Class Notes POM Unit-3 PDF

UNIT 3: Functions of Management Introduction to Different functions of Management: Planning, Organizing, Directing, Coordination and Controlling. (POSDCORB). Planning- Introduction, Essentials, Importance, Types of Plans followed in Banking sector, Process, Vision, Goals, Strategies, Polices and Pl...

UNIT 3: Functions of Management Introduction to Different functions of Management: Planning, Organizing, Directing, Coordination and Controlling. (POSDCORB). Planning- Introduction, Essentials, Importance, Types of Plans followed in Banking sector, Process, Vision, Goals, Strategies, Polices and Planning Premises. Rationality in Decision Making. Functions of Management: Management is defined as the procedure of organising, directing, planning and controlling the efforts of organisational members and of managing organisational sources to accomplish particular goals.  Planning is the purpose of ascertaining in advance what is supposed to be done and who has to do it. This signifies establishing goals in advance and promoting a way of delivering them effectively and efficiently. In an establishment, the aim is the obtainment and sale of conventional Indian handloom and workmanship articles. They trade furnishings, readymades, household items and fabrics made out of classical Indian textiles.  Organising is the administrative operation of specifying grouping tasks, duties, authorising power and designating resources needed to carry out a particular system. Once a definite plan has been set for the completion of an organisational intent, the organising party reviews the actions and resources expected to execute the program. It ascertains what actions and resources are needed. It determines who will do a distinct job, where and when it will be done.  Staffing is obtaining the best resources for the right job. A significant perspective of management is to make certain that the appropriate people with the apt skills are obtainable in the proper places and times to achieve the goals of the company. This is also called the human resource operations and it includes activities such as selection, placement, recruitment and coaching of employees.  Directing involves directing, leading and encouraging the employees to complete the tasks allocated to them. This entails building an environment that inspires employees to do their best. Motivation and leadership are 2 chief elements of direction. Directing also includes communicating efficiently as well as managing employees at the workplace. Motivating workers means simply building an atmosphere that urges them to want to work. Leadership is inspiring others to do what the manager wants them to do.  Controlling is the management operation of controlling organisational achievement towards the accomplishment of organisational intentions. The job of controlling comprises ascertaining criteria of performance, computing the current performance, comparing this with organised rules and taking remedial action where any divergence is observed. Here management should ascertain what activities and outputs are important to progress, how and where they can be regulated and who should have the power to take remedial response. What is POSDCORB? POSDCORB is an acronym which means Planning, Organizing, Staffing, Directing, Coordinating, Reporting and Budgeting which was first coined in a paper on administrative management that was written for the Brownlow Committee by Luther Gulick and Lyndall Urwick. POSDCORB can be used as a systematic framework for efficiently executing business processes in a company or by an individual. Steps of POSDCORB As we have already understood that POSDCORB is a series of steps for management, we need to understand these steps. These are various steps or stages involved in a typical administrative process. POSDCORB can be explained sequentially in detail below: 1.Planning This essentially refers to establishing a broad sketch of the work to be completed and the procedures incorporated to implement them. Planning is the first and most important step in POSDCORB as it sets the overall structure of the process with activities and timelines. 2.Organizing Organizing involves formally classifying, defining and synchronizing the various sub- processes or subdivisions of the work to be done. It makes sure that the activities and timelines in the first step of planning are refined and organized further so that right people can be staffed to execute these tasks. 3.Staffing This involves recruiting and selecting the right candidates for the job and facilitating their orientation and training while maintaining a favorable work environment. 4.Directing This entails decision making and delegating structured instructions and orders to execute them. Directing is an important step in the POSDCORB cycle as it makes thing happen by giving clear objectives to teams and individuals. 5.Coordinating This basically refers to orchestrating and interlinking the various components of the work. 6.Reporting Reporting involves regularly updating the superior about the progress or the work related activities. The information dissemination can be through records or inspection. 7.Budgeting Budgeting involves all the activities that under Auditing, Accounting, Fiscal Planning and Control. The above image shows the various stages of POSDCORB Importance of POSDCORB Every business needs to have systematic framework in ensuring there is maximum output, minimum wastage and higher margins. POSDCORB is one such method in management where workforce and employees can be managed in a way which would be beneficial for a company. This concept helps organizations to break down the work into multiple processes and help in getting maximum value out to each employee. These steps and stages of POSDCORB help the HR team to deliver to the needs of a company. Example of POSDCORB Consider a multinational starting an exercise involving a good number of employees in the workforce. As per POSDCORB, the planning stage would be doing the thorough research about the number of people needed, team size, work type etc. Organizing and staffing stages would be the HR department making a list of people i.e. supervisors and subordinates who would could execute this role. Once this is done, as per POSDCORB directing would be giving instructions and ensuring implementation of the plan as per the requirement. To ensure a better two way communication, coordinating plays a pivotal role. Once all this done, the different ways of reporting are done which ensures accountability and responsibility of the team. Finally, the budget to be allocated is studied. In this way, POSDCORB can be used for better management. Planning- Introduction, Essentials, Importance: What is Planning? Planning is ascertaining prior to what to do and how to do. It is one of the primary managerial duties. Before doing something, the manager must form an opinion on how to work on a specific job. Hence, planning is firmly correlated with discovery and creativity. But the manager would first have to set goals. Planning is an essential step what managers at all levels take. It needs holding on to the decisions since it includes selecting a choice from alternative ways of performance. MEANING OF Planning bridges the gap between where we are (present) and where we want to PLANNING go (future). In simple words, foreseeing the future contingencies and plan for it to accomplish an objective. Importance of Planning Planning is definitely significant as it directs us where to go, it furnishes direction and decreases the danger of risk by making predictions. The significant advantages of planning are provided below:  Planning provides directions: Planning assures that the objectives are certainly asserted so that they serve as a model for determining what action should be taken and in which direction. If objects are well established, employees are informed of what the company has to do and what they need do to accomplish those purposes.  Planning decreases the chances of risk: Planning is an activity which permits a manager to look forward and predict changes. By determining in prior the tasks to be completed, planning notes the way to deal with changes and unpredictable effects.  Planning decreases overlapping and wasteful activities: Planning works as the foundation of organising the activities and purposes of distinct branches, departments, and people. It assists in avoiding chaos and confusion. Since planning guarantees precision in understanding and action, work is conducted on easily without delays.  Planning encourages innovative ideas: Since it is the primary function of management, new approaches can take the form of actual plans. It is the most challenging project for the management as it leads all planned actions pointing to growth and of the business.  Planning aids decision making: It encourages the manager to look into the future and make a decision from amongst several alternative plans of action. The manager has to assess each option and pick the most viable plan. Essentials Of Ideal Planning In Management Function: Planning process helps to determine the future action and its expected result. Planning means deciding in advance what to do, when to do, how to do, and by whom to do. Basically plans are formulated with a view to achieve organizational goals. An ideal plan will be one that enables the management to achieve its goals. An ideal plan should have the following essentials: 1.Objectives: One of the most important elements of sound planning is objective. Every plan must have feasible objectives both general and specific. General objectives include survival, growth, development etc while specific objective include the goals set for various departments, divisions, groups and individuals. 2. Policies: Policies define the limits within which decisions are to be made. Policies are generally framed by top management. However, managers at any level may lay down policies within his limits and authorities. Policies ensure consistent and unified performance and exercise of discretion by managers. Policies may be written or verbal. Policies helps the manager to delegate authority and chalk out the limits for decisions by the. Subordinates. 3. Procedures: A procedure prescribes the sequence of steps that must be followed in order to achieve a specific purpose. The essence of procedures is that it is followed in chronological order in a definite way of doing a thing. Procedures are designed to executive policies and achieve objectives. It is followed in all major functional areas- purchase procedure, material issue procedure, accounting procedure etc. 4. Rules: A rule is a guide to action. It tell us whether a definite action will be taken a will not be taken in case of given situation. For eg; customers complaints must be replied within the same day. A rule is a prescribed course of notion a conduct that must be followed. 5. Strategies: A strategy matches organisations competence (internal resources and skills) with the opportunities and the risk involved in such a way that organisations resources can be deployed effectively and efficiently overtime. 1. Most important goal 2. Most significant policies 3. Major programmes. 6. Programmes: A programme lays down the principle steps for accomplishing a Mission and sets an approximate time for carrying out each step. A programme is made up of objectives, policies, procedures, budget, schedules etc. 7. Projects: Simply, a project is a cluster of activities that is relatively separate and clear- int. It is a part of a programme. The essence of project lies in identifying a nice, neat work package, alternatives, activities etc. 8. Budgets: A budget is a statement or a plan of expected results expressed in numerical terms such as man-hours, units of production. Machine hours or any other quantitative. Measurable terms it is an important control device as it provides standards against which actual performance may be measured. 9. Forecasts: Forecasts are estimates of future events providing parameters to planning. Forecasts do not involve any commitment but is an integral part of planning us planning cant be done without proper forecasting be it economical, political, social etc. Practical Activity: Types of Plans followed in Banking sector: (Process, Vision, Goals, Strategies, Polices and Planning Premises) Process Plans: Focus on daily banking operations, like how to handle account openings, loan disbursements, and risk management. These are operational plans ensuring efficiency and compliance with regulations. Vision Plans: Set long-term, aspirational goals for the bank, such as becoming a leader in sustainable banking or achieving full digital transformation by a certain year. It serves as a guide for all future actions. Goals: Are specific targets, such as increasing profitability, reducing non-performing assets (NPAs), or enhancing customer satisfaction scores. They are measurable and time- bound.  Strategies: Broad action plans to achieve the bank’s goals. For example, a bank might pursue digital transformation to attract younger customers or develop partnerships to expand its reach. Policies: Provide a framework for consistent decision-making. For instance, a bank’s lending policy outlines criteria for approving loans, including creditworthiness and risk assessment guidelines. Planning Premises: These are assumptions or forecasts that banks make about external factors like economic growth rates, interest rate trends, and technological advancements. Plans are developed based on these premises to stay aligned with future changes. Rationality in Decision Making. Managers in organisations must make rational decisions. Rational decision making is the opposite of intuitive decision making. It is a strict procedure utilising objective knowledge and logic. It involves identifying the problem to solve, gathering facts, identifying options and outcomes, analysing them, considering all the relationships and selecting the decision. Rational decision making requires support: methods and software tools. The identification of the problem to solve needs methods that would measure and evaluate the current situation. Identification and evaluation of options and analysis of the available possibilities involves analysis and optimisation methods. Incorporating intuition into rational decision making needs adequate methods that would translate ideas or observed behaviours into hard data. Communication, observation and opinions recording is hardly possible today without adequate software. Information and data that form the input, intermediate variables and the output must be stored, managed and made accessible in a user-friendly manner. Rational Decisions in Organisations: Theoretical and Practical Aspects presents selected recent developments in the support of the widely understood rational decision making in organisations, illustrated through case studies. The book shows not only the variety of perspectives involved in decision making, but also the variety of domains where rational decision support systems are needed. The case studies present decision making by medical doctors, students and managers of various universities, IT project teams, construction companies, banks and small and large manufacturing companies. Covering the richness of relationships in which the decisions should and must be taken, the book illustrates how modern organisations operate in chains and networks; they have multiple responsibilities, including social, legal, business and ethical duties. Nowadays, managers in organisations can make transparent decisions and consider a multitude of stakeholders and their diverse features, incorporating diverse criteria, using multiple types and drivers of information and decision-making patterns, and referring to numerous lessons learned. As the book makes clear, the marriage of theoretical ideas with the possibilities offered by technology can make the decisions in organisations more rational and, at the same time, more human. RATIONALIZED DECISION MAKING: Rationalized decision-making is a method for systematically choosing among possible choices the one that is built on the most concrete reasons and facts. One employs a series of analytical stages to scrutinize relevant facts, observations and thinkable outcomes before selecting a specific course of action. When challenged with difficult decisions, we incline to rationalize our made choices by appealing that we never wanted the unselected option. Behavioral studies in cognitive conflict found that increased activity in the right-inferior frontal gyrus, medial fronto- parietal regions and ventral striatum, and decreased activity in anterior insula were related to consequent decision-related attitude transformation. Thus, typical rationalization processes linked with decision-making may be engaged very quickly at the moment of the decision, without prolonged negotiation, including reappraisal- like emotion-regulating processes. (Jarcho, Berkman, & Lieberman, 2010) You eat chocolate because you want to, not because of its antioxidant or mood-boosting properties; though you might use this as a reason to defend your eating of something fatty and sugary, i.e. we rationalize. Rationalization influences choices and can help economists appreciate why people make decisions violating usual economic concepts. “People have preferences. But they cannot choose any old thing they like because they have to be able to rationalize the choice. Rationalization means that people are constrained optimizers, and one of the constraints – in the way of choosing a preference – is that they have a psyche that requires a rationale.” (Timothy Fedderson) Based on the concept of defence mechanisms introduced by Sigmund Freud, “Everyone feels that as a rational creature he must be able to give a connected, logical, and continuous account of himself, his conduct, and opinions, and all his mental processes are unconsciously manipulated and revised to that end.” (Rationalization in Every-Day Life by Ernest Jones) We feel personally authorized by voting for a candidate we sense is justly or morally greater, even when we apprehend that each individual vote has tiny impact on the bigger election. This is in accordance to the ethical voter model by Fedderson and Sandroni, giving rise to a warm glow model, whereby we vote because being an accountable citizen simply feels good. But this does not explain why we sometimes might choose Z anyway over X and Y, while fully knowing that X is preferred over Y, and Y over Z. This is because you cannot rationalize not going for X with Z as the better but undesirable option, so you cannot make a decision you cannot rationalize. No rationalization, no decision! This illustrates that the incapability to rationalize a preference compels your capability to choose a favorite option, i.e. “Rationalization theory reveals a unique preference order in a variety of cases when standard theory cannot.” (Cherepanov, Fedderson, & Sandroni, n.d.) Human behavior, according to Plato, flows from three main sources: desire, emotion and knowledge. The most prevalent biases that creep into all kinds of risk/reward decision-making – both personal and professional – are anchoring (influenced by numbers), framing (affected by how situations are presented), availability heuristic (vivid/easily imaginable events), confirmation bias (seeking evidence supporting our decisions and ignoring those against them), commitment escalation (difficulty in accepting sunk costs), and hindsight bias (not learning from past failures). Their impact needs to be curtailed, by exercising the intellectual rigour to encounter contemporary views of the future and long-lived causal assumptions. (Wolf, 2012) As every action has the likelihood for unanticipated consequences - opportune or hostile – there should always be common sense guidelines for decision-making, which are:  Decide what to decide.  Be collaboratively independent.  Avoid information bloat.  Define your desired outcome.  Beware getting stuck in the thick of thin things.  Don’t expect perfection. Though most decisions still come with zero guarantees, failing to make a decision is a decision in itself, with penalties. ---------------------------------------------End of Unit-3-----------------------------------------------------------