. For multi-domestic strategy and
international strategy, results controls are therefore more
appropriate. For global strategy and
transnational strategy, it is more appropriate to use action
controls and personnel/cultural controls.
Management control of non-profit organizations is an area
distinguishable from that in for-profit
organizations because of the inherent difference with
respect to source of funds, features of service,
the strategies for selling the service, the mode of
delivering the services, reward systems for
employees, etc. According to Gee rt Hofstede, four criteria
which help in better management control
of non-profit organizations are clear objectives,
quantifiable results, predictable interfaces, and
activities that can be repeated. For different combinations
of the four criteria, the organization can
adopt different types of controls - routine control, expert
control, trial and error control, intuitive
control, judgmental control, and political control.
Managers must find ways to encourage employees to be
creative and to initiate process
improvements, but must still retain enough control to ensure
that employee creativity benefits the
organization. The concept of "levers of control"
proposed by Robert Simon is relevant here. The
four levers of control are diagnostic control systems,
beliefs systems, boundary systems, and
interactive control systems. Diagnostic control systems use
quantitative data, statistical analyses,
and variance analyses to scan for anything unusual that
might indicate a potential problem.
Diagnostic systems work well if the goals are reasonable and
attainable. Beliefs systems are used to
communicate the doctrines of corporate culture to every
employee of the organization. Boundary
systems are based on the principle that in an age of
empowered employees, it is easier and more
effective to set the rules regarding what is inappropriate
rather than what is appropriate. The effect
of this kind of thinking is to allow employees to create and
define new solutions and methods
within defined constraints. Interactive control systems are
futuristic and involve frequent
communication between top managers. The interactive control
system helps organizations in
positioning themselves strategically in the rapidly changing
market
0 Reviews:
Post a Comment