AHMADU BELLO UNIVERSITY

ZARIA-NIGERIA.

1.0 MODULE 1: MANAGEMENT THEORY (Summary)

STUDY SESSION 1: Classical Theories of Management

2.1. Theories of Management

2.1.1. Scientific Management Approach

The scientific management theory by F.W. Taylor (1856-1915) rested his philosophy on the following
basic principles;

a. Development of a true science management, so that the method for performing each task
could be determined.

b. The scientific selection of workers so that each worker would be given responsibility for the
task for which he or she was best suited.

c. The scientific education and development of the workers.

d. Intimate, friendly cooperation between management and labor.

2.1.2. The Behavioral Approach

The behavioral approach or the human relations approach is based upon the premise of increase in
production and managerial efficiency through an understanding of the people. The growth and popularity
of this approach is attributable to Elton Mayo (1880-1949) and his Hawthorne experiments.

2.2.3. The Quantitative Approach

This approach emphasizes the use of mathematical techniques and models in solving many complex
management problems. These quantitative tools and methodologies, known as Operations Research
techniques are designed to aid in decision making relating to operations and production.

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2.2. Other School of Management

Whether we consider management an art or a science, there is no single approach that is applicable to all
situations, even if the situations are similar in nature. Accordingly, there are a number of different
approaches, some of them uniquely defined, creating a jungle of confusion in which not only the
management practitioners get involved but also professionals of many other disciplines.

2.2.1. The Empirical School

The empirical school, as the name suggests, is based upon learning from past experience, either your own
or that of other people in the form of case studies. A study is conducted as to how a problem was solved in
the past so that some methods can be used in the present to solve a similar problem. The proponents of
this school hold that management is an art and can only be learned by experience.

2.2.2. The Social System School

Based on the human relations concept and proposed by Chester Barnard, this school looks upon
management as a social system or a system of cultural inter-relationships which is conceived as the
cooperative interaction of ideas, forces, desires and thinking of a group of people. This concept has been
attributable to the theory of cooperation whereby an individual tries to satisfy his biological, physical, and
social needs through cooperation with others.

2.2.3. The Sodo technical Systems Approach

This is one of the recent approach. It is based on the studies conducted by E.L. Trist and his associates in
1951 at the Tavi stock Institute in England. It was found that there was a definite inter-relationship between
men and machines. The technology of operations (machines and methods) have a strong influence on the
individual attitudes as well as group behaviour. It does not require exhaustive study and analysis to
conclude that the newer working equipment and modern methods of operation induce a highly positive
response from the workers.

2.2.4. The Decision Theory School

This school believes that management is simply a decision making process, which is a selection of a course
of action from several available alternatives. Hence, the central focus of management theory should be the
analysis of the decision itself. The basic emphasis of this school is not on people or environment variables
influencing behaviour but on the process of decision making and that all management thought can be built
around it.

2.2.5. Contingency or Situational Approach

This approach primarily deals with the managerial ability to adopt policies that deal with a given situation
and some particular circumstances that an enterprise may encounter. Unlike Taylor and Gilbreth who were
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interested in finding the “best way” to do a task or solve a problem, this approach does not suggest that
there is a "best approach" which will work in all situations.

2.2.6. Managerial Roles Approach

This approach was popularized by Henry Mintzberg, who proposed that managerial activity (or roles),
could be established simply by observing what the managers do.

● Interpersonal: As a figurehead performing ceremonial duties on behalf of the organisation, as a

leader and as a liaison link with outsiders.

● Informational: He receives information about the operations of the organisation, passes on the
information to subordinates and transmits information to outside concerned parties.

● Decision making: He acts as an entrepreneur for new ideas, as a resource allocator, like
allocating funds for different activities, as an arbitrator in case of a conflict among the workers
or between workers and management and he negotiates contracts.

STUDY SESSION 2: Human Relation and Social Psychological Theories

2.1. Human Relation and Social Psychological Theories

The human relations approach or behavioral approach is based upon the premise of increase in production
and managerial efficiency through an understanding of the people. The growth and popularity of this
approach is attributable to Elton Mayo (1880-1949) and his Hawthorne experiments. Hawthorne studies
(1924-1932) were conducted to determine the effect of better physical facilities on workers output. These
studies showed that better physical environment or increased economic benefits in itself were not sufficient
motivators in increasing productivity. In effect the emphasis shifted to psychological and social forces, in
addition to economic forces. Mayo discovered that when workers are given special attention by
management, the productivity is likely to increase irrespective of actual changes in the working
conditions.

Even though Mayo’s conclusions are not necessarily accepted today, the Hawthorne studies were primarily
responsible for consideration of non-financial incentives in improving productivity.

2.2. Culture

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The concept of culture is perceived as a collective programming of the mind (Hofstede, 1984), Culture
could be classified into the following:

● Person Culture: is where the individual is the central focus and any structure existing to serve
the individuals within it.

● Power Culture: is a culture that depends on a central power source that exerts influence
throughout the organization.

● Task Culture: is a form of culture which is job oriented and seeks to bring together the right
resources and people and utilises the unifying power of the group.

● Role Culture: is based on logic and rationality and relies on the strength of the functions of
specialist. For instance, interactions between departments are normally controlled by procedures
and rules.

STUDY SESSION 3: Theories of Leadership

2.1. Leadership

Leadership is a dynamic process in a group whereby one individual, over a particular period of time,
and in a particular organisational context, influences the other group members to commit themselves freely
or administratively to the achievement of group activities or goals.

2.2. The Concept of Leadership Skill

Kotter (1988) states that, the word leadership is used in two basic ways in everyday conversation. To
refer to:

1. The process of moving a group of people in some direction through non-coercive means.

2. People who are in the roles where leadership is expected.

According to Hellreigel et al (1989), there are four kinds of leadership skills:

2.2.1. Visionary Skills

People are willing to follow leaders because of their visionary skills. The led become committed to the
leader’s vision which involves and is in itself confidence-giving.

2.2.2. Communication Skills

Successful leaders clearly have the skill to communicate the vision that evokes enthusiasm and
commitment.

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2.2.3. Sensitivity Skills

Leaders are both powerful and sensitive to the needs of others and so, they allow their followers to share
in developing goals and the satisfaction derived from reaching these goals.

2.2.4. Self-Awareness Skills

Leaders welcome feedback on their performance and continually take inventory of themselves.

2.3. Theories of leadership

Leadership is an art of influencing and inspiring subordinates to perform their duties willingly, competently
and enthusiastically for a group objective realisation. It could also be perceived as a process of influencing
the activities of an individual or a group in effort towards your achievement over a given time and situation.

Leadership theories include:

❖ Traits theory: It emphasises that leaders are born and not made. These traits include
intelligence, understanding, perception, high motivation, socio-economic status, maturity, initiative,
need for self-actualisation, self-assurance and understanding of inter-personal human relations.

❖ Behaviour theory: It studies leadership by focusing on what leaders do. That is to say, leaders’
effectiveness is being judged by the outcome of the individual subordinates.

❖ Contingency theory: The theory suggests that, an analysis of leadership involves not only
the individual trait and behaviour but a focus on the situation. That is, the effectiveness of
the behaviour of a leader is contingent upon the demands imposed by the situation.

❖ Path-goal theory: Emphasises that, the leaders behaviour be such as to complement the
group work setting and aspiration. This is based upon the expectancy theory of motivation and
reflects the workers beliefs that efforts will lead to successful results.

❖ Vroom Yetton-Jago theory: The theory is normative because it simply tells the leaders how
they should behave in decision making. The proponents of this theory contended that, different
problems have different characteristics; as such, they should be address by different decision
techniques.

❖ Managerial grid: This is built on two axis, one representing the “people’ while the other
representing the “task”. It pals an important part in managerial behaviour in organisational
development.

2.4. Leadership and Management

To many, the word leadership and management can be used interchangeably. However, they are very
different and the differences help to define the essential ingredient of effective leaders. Kotter (1988) puts
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the difference between leadership and management this way:

Leadership is different from management, but not for the reasons most people think. Leadership is not
mystical and mysterious. It has nothing to do with having “charisma” or other exotic personality traits. It is
not the province of a chosen few. Nor is leadership necessarily better than management or a replacement
of it. Rather, leadership and management are two distinctive and complementary systems; each has its own
function and characteristic activities. Both are necessary for success in an increasingly complex business
environment.

Management is about coping with complexity. Without good management, complex organisations tend to
become chaotic. Good management brings a degree of order and consistency to key dimensions like the
quality of products. Leadership on the other hand, is about coping with change.

Leaders are supposed to cope with changes such as faster technological change, greater international
competition, the deregulation of markets, globalisation, overcapacity in capital-intensive industries,
unstable oil market, the changing demographics of the workforce etc.

Managing companies means managing complexity, first, by planning and budgeting, establishing detailed
steps for achieving those targets, and then, allocating resources to accomplish those plans. By contrast,
leading a company to constructive change begins by setting a direction (vision) along with strategies for
producing the changes needed to achieve that vision.

Management ensures plan accomplishment by organising, controlling and problem-solving. However, for
leadership, achieving a vision requires motivating and inspiring. The leader keeps people moving in the
right direction by appealing to their basic human needs, values and sometimes emotions. In contrast, Birch
(1999) says that:

STUDY SESSION 4: System and Contingency Approaches to Management Theory

2.1. System and Contingency Approaches to Management Theory

A system is an interrelated set of elements functioning as a whole

There are four essential elements to be identified in a system of an organisation, they are as follows:

• Inputs: These are the materials, financial, human and informational resources, which the organisation
obtains from its environment.

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• Conversion device: is where the technological and managerial processes take place by transforming
inputs into outputs.

• Outputs: Are results, of the transformation process. It includes products, services, dividends, losses,
employee behaviour and information.

• Feedback: Is an environmental reaction to this output which could be favourable or unfavourable.

MODULE 2

Management Practice

STUDY SESSION 1: The Context of Management Practice

2.1. Management Practice

This deals with the practical aspects of theories in management. It involves how the various management
functions are being practiced by organisations.

Skills Necessary for Managers

Some of the essential skills are:

1. Technical skills

2. Human skills

3. Analytical skills

4. Conceptual skills

2.2. Managerial Levels

There are basically three levels of management relative to standing in an organisation's hierarchy of
authority. These levels are:

2.2.1- Top management

The top level of management includes top executives such as chief executive officer, chief operating officer,
president, executive vice-presidents and various vice-presidents. These managers are primarily involved
in broad organisational matters such as policy formulation, long range planning, goal setting and
development of organisational strategies. In general, the top management effectively deals with all
elements and forces that affect the survival, stability, and growth of an organisation.

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2.2.2. Middle management

The middle management level generally consists of divisional and departmental heads such as plant
manager, production manager, marketing manager, personnel directors etc. Their job is to interpret
policies and directions set by the top level management into specific plans and guidelines for action. Their
responsibility is to co-ordinate the working of their departments so that the set objectives can be achieved.

2.2.3. First level supervisory management

1. This level of management consists of supervisors, superintendents, unit heads, foremen, chief
clerks etc. Their primary concern is with the mechanics of the job and they are responsible for co-
coordinating the work of their employees. They must possess technical skills so that they can
assist their subordinates when necessary. They plan day-to-day operations, assign personnel to
specific jobs, oversee their activities, evaluate their performances, and become a link between the
workers and the middle level management.

Managerial Roles

These areas are:

1. Interpersonal relationships

2. Information processing and disseminating, and

3. Decision making

Characteristics of a Good Manager

Some of the more important personality traits of a successful manager are:

1. Knowledge

2. Decisiveness

3. Ability to handle conflict

4. Emotional stability

Managerial Responsibilities

1. The stockholders and other investors

2. Employees

3. Consumers
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 4. Inter-related businesses

5. The government

6. The community

2.3. Management Functions

There are basically five primary functions of management. These are:

1. Planning: Planning is future oriented and determines an organisation's direction. It is a rational

and systematic way of making decisions today that will affect the future of the company.
It is a kind of organised foresight as well as corrective hindsight. It involves the predicting of the
future as well as attempting to control the events.

2. Organising: Organising requires a formal structure of authority and the direction and flow of such
authority through which work sub-divisions are defined, arranged and coordinated so that each part
relates to each other part in a united and coherent manner so as to attain the prescribed objectives.
It follows, therefore, that the function of organising r is concerned with:

● Identifying the tasks that must be performed and grouping them whenever necessary.

● Assigning these tasks to the personnel while defining their authority and responsibility.

● Delegating this authority to these employees.

● Establishing a relationship between authority and responsibility.

● Co-coordinating these activities.

3. Staffing: Staffing is the function of hiring and retaining a suitable work-force for the
enterprise both at managerial as well as non-managerial levels. It involves the process of
recruiting, training, developing, compensating and evaluating employees, and maintaining this
work-force with proper incentives and motivations. Since the human element is the most vital factor
in the process of management, it is important to recruit the right personnel.

4. Directing: The directing function is concerned with leadership, communication, motivation

and supervision so that the employees perform their activities in the most efficient
manner possible, in order to achieve the desired goals.

5. Controlling: The function of control consists of those activities that are undertaken to ensure
that the events do not deviate from the pre-arranged plans. The activities consist of
establishing standards for work performance, measuring performance and comparing it to these set
standards and taking corrective actions as and when needed, to correct any deviations.
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STUDY SESSION 2: Management Planning in Practice

2.1. Management Planning

Planning has been defined previously as one of the five major functions of management. However, since
planning is a bridge between the present and the future, it has been called the primary management
function. Planning is particularly important because of scarce resources and uncertain
environment with a fierce competition for these resources.

2.2. The Six P’s of Planning

1. Purpose: An effective planning system requires a clear understanding of the organisation's

purpose.

2. Philosophy: Philosophy incorporates the fundamental beliefs as to how the organisation's

purpose is to be achieved.

3. Premise: This involves the strengths and weaknesses of the organisation and its knowledge and
assumptions about its environment.

4. Policies: Policies are general guidelines or constraints that aid in managerial thinking and
action. In a typical organisation, there are production policies, financial policies, accounting
policies, marketing policies, personnel policies, etc

5. Plan: Plans represent specific objectives and action statements. Objectives are the goals to be
met and the action statements are the means to achieve these ends.

6. Priorities: A particular organisational goal must be given a particular priority. Limited resources
of time, finances, materials, etc. must be proportionally allotted to goals of priority

2.3. Characteristics of Good Planning

A good plan can be identified by certain characteristics. Some of these characteristics are given below:

1. A good plan is based upon clear, well-defined and easily understood objectives. General objectives
like improving morale or increasing profits are ambiguous in nature and do not lend to specific steps
and plans. If possible, objectives must be quantified for sake of simplicity.

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 2. A good plan must be simple and comprehensive. It should be simple so that all employees can grasp
its significance and it can\be easily put into operation. It should be detailed enough so that it covers
all aspects of the operations that are necessary to achieve objectives.

3. It should be well-balanced, but flexible. A good plan should be well-balanced so that the existing
resources are properly utilized for all functions and that short-term gains are not at the cost of long-
term gains and vice-versa. Similarly, it should be flexible enough to incorporate any changes in these
resources, if necessary. Additionally, it should be responsive to changed conditions so that if future
events do not follow the anticipation, the same plan can be modified and adopted to the altered
situation.

4. Every plan should be time-bound. Even though planning is an attempt to anticipate the future, the
time period allowed for achieving goals should be reasonable. Long-range planning has more
uncertainties built into it due to difficulty in correctly anticipating events for a longer period of time.
Hence the time period covered should be reasonable and reasonably stable

2.4. Steps in Formal Planning

Planning can be considered as a series of sequential steps. These steps are:

STEP (1): Establish and define clearly the central and overall objectives of the organisation. A well-defined
objective can make the difference between success and failure of an enterprise. It clearly defines the
product or service as well as the purpose of the company. Along with the overall mission of the company,
it is also necessary to establish the specific objectives and goals. For example, the overall objective of a
hospital is to provide quality health care.

STEP (2): Determine your current position relative to your objectives. Make an assessment of your
strengths and weaknesses. This will show the distance the company has to cover before reaching its goals.
The analysis of current strengths and weaknesses would determine if the goals are realistic and achievable
and whether they need to be re-evaluated and modified.

STEP (3): Develop forecasts and future conditions. In order to effectively plan, it is important and
necessary to forecast as accurately as possible, the future trends that will affect the company's standing
and operations. The factors of forecast will include general economic conditions, changes in consumer
attitudes, new technological and product developments, possible competitive strategies and any adverse
legal developments.

STEP (4): Preparation of derivative plans. Once an overall plan has been adopted, it is necessary to develop
other derivative plans for each segment of the company, to support the formal plan. Derivative or sectional
plans are developed in each area of the business, but within the framework of the primary plan in order to
coordinate and integrate programmes and policies of all sections of the enterprise.

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STEP (5): Implement the plan and evaluate its results. The success of the plan would depend upon how
effectively the plan is implemented. This implementation is going to require a combination of all skills and
coordination of all factors. Also in this ever-changing dynamic environment, it is necessary to keep the plan
open to evaluation and modification. The plans should be periodically re-evaluated to measure its progress
and effectiveness so that any deviations can be corrected and any adjustments can be made.

2.5. Problems and Limitations in Planning

1. Corporate planning is not integrated into the total management system.

2. There is a lack of understanding of the different steps of the planning process

3. Management at different levels in the organisation has not properly contributed to planning
activities

4. In starting formal planning, too much is attempted at once

5. The management is not always willing to cancel or modify poor plans.

6. Management fails to operate by the plans.

7. Resistance to change by organisational members.

8. Lack of contingency plans.

2.6. Levels of Planning

There are basically three levels of planning associated with the different managerial levels. These levels
are:

1. Strategic planning: The strategic planning is conducted by the top management which includes
Chief Executive Officer, President, Vice-Presidents, General Managers, etc. and is the process
of determining overall objectives of the organisation and the policies and strategies
adopted to achieve those objectives. It is a long-range planning and may cover a time period
of up to 10 years, it basically deals with the total assessment of the organisation's capabilities, its
strengths and its weaknesses and an objective evaluation of the dynamic environment. The
planning also determines the direction the company will be taking in achieving these goals.

2. Intermediate planning: This planning covers a time frame of about 6 months to 2 years
and is contemplated by middle management which includes functional managers,
department heads and product-line managers. They also have the task of polishing the top
management's strategic plans. The middle management will have a critical look at the resources

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 available and they will determine the most effective and efficient mix of human, financial, and
material factors. They refine the broad strategic plans into more workable and realistic plans.

3. Operational planning: These plans are the responsibility of lower management and are
conducted by unit supervisors, foremen, etc. These are short-range plans covering a time span
from one week to one year. These are more specific and they determine how a specific job is to
be completed in the best possible way.

STUDY SESSION 3: Organising for Management Practice

2.1. Organising

The organising function of management is concerned with developing a framework where the total work
is divided into manageable components in order to facilitate the accomplishments of objectives. The
organisation can be defined as two or more people working together in a coordinated manner to achieve
the common goals.

Steps in Organisation

1. Determination, identification and enumeration of activities

2. Grouping and assigning of activities

3. Delegation of authority

2.2. Principles of Organisation

These principles are:

1. The lines of authority should be clearly stated and should run from the top to the bottom of the
organisation.

2. Each person in the organisation should report to only one boss.

3. The responsibility and authority of each supervisor should be I clearly and in writing

4. The authority and responsibility should be delegated as far down the hierarchical line as
objectively possible

5. The number of levels' of authority should be as few as possible

6. The principles of specialisation should be applied wherever possible

7. The line functions and the staff functions should be kept separate

8. The span of control should be reasonable and well established

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2.3. Benefits of a Good Organisation

Some of the beneficial outcomes are:

1. A good organisation facilitates attainment of objectives through proper coordination of all activities

2. In a good organisation, the conflicts between individuals over jurisdiction are kept to minimum.

3. It eliminates overlapping and duplication of work.

4. It decreases likelihood of run-arounds

5. It facilitates promotions.

6. Aids in wage and salary administration.

7. Communication is easier at all levels of the organisational hierarchy.

8. Increased cooperation and a sense of pride.

9. It encourages creativity.

STUDY SESSION 4: Control in Management Practice

2.0 Main Content

2.1. Control

Controlling or control implies ensuring plans are properly executed as planned, in accordance
with the function of the organisation. Control could be divided into behavioural control and output
control (Cole & Kelly, 2011). The following are the basic elements of control:

● Establishment of performance standard.

● Performance measurement.

● Comparison between actual results against the expected standard.

● Effecting corrective action where necessary.

2.2. Requirements and Characteristics for an Effective Control System

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Effective controls have certain common characteristics. Some of these requirements and characteristics
are discussed below.

1. Controls must provide useful and understandable information. Misunderstood controls will not be
applied properly. The control system format must be simple, clear and unambiguous so that
irrelevant information is excluded and only useful and necessary data is utilized.

2. Controls should report deviations quickly so as to minimise the ill effects of these deviations. A well
designed control system should be capable of identifying potential problem areas before they arise
so that corrective action can be taken before the problem becomes serious and unmanageable.

3. Controls must be designed so that the right people monitor the activities of their own fields. The
sales manager, for example, should be concerned with only sales activities including output of sales
representatives, product sales by territories, any price changes that would affect sales and any new
products introduced.

4. The focus should be on strategic control points. The control system must reflect and support the
organisation’s established overall priorities so that the activities of strategic significance where
deviations would lead to greatest harm, receive the immediate corrective action and minor activities
get lower priority for control purposes.

5. Control should focus on results. The ultimate aim of the control process is to attain objectives.
Gathering information, setting standards, identifying problems, measuring deviations and reports
are simply means to the end. The controls must not fail to work. Whether it is the fault of measuring
mechanisms or the .authority structure it must be modified and corrected.

6. Controls should be economically realistic. A control system must be worth the expense. The cost of
implementing the control system must be less than the benefits derived from the control system. A
control is not desirable, if an increment in improvement involves a disproportionate increase in cost
and effort.

2.3. The Control Process

The elements of the control system are universal in nature. These elements basically fall under four distinct
steps. These are:

1. Predetermined goals

2. Measuring performance

3. Comparing actual performance with expected performance, and

4. Taking corrective action.

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Types of Control Methods

Most methods of control can be grouped into four basic types which may be applied individually or in
combination with each other. These are:

1. Pre-controls

2. Steering controls

3. Yes/No controls

4. Post-action controls

2.4. Symptoms of Inadequate Control

Some of the symptoms of inadequate control are:

1. An unexplained decline in revenues or profits.

2. A degradation of service and customer complaints.

3. Employee dissatisfaction.

4. Unnecessary working capital shortages.

5. Idle facilities or personnel.

6. Disorganized operations.

7. Evidence of waste, .inefficiency and excessive costs

3.0 MODULE 3

Functional Management

STUDY SESSION 1: Production Management

2.1. Production/Operations Management

Operations Management is the management of activities specifically related either directly or indirectly to
the organisation’s production of goods and services.

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According to Johnson, Newell and Vergin, “Operations Management is the design and
operations of systems”. The production of goods and services is a system since the organisation
components interact with each other as well as with outside environment.

2.2. Production Process

Production process simply implies the way product and services are created by business organisations.
The following are types of production process:

• Jobbing and product raised production

• Batch production

• Mass and continuous production.

2.3. Steps in Operations Management

The management of operations must be integrated with that of the organisation as a whole and
contribute to its overall objectives. Specifically, however, based upon Chase and Acquilano, the major
phases of operations management are as follows:

1. Selecting: This phase involves the selection of specific processes by which the desired
goods are to be produced or services to be performed.

2. Designing: This phase includes the design of jobs as well as the design of facilities that
will use the technology and the selected processes mere effectively.

3. Operating: This step involves scheduling work operations-and allocating workers in such
a manner as to meet short-term as well as long-term levels of output which is consistent
with forecasted demand.

4. Controlling: The controlling mechanism is to be developed at the same time as the

designing of operating systems and must be integrated with the system.

5. Updating: Updating means continuous revision of operating methods and systems in

order to meet the ever-changing and dynamic social and technological environment.

2.4. Steps in Production Planning and Control

The work of production planning and control consists of five phases. These are:

1. Routing

2. Scheduling

3. Dispatching

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 4. Inspection

5. Expediting or Follow-up.

2.5. Functions of Production/Operations Management

The process of transformation from inputs to outputs requires certain functions to be performed. Some of
these functions are discussed below in detail.

1. Design and Development

2. Capital Equipment

3. Site Selection

4. Facilities Layout

5. Work Design and Measurement

6. Purchasing/Materials Management

7. Inventory Management

STUDY SESSION 2: Personnel or Human Resource Management

2.1. Personnel Management

The effective management of personnel play a significant role toward the success or failure of a business.
The goal of personnel function is to help organisation meet strategic goals by attracting and
retaining employees and also manage them effectively.

2.2. Key Areas of Personnel Policy and Practices

● Recruitment and selection

● Training

● Pay and benefits (like pension scheme etc)

● Relations with staff association or trade unions

● Career development

● Safety and health

● Employment legislation

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 An Illustration of Personnel Function

Director of Personnel

Personnel Employee Relation Training & Devt.

Service Manager Manager Manager

Recruitment Job Evaluation Training Officer Manpower Personnel Officer

Officer Officer Planning Officer

Personnel Industrial Instructors Organization Personnel Clerk

Administrator Relation Research Analyst

Organization Line Personnel

Planning Manager Manager

Source: Cole and Kelly, (2011:459)

2.3. Human Resource Planning

Human resource planning involves objective and systematic assessment of present staffing needs of an
organisation, identifying the available personnel to satisfy the current needs, forecasting the future demand
and supply of employees, formulating staffing strategies with a view to both short range as well as long
range strategic plans and continuously monitoring, evaluating and updating these needs and resources of
supply.

Human Resources Requirements and Decisions

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 •Recruitment
•Seclection
New Recruits •Induction

•Work Allocation
•Employee Redeployment
•Promotion of Personnels
Employees •On-the-job & Off-the-job training
•Wages & Salaries
•Workers Productivity

•Employees Resignations
Leavers • Employees Retirement
• Employees Redundancies

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 Human Resource Planning Circle

Corporate
Reviewed Objectives
Outcomes
[Link]
Recruitment /short term
needs.
Training and
Perational Plans for Demand for
Development Meeting HR Requirement Personnel [Link]
term needs
Promotion and
Career Planning Assess [Link] term
Personnel requirement
Pay and Supply
Productivity
Retirement and
RedundancyExisting Staff Future Prospects

Staff Categories Leavers

Staff Number Recruitment

Readiness for Promotion State of Labour Market

Trainability Trends in education

STUDY SESSION 3: Marketing Management

2.1. Marketing

Marketing is everywhere. Marketing centers’ on a set of processes for creating, communicating

and delivering value to customers; for managing customer relationships; and, for providing
direction to an organisation based on market insights. Marketing consists of individual and
organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic
environment through the creation, distribution, promotion and pricing of goods, services and ideas.

2.2. The Marketing Concept

The marketing concept could be seen to be a common sense managerial orientation that understands the
needs and wants of customers in the market, and adopts the operations of the organisation to deliver the
right goods and services more effectively and efficiently than company’s competitors.

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2.3. Making the Marketing Concept Work

In spite of the difficulties inherent in implementing the marketing concept, Rosenberg (1977) believes that
where there is a will to use the marketing concept, there will be a way to implement it. The proper method
of implementation may vary with each organisation’s size, product, market and management style. To
make the marketing concept work, there must be customer orientation. This orientation must be top down.

2.4. Benefits of the Marketing Concept

Rosenberg (1977) provides the following benefits of implementing the marketing concept:

● Reduce business risk as a result of systematic market research, the scientific acquisition and analysis
of market data relevant to the decision making and better market and sales forecasting.

● Improves business planning as a result of earlier identification and assessment of future market
trends and opportunities and the acceptance of a planning discipline based on defined objectives
with which all departments must gear their programmes.

● Greater competitiveness based on marketing skills. As more and more of our competitors achieve
technological and manufacturing efficiency, the differences in the products from companies will
tend to narrow.

2.5. The Marketing Management

This involves analysis, planning, implementation and control of programmes designed to create, build
and maintain beneficial, exchanges with target buyers for the purpose of achieving organisational
objectives. In essence, marketing management involves managing demand which is turn involves
managing customer relationship

STUDY SESSION 4: Financial Management

Section and Subsection Headings:

Introduction.

2.1. Financial Management

Financial management has to do with the responsibility of obtaining and effective utilisation of
funds necessary for efficient operation of an enterprise. Financial management is concerned with
the use of accounting knowledge, economic models, mathematical rules, systematic analysis and
behavioural science for the specific purpose of assisting management in its function of financial planning
and control.

2.2. Relationship between Financial management, Accounting and Economics

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Financial management has a close relationship with economics on one hand and accounting on the other
hand. In economics, there are two important ties that bind economics to finance. First, the macroeconomic
factors like the growth rate in the economy, the domestic savings rate, the role of the government in
economic affairs, the tax environment, the availability of funds to the corporate sector, the rate of inflation,
the real rate of interest, and the terms on which the firm can raise finances define the environment in which
the firm operates. Therefore, a basic knowledge of macroeconomics is necessary for you to understand the
environment in which the firm operates by the financial manager. On the micro-economic environment
however, relevant theories and concepts of micro economic provide the conceptual framework on the basis
of which financial tools and models are developed.

The knowledge of the principles and concepts of micro economics can sharpen greatly the analysis of
decision alternatives in finance. Financial management, in essence, can be regarded as applied micro
economics. For example, the principle of marginal analysis which is a key principle of micro economics for
decision making is also applicable to a number of managerial decisions in finance.

In terms of the relationship between Finance and Accounting, it is the accounting functions that provide
the necessary input which the finance manager relies on in the discharge of his responsibilities. The
functions of the financial manager should not be misunderstood with those performed by the Accountant.
The financial Manager relies mostly on the processed information supplied by the Accountant. In practice,
the basic knowledge of accounting is required by the financial manager in order to appreciate and interpret
financial statements and to make reports from them.

2.3. Role of Managerial Finance

The role of Managerial Finance in an organisation is therefore to provide the basic framework on which
financial principles and concepts can be deployed to make the right financial decisions for the firm. These
decisions are in three core areas: Financing decision, Investment decision and Dividend decision.
The three decision areas which the financial manager makes are explained below:

i. Financing decision: Financing decision is a vital function which the financial manager must perform
for the organisation. He should be able to make decisions about when, where and how the
organisation should acquire funds, and decide also on the appropriate channels of utilising such
funds. Funds can be generated for the business through many ways either by equity contribution
from the stockholders or through borrowing.

ii. Investment decision: Another essential area where the financial manager must take decision is in
the identification of viable projects in which the firm should invest its funds in. This decision relates
to careful selection of assets in which funds will be invested by the firm. A firm has many options to
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 invest its funds but firm has to select the most appropriate investment which will bring maximum
benefit for the firm and deciding or selecting the most appropriate proposal is an aspect of
investment decision.

iii. Dividend Decision: Businesses are generally operated for profit motive. Earning profit or generating
a positive return on investment for the stockholders is a major concern of all business entities.

2.4. Functions of the Financial Manager

The important functions of the financial manager in modern businesses shall include, but not limited, to
the following:

i. Raising of capital: to arrange and execute programmes that will facilitate the provision of capital
required by the business.

ii. Investor relations: to establish and maintain adequate information with respect to company’s
securities and to maintain a liaison with investors, bankers, financial analysts and shareholders.

iii. Sourcing Short term finance: to maintain adequate sources for company’s current borrowing
from commercial banks and other lending institutions.

iv. Financial Custody: to maintain banking arrangement for receiving and banking funds in the
accounts of the business.

v. Credit collections: to direct the granting of credit and the collection of accounts due to the
company as at when due.

vi. Investments: to invest the company’s funds as required and to establish and co-ordinate policies
for investment in pension and other similar trusts.

vii. Insurance: to comprehensively provide insurance cover on the assets of the business as required.

viii. Financial Planning and control: to establish, co-ordinate and administer an adequate financial
plan for the control of operations.

ix. Reporting and interpreting: to compare information with operating standards and to report and
interpret the results of operations to all levels of management and to the owners of the business.

x. Evaluating and consulting: to consult with all the segments of management responsible for
policy or action concerning any phase of the operation of the business as it relates to the
attainment of objectives and the effectiveness of policies, organisational structure and procedures.

xi. Tax administration: to establish and administer tax policies and procedures.

xii. Government reporting: to supervise and co-ordinate the preparation of reports to government
agencies.
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xiii. Protection of assets: To ensure protection of assets of the business through internal control, internal
auditing, etc.

Development Of Financial Strategy

(a) Determination of financial objectives.

(b) Planning of capital structure

(c) Short and long-term planning

i. Treasury Management

(a) Forex management

(b) Cash forecasting

(c) Insurance

(d) Working capital

(e) Credit policy

(f) Raising of funds

ii. Long-Term Planning

(a) Mergers and Acquisitions

(b) Capital budgeting

STUDY SESSION 5: Modern Approaches to Management

2.1. Modern Approaches to Management

Modern approaches to management arose because of the need for more sophisticated techniques of
managing organisations. Organisations become more complex both in organisational structure and
operations.

2.2. Management by Objectives (MBO)

MBO is a process by which managers and subordinates work together in identifying goals and
setting up objectives and make plans together in order to achieve these objectives.

2.3. The MBO Process

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Some of the elements in the MBO process can be described as follows:

1. Central goal setting.

2. Manager-subordinate involvement.

3. Matching goals and resources.

4. Freedom of implementation.

5. Review and appraisal of performance.

Advantages of MBO

Henri Tosi and Stephen Carroll have done extensive work in this area and described some of the pros and
cons of MBO. Some of the advantages of MBO are:

1. Since MBO is a result-oriented process and focusses on setting/ and controlling goals, it encourages
managers to do detailed planning.

2. Both the manager and the subordinates know what is expected - of them and hence there is no role
ambiguity or confusion.

3. The managers are required to establish measurable targets and standards of performance and
priorities for these targets.

4. MBO often highlights the area in which the employees need further training

Disadvantages of MBO

1. In a classical established structure of our organisations, the authority flows from top to bottom. This
creates discipline and better performance.

2. MBO may be resented by subordinates. They may be under pressure to get along with the
management when setting goals and objectives and these goals may be set unrealistically high.

3. The emphasis in MBO system is on quantifying the goals and objectives. It does not leave any
ground for subjective goals

4. The integration of MBO system with other systems such as forecasting and budgeting etc. is very
poor. This makes the overall functioning of all systems more difficult.

2.4. Suggestions for improving the Effectiveness of MBO

1. It is important to secure top management support and commitment. Without this commitment,
MBO can never really be a success. The top managers and their subordinates’ should all consider

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 themselves as players of the same team. This means that the superiors must be willing to relinquish
and share the necessary authority with subordinates.

2. The objectives should be clearly formulated, should be realistic and achievable. For example, it is
not realistic for the R&D department of an organization to set a goal of, say, 10 inventions per year.
These goals should be set with the participation of the subordinates. They must be properly
communicated, clearly understood and accepted' by all. MBO works best when goals are accepted.

3. The goals must be continuously reviewed and modified as the changed conditions require. The
review technique should be such that any deviations are caught early and corrected.

4. All personnel involved should be given formal training in understanding the basics as well as the
contents of the programme. Such education should include as to how to set goals, the methods to
achieve these goals, methods of reviews and evaluation of performance and provisions to include
any feedback that may be given.

5. MBO system is a major undertaking based upon sound organisational and psychological
principles. Hence it should be totally accepted as a style of managing arid should be totally
synthesized with the organisational climate. All personnel involved must have a clear
understanding of' their role authority and their expectations. The system should be absorbed
totally by all members of the organisation.

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