Functions of Management

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s major objectives and goals. Strategic planning is the process by which the organizations strategies are determined. In the process, three basic questions are answered:

  1. Where are we now?
  2. Where do we want to be?
  3. How do we get there?

The where are we now? question is answered through the first three steps of the strategy formulation process: (1) perform internal and external environmental analyses, (2) review vision, mission and objectives, and (3) determine SWOT: Strengths, Weaknesses, Opportunities and Threats. SWOT analysis requires managers to be honest, self-disciplined and thorough. Going on to strategy choices without a comprehensive SWOT analysis is risky. [1]

Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon and made key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial, marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives. Weaknesses may be so important that they need to be addressed before any further strategic planning steps are taken.

Opportunities and threats are uncontrollable by management because they are external to the firm. Opportunities provide the firm the possibility of a major improvement. Threats may stand in the way of a firm reaching its mission and objectives.




Organizing is establishing the internal organizational structure of the business. The focus is on division, coordination, and control of tasks and the flow of information within the organization. Managers distribute responsibility and authority to job holders in this function of management.


Organizational Structure


Each organization has an organizational structure. By action and/or inaction, managers structure businesses. Ideally, in developing an organizational structure and distributing authority, managers decisions reflect the mission, objectives, goals and tactics that grew out of the planning function. Specifically, they decide:

  1. Division of labor
  2. Delegation of authority
  3. Departmentation
  4. Span of control
  5. Coordination

Management must make these decisions in any organization that has more than two people. Small may not be simple.

Organizational structure is particularly important in family businesses where each family member has three hats (multiple roles): family, business and personal. Confusion among these hats complicates organizational structure decisions.


Division of Labor


Division of labor is captured in an organization chart, a pictorial representation of an organizations formal structure. An organization chart is concerned with relationships among tasks and the authority to do the tasks. Eight kinds of relationships can be captured in an organization chart:

  1. The division/specialization of labor
  2. Relative authority
  3. Departmentation
  4. Span of control
  5. The levels of management
  6. Coordination centers
  7. Formal communication channels
  8. Decision responsibility

To improve organizing managers should listen to the opinion of Bernard L. Erven. Organization charts have important weaknesses that should be of concern to managers developing and using them:

  1. They may imply a formality that doesnt exist.
  2. They may be inconsistent with reality.
  3. Their usual top down perspective often minimizes the role of customers, front-line managers and employees without management responsibilities.
  4. They fail to capture the informal structure and informal communication.
  5. They often imply that a pyramidal structure is the best or only way to organize.
  6. They fail to address the potential power and authority of staff positions compared with line positions. [1]


Delegation of Authority


Authority is legitimized power. Power is the ability to influence others. Delegation is distribution of authority. Delegation frees the manager from the tyranny of urgency. Delegation frees the manager to use his or her time on high priority activities. Note that delegation of authority does not free the manager from accountability for the actions and decisions of subordinates.

Delegation of authority is guided by several key principles and concepts:

Exception principle Someone must be in charge. A person higher in the organization handles exceptions to the usual. The most exceptional, rare, or unusual decisions end up at the top management level because no one lower in the organization has the authority to handle them.

Scalar chain of command The exception principle functions in concert with the concept of scalar chain of command formal distribution of organizational authority is in a hierarchical fashion. The higher one is in an organization, the more authority one has.

Decentralization Decisions are to be pushed down to the lowest feasible level in the organization. The organizational structure goal is to have working managers rather than managed workers.

Parity principle Delegated authority must equal responsibility. With responsibility for a job must go the authority to accomplish the job.

Span of control The span of control is the number of people a manager supervises. The typical guideline is a span of control of no more than 56 people. However, a larger span of control is possible depending on the complexity, variety and proximity of jobs.

Unity principle Ideally, no one in an organization reports to more than one supervisor. Employees should not have to decide which of their supervisors to make unhappy because of the impossibility of following all the instructions given them.

Line and staff authority Line authority is authority within an organizations or units chain of command. Staff authority is advisory to line authority. Assume a crew leader reports to the garden store manager who in turn reports to the president. Further assume that the crew leader and store manager can hire and fire, and give raises to the people they supervise. Both the crew leader and store manager have line authority. To contrast, assume that the president has an accountant who prepares monthly financial summaries with recommendations for corrective action. The accountant has staff authority but not line authority.

Departmentation is the grouping of jobs under the authority of a single manager, according to some rational basis, for the purposes of planning, coordination and control. The number of departments in an organization depends on the number of different jobs, i.e., the size and complexity of the business. [3]




Directing is influencing peoples behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organizations mission and objectives while simultaneously helping them accomplish their own career objectives.

Managers give this function a variety of names. Higgins calls it leading. Other labels are: influencing, coaching, motivating, interpersonal relations, and human relations.

The directing function gives the manager an active rather than a passive role in employee performance, conduct and accomplishments. Managers accomplish their objectives through people. In blaming others for her or his human resource problems, a manager is denying the management responsibilities inherent in the directing function.

The directing function gives managers a second responsibility: helping people in the organization accomplish their individual career goals. Organizations do not succeed while their people are failing. Helping people in the organization with career planning and professional development is an integral part of the directing function.




Selection, training, evaluation and discipline cannot guarantee a high level of employee performance. Motivation, the inner force that directs employee behavior, also plays an important role. Highly motivated people perform better than unmotivated people. Motivation covers up ability and skill deficiencies in employees. Such truisms about motivation leave employers wanting to be surrounded by highly motivated people but unequipped to motivate their employees. Employers and supervisors want easily applied motivation models but such models are unavailable.

Three ways of looking at motivation are: needs, rewards and effort. The needs approach stems from the notion that peoples unsatisfied needs drive their behavior. Figure out a persons needs, satisfy the needs and the person will be motivated. For example, a person with a high need to satisfy goals is motivated by production targets. The rewards approach is based on the expectation that rewarded behavior is repeated. Giving a person a bonus for excellent performance during a difficult harvest period encourages the person to make a special effort during the next difficult harvest. The effort approach to motivation is based on the expectation that effort brings the worker what he or she wants. The thought that working hard leads to advancement and new career opportunities is consistent with the effort approach. The effort approach includes a presumption that the employer is fair, i.e., effort is recognized and rewarded. Mana