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7/31/2019 Manual in POM

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Chapter 1

Management: Science, Theory and Practice

One of the most important human activities is managing. Managing is an

increasingly important activity in todays complex society. Ever since people beganforming groups to accomplish aims they could not achieve as individuals, managing has

been essential to ensure the coordination of individual efforts. Our society breeds moreand more organizations everyday. In each of these organizations, managing is an

essential activity. The task of managers has been rising in importance. Managers

constantly needed to plan, organize, direct and control operations to ensure that

organizations accomplish their goals. There is, and will continue to be, a demand formanagers to do these jobs.

Managerial jobs differ, not all managers perform exactly the same activities or

face the same problems. These differences are to be expected. Organizations like

McDonalds Hamburger chains and San Miguel Corporations and the like , manufactureor sell products . Some provide services like hospitals, government agencies, accounting

firms, schools and churches.

Since management is not a closed system, all managers deal and interact with

different environments- economic, technological, social, political, legal and ethical- inwhich they operate.

Despite the aforementioned differences, all managerial jobs share certain

features. To discover these, we will examine some of the more recent definitions ofmanagement as given by the authorities in this field.

Management: A DefinitionTerry and Rue (1982) defined management as a process or form of work that

involves the guidance and direction of a group of people toward organizational goals or

objectives.

Stoner (1993) states that management is the process of planning, organizing,

leading and controlling the efforts of organization members and of using all other

organizational resources to achieve stated organizational goals.

Koontz , ODonnel, and Weihrich (1980) point out that management is the

establishment of an environment for group effort in such a way that individuals willcontribute for group objectives with the least amount of such inputs as money, time,

effort, discomfort and materials.

Johnson and Stenson (1978) defined management is the process of workingwith and through other people to accomplish organizational goals.

Based on the above definitions of management, certain features emerge:


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1. Management is a process (a systematic way of doing things).2. It utilizes resources efficiently.

3. It gets things done through and with others.

4. It achieves a stated goal.

Considering all these variables, we can therefore define management as the

process by which a manager of an organization efficiently utilizes resources to achieve its

overall goals at minimum cost and maximum profit. Collectively, according toLorenzana, Carlos (2003) the term management refers to the group of people who are

responsible and accountable for directing the workforce and seeing to it that the

organization meets its organizational goals or objectives.

Management: Art and ScienceIs management an art, or a science? Some management authorities regard

management as an art because it involves the proficiency in the practical application of

knowledge acquired through study, experience and observation. It also involves theapplication of skills and techniques to achieve desirable results.

On the other hand, management scholars regard management as a science,

since it is a body of knowledge dealing with a body of facts or truths systematically

arranged and showing the operation of acceptable standards and laws.

Managing as practice is an art, organized knowledge about management is a

science.

Management: Functions and Processes

Specifically, what is management? Are there certain functions that all

managers perform regardless of whether they are company presidents, managers of

departments or supervisors of operative employees.

If one looks closely at managers at work, he can see that fundamentally, they

are all performing or should be performing the same activities during the time they are

actually managing rather than doing work similar to that done by those under them.

These activities are called functions of management or referred to as ProcessApproach to Management by Koontz ODonnel. According to this view, managers

perform the following five (5) essential functions:

1. Planning. This is the process of setting the objectives to be accomplished by an

organization during a future time period and deciding on the methods of reaching them.

2. Organizing. It is the process of identifying, subdividing, grouping, assigning and

coordinating activities and providing the necessary authority to carry out the activities.


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2. INFORMATIONAL ROLES. This is divided into the following sub-types:

Monitor Role. Since flow of information flow from various parts of the

organization, both in the upper and the lower levels, converge in a managers

office and allow him to monitor activities occurring outside his office.

Disseminator Role. Managers have a key role in transmitting and

disseminating such information to other parts of the organization.

Spokesperson Role. The managers position in the organization requires them

to represent and speak for their units, vis--vis other units of the organization

and outsiders.

3. DECISIONAL ROLES. This consists of the following four types:

Entrepreneurial Role. As managers, he plays a key role in the identification

of new opportunities and the development of those into new products,services, methods or activities within their organizations.

Problem Solver . Managers are called upon to identify solutions and to take

action to overcome the continuous stream of problems which crop up in

the day to day operation of the institution.

Resources Allocator. Managers exercises a key role in the distribution of

funds, personnel, materials and other organizational resources among

competing users in the organization.

Negotiator. Managers are frequently involved in negotiation activities

which have a key impact on the performance of their units.

The Skills of Manager

Since managers have varied nature of activities to perform, it is to be expected

that managers would need equally varied capabilities and skills. It is however, possibleto classify the range of capabilities and skills required of managers into four types. These

are:

1. Technical Skills. This is the knowledge and proficiency in activities involvingmethods, know-how, procedures and processes. It involves working with toolsand specific techniques to achieve the desired results.

2. Human or Interpersonal Skills. This is the ability to work with people it is acooperative effort. The need to be skilled in human relations and the creation of

work environment in which people feel secure and free to express their opinions.


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3. Conceptual Skills. This is the ability to see the overall picture, to identify

important elements in a situation, and to understand the relationships amongthe elements.

4. Design Skills. This is the ability to solve problems in different ways that willbenefit the organization. Managers must have the skill of being able to designa workable solution to the problem in the light of the existing realities they face.

Different Types of Managers

The tasks of managers are, in a fundamental sense, similar in different types ofinstitutions. Nevertheless, there are important differences in the objectives,

environments, and resources of these institutions which influence the methods used in the

performance of the managerial functions. (Echanis, Erlinda et al, 2001)

How Business Managers are Trained

Managers are trained differently across countries and cultures. In Japan and

West Germany, managers are recruited from among young graduates of the school

systems especially those with technical backgrounds like engineering, and in Japan such

as accountancy. These recruits acquire the broader skills of business management duringtheir career in the business firm in which they work.

In the United States and Philippines, significant numbers of business managersare trained in business schools in colleges and universities prior to their entry into

business. This practice is based on the assumption that a sufficient body of knowledge in

business management exists which can be taught in school to inexperienced people.

Training managers of each of the above modes has its advantages and

disadvantages. The advantage of university training for prospective young business

managers is the acquisition of a broader knowledge of business management whichtranscends the specific management methods and practices of a particular company or

industry.

This generality of knowledge is also a disadvantage of college training for

business. Since business encompasses a wide range of activities like banking,

manufacturing or agriculture or retailing. A young graduate in business must often

acquire substantial operating knowledge and experience in a particular business or

industry before he can effectively apply the knowledge he has acquired.

Another problem with college trained managers is that unlike other technicalprofessions, management is inherently a social process requiring a high level of human-

interpersonal skills. Young managers generally gain the confidence and maturity in

directing other people only after years of actual experience in supervisory positions in the

work environment.


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Because of the following reasons, it is risky for a young graduate of business

management to regard himself as a polished manager after school. He needs to mature asa leader of people and acquire adequate operating experience in his chosen field of

business activity before he can realize his full potential as a manager.

Chapter 2

The Evolution of Management Thought

Management is as old as man. In ancient Sumeria, Egypt, Babylon, Palestine,China, Greece and Rome, abundant pieces of evidence of management are found in the

historical records of government, the army, the courts, and the church. From these

established beginnings, it underwent few changes from its authoritarian techniques until

recently. What we now term as management has evolved from some of the fundamentalconcepts of industrial democracy and management techniques that have been pioneered

by a number of successful organizations in the United States.

Through the years of management evolution several management schools of

thought have had definite impact on the approach one follows in the study of

management. These schools may be grouped into the following categories:

1. Frederick W. Taylor and Scientific Management

In 1895, Frederick W. Taylor who challenged the previous

methods of managing a business came up with Scientific Management. ScientificManagement was a philosophy that deals with the relationship of people and work. The

basis for this relationship was finding the one best way for doing a job and finding the

proper person for each job. The goal was maximum output with minimum effort throughthe elimination of waste and inefficiency. Taylor believed that if both labor and

management embrace this philosophy they would become teammates rather thanadversaries, disregarding their traditional relationship and sharing in greater profits than

before.


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Frederick W. Taylor is known as the Father of Scientific Management. His

writings on the subject published in 1911, was based on his experiences as apprentice,supervisor, and consultant in the US Steel industry for over thirty years.

Taylor called for a mental revolution on the part of both management and labor

based on a shared perception of the community of their interests. He advocated the highwage but low labor cost concept where labor could be given high wages but where

production costs would remain low because of high labor productivity.

On work methods and output standards, Taylor devised and advocated the use of

tools which are now standard methodologies in industrial engineering, namely methods

analysis and time and motion study. He explained the need for these methods.

In addition to methods analysis and time and motion study, Taylor also

advocated the adoption of functional foremanship. By this he meant that the job of

shop foremen and managers would be redefined to include not merely the physical

supervision of workers but also, and more importantly, the planning of the methods andflow of work in the shop floor.

Taylor also innovated the piece rate system where workers were given anincentive, in the form of a higher piece rate, for producing above a target output standard

for each job.

The combination of the attention to work planning, methods design and time

study, better incentive systems, and careful selection of workers enabled Taylor to

achieve dramatic improvements in efficiency and productivity in the various companieswhere he consulted. This made him one of the more celebrated personalities in America

during his time

Taylor attracted considerable attention in labor, government and academiccircles. He also attracted a considerable intellectual following among other engineers in

the steel industry. Among his well known followers were Frank and Lillian Gilbreth who

pioneered the use of synthetic time standards a major tool in industrial engineering.

Another major contribution to the Scientific Management was Henry L. Gantt

who devised what is known as the Gantt chart. This is a bar chart comparing schedulewith actual performance widely used in production control and now in computer

scheduling operations. Gantt was also one of the first to recognize publicly the social

responsibility of business and management.


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2. Henry Fayol and the Process View of Management

In 1916, Henry Fayol, a Frenchman, drew up a blueprint for acohesive doctrine of management after investigating managerial behavior. He presenteda breakdown of the functions of management which he listed as: planning, organizing,

commanding, coordinating and controlling. Fayols model of management as a series of

functions remains a keystone of management theory to this day. His most significant

contribution, however, was his 14 Principles of Management namely: Division oflabor, authority and responsibility, discipline, unity of command, unity of direction,

subordination of individual interest to the general interest, fair remuneration of personnel,centralization, scalar chain, order, equity, stability of tenure, initiative and esprit de

corps

Henry Fayols work was not widely known in the United States and the rest of

the world until the thirties, until it was first translated into English. Nonetheless, hisconception of the nature of management and the principles of organization which he

proposed were more fundamental and general than those proposed by his predecessors

and continue to be influential even today.

3. The Human Relations Movement

Elton Mayo and Fritz Roethlisberger are the two names associated with the

development of this school of thought. The Human Relations Movement is associatedwith the famous Hawthorne Experiment in the Western Electric Company which took

place in 1927-1932 in the United States.

Elton Mayos Hawthorne studies which began in 1927 to determine therelationship between physical working conditions and productivity emphasized the

potential impact of the behavioral sciences on management. Mayo and this teams

experiments confirmed that management should regard work as a social as well as a

mechanical experience.

This school analyzes management from the standpoint of interpersonal

relations of men in the organization as they interact with one another and uses the fieldsof psychology and sociology for its techniques. This school is premised on the

conviction that management is getting things done through others. Since the primary

focus of the school is the individual, practitioner of this school see motivation as an

important function of management to understand and get the best from people by meetingtheir needs and responding to their aspirations


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Through the years, this school developed and the focus of attention is onthe group of individuals which primarily studies behavioral patterns of small and large

groups in the organization. This approach is referred to as organizational behavior.

4. The Quantitative Approaches to Management

One of the major components of contemporary management literature is the

contributions of the quantitative sciences i.e., mathematics and statistics. Though the

effort to define management problems more precisely in quantitative terms is old, it was

not until after World War II that the methods of the quantitative sciences began to besystematically applied to solve practical problems in management.

According to Ackoff and Sasieni, the methods of quantitative sciences first found

systematic applications in the war effort in Britain in the early days of World War II.

This school views management as a system of mathematical models and processeswhich expresses management problems into goals and objectives and derives factorrelationships and combinations that may likely optimize the stated goals and objectives of

the organizations. This school is best exemplified by operation researchers and analysis.

The mathematical model has been used extensively through the computer system inmodern management.

5. The Systems Approach

General Systems Theory is a relatively new discipline which tries to describe

phenomena by using concepts in several disciplines. Because of its holistic and

multidisciplinary perspective, systems concepts have been found to be useful indescribing complex activities including organizations.

The systems approach or the practice of considering the environmental,

psychological, physical, and informational facets of a managers job as a whole system

rather than as a collection of unrelated parts was the approach from the late 1960s to the

early 1970s . The basic idea during this period was to integrate the other schools ofmanagement into the functional approach.

A system may be defined as a set of interacting elements bound together by acommon objective and operating within a given environment (Baltazar, Jose D, et al,

1988). Systems may be physical, biological, chemical or mechanical. The systemsschool of management is an assembly of concepts, principles, theories, techniques,procedures, and approaches operating within an internal and external environment.

Management in the system school is viewed to be divided and composed ofsubsystems; e.g. the systems of planning, organizing, controlling, monitoring, staffing,

budgeting and decision-making. The various tasks in an organization constitute a system.


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6. The Empirical School

This school critically examines management through experience by usingcases and incidents in its study of management. There is a common saying that

experience is the best teacher. Practitioners of this school formulate principles frommanagement experiences and use them as guides for their future actions. According to

Ernest Dale (1952), it cannot be denied that the study of management experience isimportant ; but the over-emphasis of the empirists on the past virtually make them

vulnerable in criticism, on the premise that the future may likely occur in a different wayfrom the past. Events and other circumstances, as a result of human activity, continue

changing and therefore, they are exactly the same, if ever they recur at all.

7. The Contingency Approach

The Contingency Approach to management was the dominant approach in

the 1970s. This emphasizes the fact that there is no single best way to manage in all

circumstances and that different situation and conditions require different management

approaches.

8. The Cost-Saving Approach

The late 1970s ushered in what is now known at the cost saving approach.

Renewed interest in this approach was brought about by the recent resources shortages.Its proponents view this as the only way of maintaining and increasing profits.

9. The Unified Operational Approach

The late 1980s favored a unified operational approach, Harold Koontz inan article pointed out that this approach to management recognizes that there is a core of

knowledge about managing that exists only in management. Such matters as line and

staff, departmentation, the limitations of the span of management, managerial appraisal,and various managerial control techniques involved concepts and theory found only

where managing is involved. In addition, this approach is eclectic in that it draws on

pertinent knowledge derived from other fields. It includes the clinical study of

management activities, problems and solutions; applications of systems theory; decision-

making; motivation and leadership theory; individual and group behavior theory; and theapplication of mathematical modeling and techniques.

As the 1990s unfold, the prevailing belief is that no single approach or schoolcan be set apart as most important. Rather, the complete manager must be able to

recognize each approach or school as contributing insights, perspectives, and special

tools toward the accomplishment of his goal.


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It should be pointed out that most companies today urge management schools

to buttress their teaching of practice with a good grounding in the underlying theory.

People Who Made Major Contributions in the Field of Management

The emergence of management concepts for persons interested in managementevaluation and development thought and the patterns of management analysis has been aninteresting subject to management practitioners and students. It is in this context that we

acknowledge those major contributors in the field of management:

FREDERICK W. TAYLOR (March 20, 1856March 21, 1915)

Frederick W. Taylor is generally acknowledged as the Father of Scientific

Management. Most likely, no other person in the domain of management has had a

greater influence on the early development of management. At an early age, he gave uphis college studies and started working as an apprentice pattern-maker and machinist in

1875. Later, he joined the Midvale Street Company in Philadelphia as a machinist. Herose to the position of Chief Engineer after earning a degree in engineering throughevening study. He invented the high-speed steel-cutting tools found in industrial

engineering and technical shops today. His experience as an apprentice, an ordinary

laborer, a foreman, a master mechanic, and eventually, a chief engineer of a steelcompany gave him insights to understand the problems and attitudes of workers and to

see the possibilities for improving the quality of management.

Taylors major concern throughout his life was to increase efficiency in

production. He saw productivity as the answer to both higher wages and higher profits.

He believed that the application of scientific methods, instead of custom and rule of

thumb, could yield productivity without the expenditure of human energy. His principlesemphasize using science, creating group harmony, and cooperation achieving maximum

output, and developing workers.

HENRY L. GANTT (1861-1919)

Henry L. Gantt is known for his development of graphicmethods of describing plans and making possible better managerial control. He stressed

the importance of time and cost in planning, directing and controlling tasks. He is known

for the famous Gantt chart which is widely used today and the forerunner of the ProgramEvaluation and Review Technique (PERT).


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Gantt, like Taylor, was a mechanical engineer, and he emphasized the

importance of teaching, of developing and understanding of systems on the part of bothlabor and management, and of appreciating that in all problems of management.

Gantt is also called for scientific selection of workers and harmonious

cooperation between labor and management. He emphasized the need for training ofworkers. He developed the Gantt chart that recognized that the total program goals

should be regarded as a series of interrelated supporting plans and events that people can

comprehend and follow. It may be noted that the most important development of controlreflects the simple principles of control, by picking out the more critical elements of a

plan to watch the flow carefully.

HENRY FAYOL (1841-1925)

Henry Fayol, referred to as the real Father of ModernManagement Theory, is a French industrialist. Fayol found out that activities of anindustrial undertaking could be divided into six groups, as follows: (1) Technical

(production) (2) commercial (buying, selling, and exchanging) (3) Financial (search for,

and optimum use of, capital) (4) security (protection of property and persons) (5)

accounting (including statistics) and (6) managerial (planning, organizing, command,coordination and control).

Fayol listed fourteen Principles of Management

1. Division of Work. This is the specialization that economists consider necessary for

efficiency in the use of labor. Fayol applies the principles of all kinds of work,

managerial and technical.

2. Authority and responsibility. Fayol finds authority and responsibility to be related,

the latter , arising from the former. He sees authority as a combination of official

factor deriving from the managers position, and personal factors composed ofintelligence , moral worth and experience.

3. Discipline. He sees disciplines respect for agreements which are directed atachieving obedience, application and energy.

4. Unity of command. This means that subordinates should receive orders from onesuperior only.


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5. Unity of direction. In this principle in each group of activities, the same objective

must have one head and one plan. As distinguished from unity of command, this

relates to the organization of the body corporate, rather than to personnel. He did

not mean that all decisions should be made at the top.

6. Subordination of individual to general interest. When the interest of managementand the workers differ, management must reconcile them.

7. Remuneration. The remuneration and methods of payment should be fair. It shouldafford the maximum satisfaction to employees and employer. Equal work, and pay

8. Centralization. Fayol refers to the extent to which authority is concentrated.

Individual circumstances will determine the degree that will produce the best overall

yield.

9. Scalar chain. This is the chain of superiors from the highest to the lowest ranks.

10. Order. Breaking this into material and social order, Fayol believes that there

should be an arrangement of things and people in an organization.

11. Equity. Loyalty and commitment should be elicited from personnel by a

combination of kindness and justice on the part of managers when dealing withsubordinates.

12. Stability of tenure. Fayol pointed out the unnecessary turnover to be both the cause

and the effect of poor management and stressed its dangers and costs.

13. Initiative. Initiative is conceived to be the thinking out and execution of a plan and

one of the satisfactions for an intelligent individual to experience . Fayol exhorts

managers to sacrifice personal vanity in order to permit subordinates to exercise it.

14. Esprit de corps. This is the principle that in unity, there is strength. This, in effect

is the extension of the principle of unity of command which emphasizes the needfor teamwork and the importance of communication in obtaining it.

CHESTER I. BARNARD (1886-1961)

Chester I. Barnard was a first-ratio scholar and intellectual who was greatly

influenced by Pareto, Mayo, and other faculty members at Harvard, where he taught. He

was a business executive and was one of the earliest writers that conceived of anorganization as a system which embraced the activities of two or more persons,

coordinating their activities to attain a common goal. He considered organization as the

binding element common to all cooperative systems. According to Barnards theoreticalformulation, the continuance of a successful organization depends upon two conditions:

(1) the accomplishment of the purposes of the organization, which he termed

effectiveness, and (2) the satisfaction of individual motives, which he termed


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efficiency. There are two types of processes that are required for meeting these

conditions: (1) those relating to the cooperative system itself and its relationship to itsenvironment and (2) those relating to the creation and allocation of satisfaction among

individuals. His analysis of the manager is truly a social systems approach, since, in

order to understand better the functions of executives, he looked for their major tasks in

the system where they operate. He suggested a comprehensive social systems approachto managing.

ELTON MAYO (1880-1949)

Elton Mayo, together with FJ, Roethlisberger, through their researches, gave

academic stature to the study of human behavior at work, applying keen insight, straightthinking, and sociological backgrounds to industrial experiment. They concluded that an

organization is a social system and the worker is, indeed, the most important elements in

it. Their experiments concluded that the worker is not a simple tool but a complex

personality that often is difficult to understand. The studies also recommended that an

understanding of group dynamics, coupled with the application of supportive supervision,was important. Another finding of their research was that the improvement in

productivity was due to social factors as morale, satisfactory interrelationships betweenmembers of a work group, and effective management a kind of behavior, and managing

that would understand human behavior, and serve it through interpersonal skills as

motivating, counseling, leading and communicating. This phenomenon, arising from

workers being noticed has been known as the Hawthorne Effect.

HUGO MUNSTERBERG (1863-1916)

Hugo Musterberg is acknowledged to be the father of IndustrialPsychology. He studied psychology and received his Ph.D. at the University of Leipzig

in 1885. He received his Degree in Medicine at the University of Heidelberg in 1887. At

the age of 29, he went to Harvard to take charge of the psychological laboratory andtaught experimental psychology where he saw the importance of applying behavioral

science to scientific management. In his book Psychology and Industrial Efficiency, his

objectives were to discover (1) how to find people whose mental qualities best fit themfor the work they are to do, (2) under what psychological conditions the greatest and most

satisfactory output can be obtained from the work of every person and (3) how a business

can influence workers in order to obtain the best results from them. He was interested inthe mutuality of interests between managers and workers. His approach is aimed to

promote the welfare of workers by reducing their time, increase their wages and raise

their level of life.


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FRANK B. GILBRETH (1868-1924) and LILIAN M. GILBRETH (1878-1972

The ideas of Taylor were strongly supported and developed by the famous

husband-and-wife team of Frank and Lillian Gilbreth. This husband-and-wife tandemstresses that, in applying scientific management principles, managers must look at the

workers first and understand their personalities and needs. According to the Gilbreths, it

is not the monotony of work that causes so much worker dissatisfaction but rather,

managements lack of interest in workers.

Laurence Peter observed that, managers get promoted until they reach the level of

their incompetence; but no further promotion is possible. Errors in the selection are

possible, perhaps even common. If a manager succeeds in a position, often requiringskills that the person does not possess, such promotion may involve work that is over the

managers head. While the possibility of individual growth must not be overlooked, the

Peter principle can serve as a warning not to take the selection and promotion process

lightly.

William Ouchi , wrote the best-selling book Theory Z. It shows how selected

Japanese management practices may be adopted in the United States. In Theory Z,selected Japanese managerial practices are introduced by companies, e.g. IBM, Helett-

Packard and Dayton-Hudson. One of the characteristics of the type Z organization, as

suggested by Professor Ouchi, is an emphasis on the interpersonal skills that are neededfor group interaction. There is also an emphasis on informal and democratic relationships

based on trust. Participative management facilitates the free flow of information needed

to reach consensus. Formal planning and objectives are very important. A corporatephilosophy and corporate values guide managerial actions. Workers are seen as wholehuman beings, not simply as factors in production. Theory Z companies selectively use

environment prevailing in the United States.


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CHAPTER 3

Planning

Planning contributes tremendously in the development of the organization inbusiness and industry. It is a fundamental statement that provides guides to ideas,

decisions and actions of the people in the top levels of management.

DefinitionPlanning is a process of determining proposed mode of action in light of the

objectives of the organization with full of understanding of the factors involve.

It is one of the functions that precede all other managerial functions of organizing,

staffing, directing and controlling. Planning is variety of plans taking the form of

strategy, rule, guide, procedure, and others. This contributes to the effective utilization of

resources line men, machine, materials and methods.

How Important is Planning?All levels of within the organization plan their action because they want it to be

effective and efficient in achieving their objectives. However, there are the enumerated

factors which explain the importance of planning.1. Planning is required in order to facilitate the accomplishment of business

purposes and objectives.

2. Planning is performed before the execution of all other managerial functions.3. Planning is the answer on where the organization now is and where it will be

tomorrow.

4. Planning never stop. It must be regularly in view of the changes of situations andvariable in the environment.

Kinds of Planning

1. Strategic Planninga planning that is reserved for the top-level manager, sinceit involves determination of overall direction. Its about issues on major social,political and technological influences which might affect its business.

2. Tactical planningthe type of planning for the middle and lower-levelmanagers. This concern in determining the task to be done, establishing

responsibilities and accountabilities, setting quantitative measures for each task,

implementing the planned actins and exercising controls.

Planning and the Management Process

The activity and responsibility are distributed at the different levels of the firm.Through planning the objectives of an enterprise and its subunits are being achieved. At

the top management level, the plans generally cover the whole firm while at the middle or


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subunit levels, plans may cover only particular sections or department which more on

functional in character.

Here are the examples of typical plans developed at the middle or subunits level:

1.

Sales Forecast (Marketing)2. Production Schedule (Manufacturing)3. Cash Budget (Finance)4. Recruitment Plan (Personnel)5. Procurement Plan (Purchasing)

In the top level management, planning has been evolved over the years.However, the most common form of planning for the firm is the profit budget which is

also commonly referred to as the annual company budget.

The plan essentially consists of:

1. The companys expected revenues for the year.2. Its planned expenses for the year.3. Its expected profits (or losses) for the period.

The formal planning systems are much concerned with setting andcommunicating the performance expectations of top management and as well as to

individual units or department which compromise it. The performance expectations are

expressed in the objectives and goals.

Objectives are clear-cut and carefully considered statement designed to give an

organization and its members the direction and purpose. According to Peter Drucker

business should have well defined objectives and goals in all of the following areas:

1. Market standing2. Innovation3. Productivity4. Physical and financial resources5. Profitability6. Managerial performance and development7. Worker performance and attitude8. Public responsibility

Types of Plans

There are categories for describing plans in business like programs and projects,

policies, procedures and rules.

Programs and Rules


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Programsit is usually refer to larger activity units. This is a collection of related plans

or projects. For example: an expansion program which consists of the related activities,building a new factory, recruitment and training of new workers, opening of new market

outlets, additional sales force, etc.

Projectsa plan which pertains to a discrete activity unit which has a specific startingand ending point. It may also be distinguished from other operating plans in that they

involve non-repetitive activities. For example: constructing the factory building,

conducting a market survey for a specific product or moving the office to anotherlocation.

Policies, Procedures and Rules

Policiesthese are general statements or understandings that guide company personnel

in making decisions. Policies are usually contained in memos, more frequently in

company manuals.

Rules and Proceduresthese are specific instructions or definite actions to be taken or

not to be taken with respect to a task or situation.

In business management, it has analytic tools and techniques for business

planning and decision making. Many of these tools and techniques are suited to specifictypes of planning functions in financial planning, production and logistics planning,

marketing and sales planning, etc. These include Break-Even Analysis, Forecasting

Models, Linear Programming, and Simulation Model.

Break-Even Analysisit is the most widely used planning tool in business. Itanalyzes the effect on profits of different pricing strategies or of differentalternatives in incurring costs.

Forecasting Modelsthe process of developing assumptions about the futurethat are relevant to the predicted level of certain planning variables. For example,company sales.

Linear Programmingit is a quantitative tool for determining the optimalcombination of resources and activities. It can be used for production scheduling,

allocation of marketing personnel to territories or allocation or production inputsto produce an item at minimum cost.


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Chapter 4

Organizing

Organizing is the process of grouping of work/division of work, subdividing the work to be done

delegation and empowerment of authority and responsibility, and the establishment of goodenvironment towards the attainment of a common goal.

Organizing in some manufacturing firms is termed as zoning. It is where the superior/manager- in

charge group his team members to work on different tasks identified.

This is the function of organizing. Organizing has been defined as the process of identifying

activities needed to accomplish a goal, subdividing and grouping these activities intomeaningful units, and assigning authority and responsibility to people for their

accomplishment. Some define organizing more simply as "dividing work and coordinating

divided work."(Echanis & Rodriguez)

Nature and Scope of OrganizingOrganizing as a process should consider several factors or fundamentals and they are as follows;

The structure must reflect objectives and plans because activities of the organization are basedon them.

The structure must reflect authority given to top and middle management. The organization structure should reflect their external environment The organization must be manned

The organization should be based on the objectives and plans and supporting activities to attain the

firms goal and not on individuals to staff it.

The structure is designed to clarify the scopes and limitations of ones position. It also serves as anindicator for channels of communication and distribution of tasks.

Organization structures are designed not just based on their objectives and plans which are external

but should also be based on their external environment. External, environmental factors that needs tobe considered are social, political, economic, education, technological and moral/ethical.

The organization must be manned. Structures must reflect the authority and its scope since activitiesare grouped. It should be clear to all members about their duties and responsibilities and their area offunctions.

The number of persons (subordinates) that a manager supervises or manages is called his

"span of control". As previously stated, this span can not be indefinitely expanded, although

what is an effective span of control may vary depending on the individual manager's abilityor on the nature and variety of the activities involved.


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Organization and its Nature

Organization - is the executive structure of business. It emphasized that the organization is theexecutive/main framework by which operations or work is performed, that it clarifies required

channels, points of origin and flow of management direction and control. It also connotes creative

process. This means that organizations being a creative process works efficiently an effectively withtheir respective tasks through team efforts.

ORGANIZATION CHART

George Terry defined an organization chart as a diagrammatical form which shows important

aspects of an organization including the major functions and their respective relationships, thechannels of supervision, and the relative authority of each employee who is in charge of each

function

An organization chart is a drawing that shows the important aspects of an organizational structure. It

shows the relationship among positions as to authority, accountability and responsibility and the

manpower who staff or occupy these positions.

THE IMPORTANCE OF AN ORGANIZATION CHART

A. It shows a clear view of the entire firms structureB. It shows the principal divisions and lines of formal authority and responsibilityC. It assists the management to divide the different work that needs to be performed effectively

and efficiently.

D. It shows a clear view of who is in charge for a particular task.E. It shows the grouping of departments for easier direction and control of activities.F. It gives access and convenience to the entire organization for the reason that it could be a way

to sort the responsibilities of the position so that time and effort are not duplicated.

G. Hence, It provides a way to lessen costs/expenses such as time, money and opportunity.To some authors, the formal definition of organization structure has many advantages,especially in large institutions. These include mainly: 1) efficiency gains fromspecialization; 2) order arising from the clarity of job definitions; and 3) reduction ofunintended gaps or overlaps in the conduct of the activities of the institution.

Formal Organization Structures

In most large institutions, the subdivision and grouping of the activities is done in a waywhich is both explicit and stable over time. This gives rise to formal organization

structures which are usually depicted through organization charts or a "table oforganization". In many organizations, such organization charts are usually supplementedby various other documents detailing the job responsibilities of the various positions,and the relationships of various positions to others. Such documents include jobdescriptions and responsibility charts. (Echanis & Rodriguez)


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The Dimensions of Structure

Organizational structure is usually defined in terms of three dimensions. These are:

The bases for grouping activities together. The type of authority relationships among organizational

units. The coordination mechanisms used.Each of these are discussed in the following sections.

GROUPING ACTIVITIES IN AN ORGANIZATION

The different activities in an organization are commonly grouped together on the followingbases: 1) function 2) product 3) area or territory 4) client served 5) other bases such as timeor simple numbers.

Grouping by Function

This basis for grouping activities is commonly used in manufacturing firms. This is

done by large manufacturing firms to gain efficiencies through specialization and tofacilitate communication, coordination and cooperation of similar or related activities.

A Functional Organization

Grouping by Product

This is the common basis usually used by large business organizations such as San Miguel

Corporation. San Miguel has several products to offer and can be classified into food andbeverage. On food products, they have raw meats and processed foods. Dairy products andsnack foods. On beverages, San Miguel offer a wide array of choices from healthy drinks

such as mineral water to fruit, and tea drinks to alcoholic beverages such as San Miguel

Beer with different variants. For this type of grouping, production and coordination

efficiency is the main objective.

President

VP

Production

VP

Finance

VP

External

VP

Research

VP

Marketing


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ORGANIZING BY PRODUCT

Grouping by Area or Territory

This is a grouping used by multinational firms and government offices. This becomes a majorbasis of grouping activities when the geographic scope of a firms operation becomescomplicated and large and when these different location/areas on which these firms operates,become very different and diversified. Other factors that could be considered, under thismethod is the culture, lifestyle, tradition, and others which means a lot of adjustments toundertake externally. If for example an organization locally established in the Philippines issuddenly branching out across the nation such as New York or Australia, one must considerthe other nations peoples taste and preferences and other factors essential for the continuityof their operations.

ORGANIZING BY GEOGRAPHIC AREA

Grouping by Client

This method of grouping activities becomes important when a company or an organizationserves well-defined client groups with different characteristics and requirements in terms

of products or services or both. In business, for example, clients are distinguished in termsof industrial vs. consumer clients, or civilian clients as against military clients, or domesticclients as against foreign clients, and so forth. Government offices may also be organizedon the basis of its major clientele group. An example is the Department of Education,Culture and Sports which has a division for Elementary Education, for Secondary Education,and for Tertiary Education. The clients of each of these divisions are respectively, theelementary schools, the high schools, and the colleges and universities throughout thePhilippines.(Echanis & Rodriguez)

GENERAL

MANAGER

DAIRY

PRODUCTS

MEAT

PRODUCTSBEVERAGES

General Manager

Northern

Luzon

Branch

Metro

Manila

Branch

Southern

Luzon

Branch

Visayas

Branch

Mindanao

Branch


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ORGANIZING BY CUSTOMER

Other Criteria for Grouping Activities (Echanis & Rodriguez)

There are still other bases for grouping activities. One is to group activities by simplenumbers. In the military, for example, field units (squads, platoons, companies, battalions,etc.) are constituted by subdividing large numbers of personnel into identical or almostidentical subunits. Thus, an army platoon is generally identical in size, composition andfunction with other platoons in the company structure.

Another basis for grouping activities is time. The most well known example of this is theorganization of a production section into three shifts, e.g. the morning shift, the afternoonshift and the night shift. These last two bases for grouping activities are less commonlyused compared to the four previously discussed and are used mainly for grouping activitiesat the bottom of the organizational pyramid.

Organizing Through a Combination of the Various Criteria

In most organizations, a combination of many, if not all of the criteria discussedabove are used for grouping various company activities. At the primary or top level, thedivisions are organized according to product lines. At the second level, grouping is byfunction. At the third level we have activities in the sales department grouped by clientand lastly, the production department grouped by area.

STORE MANAGER

MENS

DEPARTMENT

LADIES

DEPARTMENT

CHILDRENS

DEPARTMENT


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ORGANIZING THROUGH A COMBINATION OF VARIOUS CRITERIA

Matrix Organization

This form of organization was pioneered in the American aerospace industries but hassince found applications in the more traditional industries as well. A matrix structure iscreated when a project or product structure is superimposed across several functionaldepartments, resulting in dual reporting relationships for the personnel involved

Matrix organizations also solve other problems in contract project work. A matrix

structure allows better utilization of personnel (as in a case were a design engineer is notneeded full time in one project so that his functional boss can give him work within thedepartment or a simultaneous assignment to a second or third project). Matrix structuresalso provide greater feelings of job security to project personnel who have theirfunctional departments to return to when the project in which they are assigned iscompleted. Finally, matrix organizations satisfy the preference of most technicalpersonnel to be based in a department composed of members of his own professionalgroup.

In the Philippines, matrix organizations do not appear to be widely used as yet. Inpart, this is probably because the dual subordination inherent in such structures createssufficient complications in reporting relationships to discourage the use of this formexcept in those situations where the compensating advantages of this organizational formare very important to the business or institution using it.(Echanis & Rodriguez)

PRESIDENT

PRODUCT A PRODUCT B PRODUCT C

MARKETING

INDUSTRIAL

SALES

LUZON

PLANT

VIZ-MIN

PLANT

CONSUMER

SALES

FINANCEPRODUCTION


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MATRIX ORGANIZATION

Changing the Structure of an Organization

It is important to note that the structure of a firm or office, though often quite stable overtime, is rarely immutable. As a business expands, contracts, or changes its products orservices during its life, the organization structure and the basis of grouping activitiescould change radically. In the highly industrialized countries for example, small firmsproducing and selling one or a few products, and organized primarily along functionallines, became reorganized into product divisions when substantial growth in the sizeand product lines of these firms occurred over the years. Radical reorganizations of a firm(i.e., through a change in the basis for the primary grouping of the firm's activities) areusually carefully studied management decisions because they are usually intended toproduce a fundamental change in the way activities in the organization are conducted,controlled, and coordinated. Another reason is that radical reorganizations usuallyinvolve the displacement and redeployment of people and hence often encounterresistance.

FORMAL RELATIONSHIPS IN ORGANIZATIONS

Organizing, as previously defined, includes not only the identification and grouping ofactivities, but also the assignment of authority and the definition of relationships amongthe various units comprising the organization. There are three types of relationshipswhich may exist between one organizational unit and another depending on the extent offormal control or authority exercised by one over the other. These relationships are: 1) line,2) staff, and 3) functional authority.

President &

VP

Production

VP Finance VP ExternalAffairs

VP ResearchVP Marketing

PROJECT

MANAGER

PROJECT

MANAGER

Engineering

Group

Production

Group

Engineering

Group

Finance &

Acctg.Group

Production

Group

Finance &

Accounting Group

Personnel

Group

Personnel

Group


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1. Line Authority- it is the simplest and oldest form of organizational structure based on theclassical principle of Scalar Chain. It is in this form of structure, that authority passes

responsibility directly to his immediate superior. It refers to a direct straight-line responsibility

and control from the top management to the middle management and to the lower level. This

type of structure is commonly used by small enterprises wherein the operations are a lot moresimple. The advantage of this structure is that a manager takes a clear vision and control on

the business operations. And since almost everything is being taken cared of by the manager,

it becomes on the other hand a disadvantage, if the manager has limited knowledge ondifferent areas in which he is responsible with. He has to be knowledgeable on different

business areas such as human resources, accounting, marketing, management/ administrative

and more.2. Line and Staff Authority. It is the type of organizational structure that utilizes the assistance

of experts and specialists. This form of structure is commonly used by growing companies or

medium sized enterprises. Once business operations expand, operations, activities, and

market expand as well. Therefore, everything becomes complex that you need extra hand to

help you perform your tasks. This is when you need to utilize the assistance of experts andspecialists, such as a marketing officer or an assistant manager to do the job.

Line Authority

VP for Production

Factor Mana er

PRESIDENT

Assembly Supervisor


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Line and Staff Authority

3. Functional Authority. This form of authority completely utilizes the service of experts or

specialists. The development of staff departments and position led quite naturally to attempt complete

reorganization on a functional basis. This removed the staff specialist from his assisting capacity andgave him the pure authority and responsibility for supervision and administration of the function,

replacing the operating personnel.Taylor felt that the advantage of functional specialization will be achieved to a great extent under this

method of organization. But this type of organization violates one of the traditional principles oforganization namely, the Unity of Command. According to this principle, no one subordinate can

have more than one supervisor. Reporting to several bosses could create problems such as lack ofauthority, inadequate control, confusion, and conflicts.

MARKETING

MANAGERPERSONNEL

MANAGER

PRODUCTION

MANAGER

ADVERTISINGMARKETING

RESEARCH

SALES

QUALITYCONTROL

PURCHASING PLANT SUPERVISOR

MANAGING

FINANCE

MANAGER

ENGINEERING

MANAGER


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Functional Authority Relationship

COORDINATING ACTIVITIES

As previously mentioned, divided, activities in the organization must be coordinated to

insure that these are directed at the overall goals of the organization. The coordination ofthe various activities in the organization is accomplished through numerousmechanisms which include: 1) the authority structure, 2) formal coordination structures,3) information systems, and 4) informal mechanisms.

The Authority Structure

The placement of a group of persons (and the activities they represent) under a commonsuperior provides the basic structural framework for the unified direction of such personsand activities. Moreover, a superior, says a vice president of production, may supervisedirectly only a limited number of individuals, yet he indirectly influences all the activitiesunder his subordinates' command. In the extreme case, the vice president can directlycommand any person under his department since the authority of all personsorganizationally below him in the department hierarchy are delegated authority, that is,such authority devolves from the authority of the person who is higher in the commandstructure. The authority structure is thus the basic mechanism which makes possible theunified direction and coordination of the activities in an organization.

ACCOUNTING

STAFF

FACTORY

MANAGER

CONTROLLER

PRESIDENT


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Formal Coordination Bodies

Committee This is another form of common organizational structure. This is used in situations

where group action and participation/decision is required. It is created to deal with special orunusual activities and any manager has the right to form a committee if needed.

Committees are classified as

Ad Hoc Committee undertakes temporary committees; Standing Committee. This is sometimes called permanent committee which

undertakes permanent activities, such as the Bidding and Awards Committee or the

Budget Committee.

NATURE OF COMMITTEE

A Committee is a tool for the development of ideas and procedures. It is a means by which ideas canbe pooled and offered for criticism. It is an effective way of getting all your people to work togetherand resolve matters that needs to be done through the collective opinions and common strategies.

There are four basic committees to be considered in forming a committee (According to Conrado S.Inigo)

A. The organization of a committee should grow out of a need that is recognized by therepresentatives of the departments and the personnel affected.

B. The members of a committee should be representatives of the function and personnelconcerned who have variations in opinion among them.

C. Duties, authority, and responsibility must be clearly defined.D.

The organization and operation of a committee should be a cooperative development.

Information Systems

Communication is considered as an input or a raw material in an organizations operation.

It is as essential as coordination and cooperation. Information technology nowadays givesan organization a competitive advantage that can position them strategically in the market.

CLASSICAL PRINCIPLES OF ORGANIZATION (Echanis & Rodriguez)

Many of the principles or guides for effective organizing observed today had their origins inmilitary organizations. This is understandable because historically, the military was already

a highly developed institution long before large scale business and other modemorganizations developed. Because of their pre-modern origins, these principles are oftenlabeled as "classical" principles of organization.


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Some of the more well-known principles are described below.

Principle of Unity of Command

This rule says that a person in an organization should have only one direct superior. Asituation where a person reports to more than one direct superior (i.e./'dual subordination")

is considered undesirable because it could confront the subordinate with a situation wherethe directives of his superiors are inconsistent with each other. Such inconsistencies couldproduce confusion, inaction, and conflict in the organization thus reducing its efficiency oreffectiveness.

A corollary of the above is the rule against "bypassing". This rule says that a superior shouldavoid giving orders directly to the subordinates of his subordinate. Doing so tends toundermine the authority of the subordinate involved. To avoid "bypassing" hissubordinate, a superior should course his orders or directives to lower level personnelthrough their immediate superiors.

It is important to note that the above do not represent absolute prohibitions. There are manysituations in which dual subordination and bypassing are knowingly allowed to occur in anorganization (see discussion .on Matrix Organization). Nonetheless it is easy to see that thewholesale occurrence of multiple subordination and bypassing in an organization canproduce great confusion or disorder among its members.

Parity of Authority and Responsibility

This principle says that if a person is responsible for accomplishing a certain task in theorganization, he should be given sufficient authority to accomplish that task. This is acommon rule, and yet experience shows that many problems occur in organizations becausesuperiors often expect their subordinates to achieve certain results but fail (perhaps

inadvertently) to give them the necessary authority to achieve those results. As mentionedpreviously, the use of formal position descriptions which include a listing of the authority ofthe person occupying the position helps to avoid many of these types of problems.

Absoluteness of Responsibility

This principle states that though a superior in an organization may delegate a portion of hisauthority to his subordinates, he does not, in so doing, reduce his responsibility oraccountability for the performance of the tasks under his jurisdiction. This principle isintended to avoid situations in which a superior can escape accountability for unsatisfactoryperformance through the simple expediency of delegating authority to his subordinates.

Checks and Balance

This principle states that an organizational unit whose function is to check or evaluate theactivities of another organizational unit must not be placed under the control or supervisionof the unit to be evaluated. An example of the observance of this principle is the commonpractice in business organizations of separating the internal audit unit from the accountingunit.


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Principle of Specialization

This principle states that an organizational unit becomes more efficient the more itspecializes in the performance of a set of similar or related activities over time.

Chapter 5

Staffing

Staffing is one of the most important functions of management. This is the key

function wherein an organization can take a big step to achieve their goals. Although

managers are not everyday exercising this function, this is the most critical part for the

reason that in staffing, you should be able to formulate the right job analysis to get theright people to match or perform their duties and responsibilities effectively and

efficiently. This decision of a manager on employees can have long-term significance to

the organization as well as to the individuals employed. Manpower is an active andinteractive element or resources or inputs of an organization that is why it is still the most

essential among the six (6) Ms of management which is Manpower, Money, Material s,

Methods, Machineries/Machine and Market. Manpower can identify the organizations

success or failure.

Staffing includes the recruitment, selection, assignment, and development of the

various kinds of human resources required by the organization. It also includes stafforientation, wage and salary administration, performance appraisal, manpower planning

and other staffing issues.

Recruitment

Recruitment as defined by Echanis and Rodriguez is the process of attracting theappropriate number of qualified individuals to apply for vacant positions in anorganization. The recruitment process costs both time and money and opportunity suchthat management should be able to attract the qualified candidates within a reasonableperiod of time at minimum costs to the firm. Systematic recruitment requires jobanalysis and the identification of applicants for vacant positions.

JOB ANALYSIS.

Job Analysis includes job description and the job specifications. This is part of the duty

of the human resources manager and is identified to be critical because it is through jobanalysis that you get an asset or a liability employee. It is through the several processes ofstaffing that you determine the first step to the organizations attainability of goals.Formulation of Job Analysis requires a thorough research and analysis of the previousand current methodologies used by the organization

Job Description indicates the job title, primary duties and responsibilities and for non-managerial positions, the kind of equipment or machines that will be operated by theperson who will occupy the position.


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Job Specifications or Job Qualifications state the minimum qualifications of the personneeded to perform the job. Such qualifications usually include personal and educationalbackground, work experience and technical/physical/communications skills.

SOURCES OF APPLICANTS (According to Echanis and Rodriguez)

Applicants can either be sourced internally or externally.

Internal recruiting means considering present employees as candidates for job openings.

Filling up the vacant positions in this manner imply the following company policies:

1) Allowing transfers from one department to another or transfers from one branchlocation to another

2) Promoting from within.

These policies are generally good for building morale and may prevent goodemployees from leaving the firm. However, recommendation from direct superior isrequired and in some instances, this can either be an advantage or disadvantage. It is anadvantage if the basis will be on the recommended employees performance but it is adisadvantage if the basis is through Padrino System.

Another disadvantage is the "ripple effect". When an organization tends to fill vacanciesthrough internal sourcing, turnover may rise and it will cost the company a lot. It will be acost in time, money and opportunity. The reason for that is the company may still need to gothrough the process of external recruitment and selection just to fill the vacant position theinternal employee vacated.

External Recruiting is the process of attracting individuals outside the organization toapply for positions with the firm.

Recruitment process and methodologies depends on the job openings. If the openingrequires technical skills, some organizations often use the services given by large andtrusted employment and training agencies, mainly because these agencies rigidlyfamiliarize these employees and enhance their skills before they are officially employed.These agencies are paid of course, by the organization depending on their agreements.

Most companies nowadays are organizing job fairs in several areas such as in schools anduniversities and even in malls. But the most common forms of recruitment used byseveral large firms nowadays aside on newspaper ads, television and radio is postingthough websites. The Philippine government has its own website for job searchers

wherein the government assists applicants in finding a job.

Selection

Selection is also termed as levels or stages of screening. It is the process of gathering

initial and sufficient information about the applicants and to eventually arrive at a


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decision on whether to hire or not to hire the person. Organizations usually practice

selection process with several initial steps such as:

Filling up of Application forms Initial Interview Initial Examination Second Interview Second Examination Series of Interviews such as panel interviews (for managerial positions) Final Interview

THE APPLICATION FORM. The application form can serve as a first screening devicewhich interviewed. It can also serve as a medium in measuring the honesty and credibility ofprospect employee through his consistency and accuracy in filling it up. Then, It usuallyserve as a basis for interviews but nowadays, several organizations ask applicants to submittheir resume or curriculum vitae as an initial requirement in applying for a job.

ELEMENTS OF AN APPLICATION FORM

I. GENERAL INFORMATIONA. Personal Data

Name, address, age, religion, citizenship, sex, height, weightB. Health Condition

Information on serious illnesses Information on physicaldefects

C. Relatives Working with the CompanyD. Position Applied ForE. Salary DesiredF. Date Available to Start WorkII. EDUCATIONAL BACKGROUND

A. Schools, Degrees, Major SubjectsB. HonorsC. Extra-Curricular ActivitiesIII. EXPERIENCEA. CompaniesB. Positions held

C. Supervisor's nameD. Nature of workE. Reason for leavingF. Monthly salariesIV. SKILLS

A. MachinesB. OthersV. PERSONAL REFERENCESVI. AFFIRMATION BY APPLICANT of Accuracy of information and signature

TESTS Test or examinations are given to applicants to further screen them on different areas.There are several and most commonly used tests that organization nowadays, are utilizing.These are the Intelligence tests, IQ tests, Aptitude tests and Personality tests or


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Psychological tests. Intelligence tests are designed to measure mental capacity and to testmemory, speed of thought, and ability to see relationship complex problem situations.

Personality tests are designed to or candidates' personal characteristics and the way they mayaffect others, thereby giving a measure of potentiality for leadership. These tests, also known ashuman psychological tests, are designed to secure information about an applicant'sabilities, aptitudes, interests, Creativity and personality. This test proves to be very essentialfor maintaining good atmosphere in the workplace. For technical and clerical jobs, this mayrequire some technicalor hands-on tests.

INTEVIEWS

Interviews are, conducted to clarify data on the application forms, to assess the personalityand other skills of the applicant and to explain the nature of the job to the applicant for thepurpose of getting an idea of his attitude toward the job. Interview questions should beplanned in advance in order to get the process done in the shortest time possible. Exhibit1 shows an example of an interviewer's rating scale. The use of a rating scale aids in

planning the interview. (Echanis & Rodriguez)

The final phase of the selection process is the background investigation as commonlytermed by some organizations. This is where organizations ask for additionalinformation, opinion and some recommendations from outsiders or people professionallyrelated to the applicant.

Medical Examinations

This is to test the physical fitness of the applicant and usually being required byorganizations prior to orientation. Only Organization- accredited clinics and hospitals are

required by some large companies.

Orientation

Orientation is a formal introduction of company to the employees. This is where thenewly hired employees are informed about the companys history and background,organizational structure or the top management, mission, vision, policies and proceduresand other job-related information such as the duties and responsibilities, pay periods,working hours and rules & regulations. Orientations in large firms are usually done bythe human resources manager assisted by personnel assistants, but for small firms it isdone by an immediate superior.

The purposes of orientation (according to Echanis & Rodriguez) are:

1) To develop a sense of pride and loyalty on the part of new employees about thecompany.2) To create awareness in them on who are the company competitors.3) To avoid any future misunderstanding about company policies, rules and procedures.


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Wage and Salary Administration

It is every employees right to be fairly compensated for the service that render to the firm.Salary is the official term for white-collar jobs, whereas wage refers to the pay of blue-collar jobs. Salary and wage administration should be given enough attention because thisserves as the main motivator for several laborers.

Total compensation earned by employees (according to Echanis & Rodriguez) may consistof wages, salaries, fringe benefits and a form of profit-sharing. Compensation levels ofcompanies may differ even if they are in the same type of business.

The factors that influence the setting of compensation levels are:1) Attitude of management

2) Job specifications3) Environmental factors.

There are four kinds of employee compensation1. Salary or Wage is the basic compensation an employee is entitled of, for rendering

his service.2. Allowance is a pay usually given to a laborer undergoing training programs before

the company officially employs him/her. It is also a term used for a pay given toOn-the-job trainees.

3. Benefit is a pay the employees are entitled of once they belong to a certainorganization.

4. Incentives are given to employees if they exceed in rendering their time ad serviceto an organization.

Organizations consider several factors in determining a fair and reasonable salary to matchthe duties and responsibilities of an employee. Here are some of these factors.

Basic determinants of salary1.The relationship between the jobs and wage rates2. The recognition of individual differences

3. The level of pay existing in the community

4. The companys ability to pay

5. The type of industry

6. Labor costs

7. Costs of living

8. Collective bargainingCauses of wage inequities

pressure of aggressive employees or supervisors seniority


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favoritism among supervisors the feeling of being important union pressure faulty classification of jobs absence of job evaluation compensation plan not kept up- to- date

Environmental Factors. The setting of wage or salary levels is not entirely within the fullcontrol of management. In the Philippines, the law prescribes a minimum wage. In the past,in addition to this minimum wage, a cost of living allowance (COLA) per month was requiredby law. Furthermore, the supply of and demand for labor for certain company positions is asignificant factor to consider in setting compensation levels. If for instance, the need forbusiness courses was high several years ago, nowadays since we are in a modern age,technology related courses are in demand. As a result, several organizations are giving highercompensation for these types of jobs such as computer analysts, computer engineers, webdesigners, computer administrators and other computer-related courses.

Performance Appraisal

Performance Appraisal is the process of evaluating the employees work. It is an effectiveform of gauging the employees performance and progress. Performance Appraisal isperformed in organization for the following objectives:1) To determine whether employees should be retained, promoted or transferred2) To determine the amount of adjustments in salaries or wages, and3) To provide feedback to employees in the areas where they need some improvementsthrough their own efforts or by additional training.

Appraisal is usually the duty of human resources officer and done annually or semi-annuallywith a well formulated checklist/guidelines on how to evaluate an employee on different areas

to be considered. Appraisal methods include the following;

Objective Method includes measuring concrete outputs like sales volume,production outputs, or credit collections.

Judgmental Method includes rating techniques. Rating techniques make use ofrating scales on which a performance dimension or characteristic is to be rated.

Training and Development

An organization conducts training and development, for the following reasons:

1.) To motivate their employees.2.) To improve the ability required to perform their tasks.3.) To increase productivity.

Training attempts to improve the ability required by the job of operative employees and isimmediately focused on skills while development attempts to improve the abilities ofpersonnel to prepare them for more responsible positions in the future.


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Other reasons are 1) to orient employees about company operations and culture and 2) tohave a homogeneous profile of employees who could have diverse educational and socio-cultural backgrounds.

Training could be done internally or externally through the most common methods such as:

1.) Job Rotation. Job Rotation means an employee is assigned to different task over aperiod of time2.) Workshop. A workshop is an ad-hoc meeting of employees for the purpose of discussingcommon problems or a specified agenda. It is also a venue to inform each other about theagenda on hand,e.g., Productivity Workshop. In a Productivity workshop, employees discussways and means to improve productivity, e.g., through quality control of raw materials orproper maintenance of equipment or machineries. (Echanis & Rodriguez).To someorganizations, workshops are done during conventions.3.) On the-job training. On the job trainings are often termed as hands on training.Manpower Planning

Considering the dynamic external environment of a firm, an organization should consider allthe factors that affect its operations. Manpower planning should sustain the productivity ofthe organization. It is getting sufficient number of employees to support the companysperformance towards the attainment of its goal.

Planning manpower needs in advance result in: 1) lower recruitment costs, 2) better-trainedemployees and 3) longer-term relationship with key employees.

The Manpower Planning Process consists of the following activities

1) Determining manpower needs from company plans and programs.2) Determining available manpower resources.3) Analyzing training needs of present employees.4) Recruiting manpower from external sources for those positions that cannot be filled

up by present employees.

5) Planning training and development of manpower resources. The staff planningprocess is continuing and dynamic because of recurring vacancies and the changinginternal and external environment of the firm.

Issues in Staffing ( Echanis & Rodriguez)

There are several issues in staffing being discussed in this chapter such as,1) the role of

the personnel department, 2) issues on formality, 3) the important of "proper choice" inselecting employees, 4) outsourcing, and 5) recruitment agencies.

THE ROLE OF THE PERSONNEL DEPARTMENT. Personnel Departments (or sometimesreferred to by other firms as Human Resources Department) are staff departments whichassist other departments in the firm in the following areas:


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Assistance in recruiting

Assistance in Screening

Places advertisementfor vacant position

Contacts employment agency

for vacant positions

Conducts campus recruitment

Calls previous applicants

Assists in job analysis

Decides on who among theapplicants should take tests

Administers tests

Conducts preliminaryinterviews

Decides on who among theapplicants should beinterviewed by line managers

Assistance in Wages andSalary

Conducts industryAdministration survey onwages levels

Researches on legal issuesconcerning laborAssistance in PerformanceAppraisal

Oversees standardizationin the implementation ofpersonnel policies

Sees to it thatperformanceappraisal is regularlydone

Recommendsappropriateappraisal methods

Reviews fairness of

appraisal

Maintains personnel files ofallemployees, e.g. appraisals,reprimands, training, etc.,for usein future decision.


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Assists in Training andDevelopment

Maintains Personnel Files

Conducts in-housetraining programs

Identifies trainingprograms outside thecompany.

Keeps files of JobDescriptions, JobSpecifications, JobClassifications, PerformanceAppraisal records

Prepares, maintains andupdates the files incoordination with otherdepartments.

Prepares, and updates

personnel policies, manuals,other rules and procedures incoordination with otherdepartment.


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FORMALIZING AND STANDARDIZING PERSONNEL POLICIES. Formally

standardizing personnel policies uplifts the moral and motivates employees. It should be

therefore be clear that this should be the duty a personnel or human resources manager mustperform. One of the most controversial issues under this is the issue in formalizing and

standardizing performance appraisal. In a government organization for instance, its environment

is greatly affected by social and political factors. It is the job of a personnel manager to protecthis decisions from any partisan politics.

The Importance of Proper Choice in Employees

The first thing that was emphasized at the first part of this chapter is the importance of this

function as the key to an organizations success. But then, employees being hired on process may

not guarantee its success 100% for the reason that they may sometimes fit for the position but

they may not fit in the organizations environment. It is also the main reason why severalorganizations put the new employees on probationary period. It is to test their abilities towards

different areas and aspects over time.

OUTSOURCING. Outsourcing services has become a common practice among business firms,

especially for services which are not considered as critical to the firm's core competence. The mostcommon example of outsourced services are janitorial and security services but is not limited to

these. Some manufacturing firms may outsource design activity or even product

manufacturing i tself, as in contract manufacturing.

The reasons for this include:1. Companies are relieved of recruitment; selection and training functions.2. Permanent labor force is reduced which allows the company to grant more benefits to its

employees.3. Union negotiations are easier if membership is reduced.4. Companies do not have to retain some employees until retirement age. They can, in

fact, impose the qualifications.

5. Companies are relieved of daily supervision of outsourced tasks. For example, a largedirect-selling firm outsources the delivery services of its products to its agents. Several

firms service the direct selling firm by providing the vehicles and drivers. The direct

selling firm pays the service provider a lump-sum monthly fee. The provider, in turn, hires

the drivers and maintains the vehicles.

RECRUITMENT AGENCIES. Recruitment agencies hire indirectly applicants for some

positions including managerial positions. Companies are relieved of screening all applicantswhich include such activities as testing and interviewing applicants. Recruitment agencies send a

number of screened applicants to the employer who in turn chooses or selects the best choice.

Recruitment agencies are paid some fees for this service either by the employer or by the employeedepending on the arrangements. (Echanis & Rodriguez).


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Chapter 6

Directing

A. What is Directing?

Directing is the process that many people would most relate to managing. It issupervising, or leading workers to accomplish the goals of the organization.

Directing is the final action of a manager in getting others to effect all preparations

toward completion.

Directing is the process of influencing people's behavior through motivation, communication,

group dynamics, leadership and discipline.

B. Purpose of Directing

To channel the behavior of all personnel to accomplish the organization's mission and

objectives while simultaneously helping them accomplish their own career objectives.

C. Functions of Directing

1. Gives the manager an active rather than a passive role in employee performance, conductand accomplishments.

2. Gives managers a second responsibility: helping people in the organization accomplishtheir individual career goals.

3. It also includes motivation, communication, performance appraisal, discipline andconflict management.

D. How to Effectively Carry Out the Managerial Function of Directing

Directing concerns the total manner in which a manager influences actions of

subordinates.

First, it includes issuing orders that are clear, complete and within

manual in pom

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