FUNCTIONAL ASPECTS OF MANAGEMENT

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KEY FUNCTIONS IN BUSINESS

Operations

Finance

Research and Development

Human Resources

Marketing and Sales

Administration and IT support

Customer Services

The main functional

areas

DELIVERING KEY FUNCTIONS

In a small business, will be done by individuals

In a medium/large business, will be done by individuals working in functional areas or departments

LINKS BETWEEN FUNCTIONS

All functional areas must link together to achieve the overall aims and objectives

This means cooperation and good communications

Sales

Finance

Marketing

AdminIT

CS

Ops

R & DHR

HUMAN RESOURCES

Includes the legal rights and responsibilities of employer and employees

Compensation

Employee Organizations

and Unions

Training, Development

and Promotion

Working conditions

Recruitment, Retention and dismissal

The main responsibilities of the

human resources function

SELECTION & RECRUITMENT

Selection:Selection is a process of collecting and evaluating information about

an individual in order to extend an offer for employment.

Such employment can be either first position for a new employee or a different position for a current employee.

The selection process is performed under legal and environmental constraints and addresses the future interests of the organization and the individual.

Recruitment:Recruitment is defined as those organizational activities (choosing

recruitment sources, developing recruitment ads, deciding money to be spent) that influence the number & type of individuals who apply for a position & which also affects the decision of individual to accept the job offer.

OBJECTIVES OF RECRUITMENTObjectives Of Recruitment: Recruitment has 3 main objectives:

1. Develop an appropriate number of applicants for each position while keeping costs low. This helps in increasing probability of identifying only well-qualified individuals.

2. To meet organization’s legal & social obligations regarding the demographic composition of workforce -females, disabled etc Ensuring demographic balance depends on the applicant pool

3. Help increase success rate of selection process by reducing % of applicants poorly qualified or wrong skills. Processing applications is expensive both in terms of time and money. Money spent on evaluating unsuitable candidates is waste.

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COMPENSATION

Compensation:

Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees

OBJECTIVES OF COMPENSATION

Compensation:Objectives: When managed correctly, it helps the organization achieve

its objectives and obtain, maintain, and retain a productive workforce.

Compensation is a key factor in attracting and keeping the best employees and ensuring that your organization has the competitive edge in an increasingly competitive world.

Without adequate compensation, current employees are likely to leave and replacements will be difficult to recruit.

The outcomes of pay dissatisfaction harm productivity and affect the quality of work life.

TYPES OF COMPENSATION

Types Of Compensation: Direct in the form of monetary benefits and/or Indirect in the form of non-monetary benefits known as

perks, time off, etc.

(A) Financial Compensation:

Total Financial compensation = Direct + Indirect Compensation Direct Financial Compensation pay received in forms of wages, salaries, bonuses &

commissions, stocks, fringe benefits Indirect Financial Compensation(benefits) All financial rewards not included in direct compensation.

For example, workers compensation, Family & medical leave, Disability Protection

TYPES OF COMPENSATION

Types Of Compensation:

(B) Nonfinancial Compensation Satisfaction person receives from psychological & or

physical environment in which person works. For example, skills variety, experiences, good working conditions, flextime

NEED OF COMPENSATION

Need Of Compensation: A good compensation package is important to motivate the

employees to increase the organizational productivity. Unless compensation is provided no one will come and work

for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals.

Salary is just a part of the compensation system, the employees have other psychological and self-actualization needs to fulfill. Thus, compensation serves the purpose.

The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry norms.

TRAININGWhat is Training? Training refers to a planned process of modifying employee behavior,

attitude, and skill through learning in order to increase the probability of goal achievement.

The goal of training is for employees to master the knowledge, skill, and behaviors emphasized in training programs, and apply them to their day-to-day activities

Objectives of Training: Primary objective is to reduce gap between what employees know and what they should know.

New employees need to be socialized to fit in organization. Also to fill the gap.

Obsolescence of skill. Employees need to keep abreast with the latest skill. Improve performance in existing jobs. Employees want to grow and change. New skills required as employees move up the hierarchy. Long term plan may change & require employees to develop transferrable

skills.

OBJECTIVES OF TRAINING

Primary objective is to reduce gap between what employees know and what they should know.

Objectives are:

1. Socialization: Training important technique of socialization the new employee in organization culture. Socialization or induction program helps employee understand organizational policies, structure, role relationship, behavioral norm. Employee blends his attitude & behavior as per organization expectation.

2. Removing Obsolescence: Update skills & knowledge. Technology change is very fast & organizations need to keep pace with change. Ex: computer

3. Future Job Needs: Train employees to prepare them for future roles. Training needs are identified by finding out the gap between competencies required and present.

TRAINING DESIGN PROCESS

Conducting Needs Assessment

Ensuring Employees’

Readiness for Training

Creating a Learning

Environment

Ensuring Transfer of Training

Developing an Evaluation Plan

Select Training Method

Monitor and Evaluate the

Program

TRAINING DESIGN APPROACHES

Assumptions of Training Design Approaches Training design is effective only if it helps

employees reach instructional or training goals and objectives.

Measurable learning objectives should be identified before training.

Evaluation plays an important part in planning and choosing a training method, monitoring the training program, and suggesting changes to

the training design process.

FINANCEConcerned with money and future plans Preparing accounts, eg invoices, management

accounts, financial accounts for shareholders and Inland Revenue

Preparing wages and salaries Obtaining capital and resources, eg money for

expansion or to pay for resources such as equipment and materials.

FINANCIAL MANAGEMENT

Financial management refers to that part of management activity which is concerned with the planning and controlling of the firm’s financial resources.

It deals with finding out various sources of raising funds for the firm and also using such funds in the most appropriate manner

FINANCIAL MANAGEMENT

Importance Of Financial ManagementFinancial Management helps in: Financial planning & successful promotion of an

enterprise Acquisition of funds at minimum cost Proper use & allocation of funds Taking sound financial decisions Improving profitability through financial control Increasing the wealth of investors and the nation Promoting and mobilizing individual and corporate

savings

FINANCIAL MANAGEMENT

Functional Areas Of Financial Management: Determining Financial needs Choosing the sources of funds Financial Analysis & Interpretation Cost-Volume Profit Analysis Capital Budgeting Working Capital Management Dividend Policy

Administration and IT Support

Facility and maintenance

Support for software applications, electronic communications and

electronic transactions

Security

Office Supplies

Clerical work, eg mail, record keeping

The role of administration and

IT function

Operations

Concerned with the main business activities Obtains and converts resources of the

business into goods/services, ie Buildings and land Equipment People Materials

Operations Management

Operations Management is

A management function

An organization’s core function

In every organization whether Service or

Manufacturing, profit or Not for profit

OM’s Transformation Process

OM’s Transformation Role

To add value

Increase product value at each stage

Value added is the net increase between

output product value and input material value

Provide an efficient transformation

Efficiency – means performing activities well

for least possible cost

Marketing and SalesBoth are concerned with customer needs.

Sales Promotion

Market research

Activities include:

Marketing Management

Definitions of marketing

‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’

The Chartered Institute of Marketing

‘The right product, in the right place, at the right time, and at the right price’

Marketing Management

Definitions of marketing‘Marketing is the human activity

directed at satisfying human needs and wants through an exchange process’ - Kotler 1980

Implications of Marketing

Who are our existing / potential customers? What are their current / future needs? How can we satisfy these needs?

Can we offer a product/ service that the customer would value?

Can we communicate with our customers?

Can we deliver a competitive product of service?

Why should customers buy from us?

Customer ServiceConcerned with customer relationships

Activities include: Providing information Giving advice Providing credit facilities Delivering goods Providing after-sales service

Research and Development

Activities include: Technological developments Scientific research Design features Performance of product

Concerned with developing new goods/services and updating old ones

The use of ITRelates to all functional areas: Electronic communications (eg email) Data sharing (eg databases) Security systems (eg virus protection) External communications (eg Internet) Online support for customers (eg order

tracking) Electronic transactions (eg EFT)

Functional variations

No two businesses are the same!

Functions will vary because of: Size and scale of business Activities of business Type(s) of customers Needs of customers Preferences of owner(s)

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