INTERNAL ORGANIZATIONSAL ENVIRONMENT

FUNCTIONS OF MANAGEMENT

 Management is bringing together all the human resources and non-human resources in
an effort to meet the organization's goals.
 The functions of management are designed to create an environment in which the
goals of the organization can be pursued in an efficient manner. These include:

Planning

 This is concerned with defining goals for the future of the organization, deciding the
direction the business should take and the resources needed

Organizing

 This involves bringing together the factors of productions land, labour, capital and
enterprise
 It also means planning who is going to do a particular task and who is going to
supervise the job

Directing

 This involves giving instructions and getting people to work in an efficient and
effective manner.

Controlling

 This function involves monitoring the employee’s activities to determine if the

organization has achieved its target and make corrections if necessary.

Co-ordinating

 This function involves making all the resources in a business work efficiently to avoid
confusions and duplication of activities between departments.

Delegating

 This involves assigning a task to subordinates so that the manager can have more time
to devote to more important issues.

Motivating

 This is a process where workers are inspired to do their best and take responsibility for
their own work

FUNCTIONAL AREAS OF A BUSINESS

 Functional area of a business refers to how the organization is structured for efficient
operation. This means that the activities of the business are grouped accordingly to the
nature of what is required.

 A small business will be managed by one person, but a large business will be managed
by more than one person with specific skills.

 Functional areas of business include marketing, production, personnel, finance and

research and development.

1
Production

 This department is responsible for converting raw materials into goods and services
needed by customers to satisfy their needs and wants.
 The functions include: buying raw materials, ensuring high-quality production, storing
material and finished products, research and development of new products

Marketing

 This department is responsible for finding out what customers want and how this can
be promoted and sold
 The functions include: pricing the product, promotion and advertising, distribution and
selling, market research

Personnel/Human Resource

This department responsible for recruiting the right person with the expertise to carry
out the job, it is responsible for the employee’s welfare
 The functions include: recruitment of staff, staff training, disciplining of workers, staff
wages, sick leave, and pension schemes

Finance

 This department is responsible for managing the finances and cash flow of the
business.
 The functions include: keeping up-to-date accounts, keeping cash flow records,
keeping within the budget and obtaining new finances

Research and Development

This department is responsible for seeking to improve its product or service in order to
maintain its competitive edge.
 The functions include: redesigning or rebranding, financial research, feasibility study

RESPONSIBILITIES OF MANAGEMENT

 Businesses have a duty to demonstrate that they care about their stakeholders such:
employees, society, customers and the government

Management Responsibility to Owners

 To maximize efficient use of resources to reduce wastage

 To earn profit to pay dividends to shareholder
 To keep owners informed through annual reports

Management Responsibility to Employees

 To pay fair wages

 To provide good working conditions
 To offer training courses to develop workers

Management Responsibility to the Society

 To provide stable employment

 To avoid damages to the environment
 To sponsor special social/cultural events

2
Management Responsibility to Customers

 To charge fair prices

 To provide quality products
 To offer pre-sales and after-sales services

Management Responsibility to Government

 To observe all legal laws

 To pay all necessary taxes
 To provide all information required by government

CONSTRUCTING SIMPLE ORGANIZATIONAL CHARTS

Organizational Charts

 An organizational chart is a diagram of the organizational structure showing different

management and employee positions in a business. It shows:
i. the levels of authority and the span of control
ii. the department manager is responsible for
iii. who the manager is responsible for
iv. a formal relationship in the organization

Interpretation of the Chart

 The most senior position is placed by itself with no other position at that level
 All positions with the same level of authority but different departments are placed on
the same level
 Span of control – the number of subordinates reporting directly to the manager. It can
be narrow or wide
 Chain of the command-the route through which authority is passed down from the chief
executive

Types of Organizational Charts

Functional

 The functional structure is designed according to the functional area of a business such
as production, marketing, finance. In this structure, the staff of the production
department reports to the production manager. [Example on page 82 – POB textbook]

3
Line

 Authority flows from top to bottom and workers are assigned goals or task
accomplished. [Example on page 80 – POB textbook]

Line and Staff

 The line manager has ultimate authority in a firm and the staff managers area
subordinates who assist them in carrying out certain activities in the
organization. [Example on page 81 POB text book]

CHARACTERISTICS OF A GOOD LEADER

 A leader is someone who influences and directs workers towards achieving the
goals of the organization. The main characteristics of a leader are:

 Must have the ability to communicate with clarity - so that workers can understand what
is being said and not misinterpret the information
 Must be willing to listen - this will enable the leader to solve conflicts and problems
 Must be a critical thinker and be able to solve problems- being able to look at alternatives
before making a decision
 Must be able to motivate others to be self-driven- this enables workers to accomplish a
task quickly
 Must be creative- be able to come up with new
 Must have self- confidence, this allows the workers to have confidence in their leader
resulting in their willingness to follow his/her instructions

LEADERSHIP STYLES

 Leadership styles refer to the way in which a manager makes decisions and deals with
his/her staff. Leadership styles include - Autocratic, Democratic and Laisser-faire

Autocratic

 One who takes decisions alone with no discussion, the workers are not involved in the
decision-making process. It is best suited for military service, army, police force

Advantages

 Makes quick decisions without the need to consult others so no time is wasted
 Supervises workers closely, this will eliminate the tendency for workers to ‘slack off
’resulting in increased productivity
 Takes full control of the organization and get persons to carry out the required task

Disadvantages
4
  The leader is a poor motivator- this demotivate workers who want to contribute and
accept responsibility
 This leadership style does not contribute to team building since the leader is detached
 This leadership style leads to resentment and frustration among workers who cannot
pursue the goals of the organization

Democratic

 One who engages in discussion with workers before taking a decision, this involvement
can lead to better decisions
 It is best suited for small organizations where the organization’s goals require a major
commitment from the staff

Advantages

 Worker involvement is encouraged, this can lead to better decisions

 It facilitates a two-way communication which allows feedback from workers
 Job enrichment is more likely to be achieved because attention is given to workers
through involving them in decision making

Disadvantages

 Consultation with staff can be time-consuming since the views of many persons have to
be considered
 On occasions where quick decisions have to be made, this leadership style might not be
the best

Laisser-faire

 One who leaves colleague to get on with their work, such as tertiary institutions where
teachers are expected to facilitate students’ education.

Advantages

 Little if any management supervision is required, this provides job enrichment

 It encourages horizontal communication, this encourages the staff to be innovative

Disadvantages

 Delay in decision making due to numerous discussions and deliberations

 Laisser-faire approach by supervisors may be interpreted as a lack of care for the
workers

SOURCES OF INTERNAL CONFLICT IN AN ORGANIZATION

There are some factors that can lead to dissatisfaction and conflict between management and
workers, which management should guard against or be prepared to handle. These include:

 Levels of worker’s pay

 Working conditions e.g. long hours
 Unfair treatment of employees e.g. unfair dismissal
 Competition between employees regarding performance/promotions
 Leadership style not suitable for employees
 Breakdown in communication leading to a misunderstanding between employer and
employee

Employer’s Strategy to Settle Disputes

5
  Negotiations – are used to reach a settlement between the employer and employee
 Public relations- this is using the media to gain public support for the employer’s
position
 Threats of redundancies- this is where the employer puts pressure on the union to reach
a settlement
 Change of contract – this is where the employer may change or issue a new contract
when old ones are due for renewal if the worker takes part in industrial actions
 Closure – the business or factory will be closed to solve the conflict leading to
redundancy and loss of profit to the owner
 Lockouts – these are short-term closures of the business to prevent employees from
working and being paid
 The employment of other workers to break the strike

Employees Strategy to Settle Disputes

 Go slow- a form of industrial action where worker’s work at a minimum pace, they
may lose their bonus pay.
 Work to rule- workers refuse to work outside of the precise terms of their employment.
 Overtime bans – employers refuse to work more than contracted number of hours.
 Strike actions – workers totally withdraw their labor for a period of time leading to
production stoppage.
 Picketing – demonstration by workers to gain support for their case.

Conflict Resolution Strategy

 A grievance is an issue or dispute that workers take to their employer.

The following grievance procedure is taken to resolve a conflict:

1. Workers report the grievance to Trade Union

2. Union delegates utilize collective bargaining to resolve conflict with supervisors
3. If unresolved delegates seek to resolve conflict with top managers
4. If an unresolved matter is reported to the Labour Minister for mediation or
conciliation
5. If unresolved then the Industrial Disputes Tribunal [IDT], the chief arbitration body
is bought in to solve the problem
6. IDT hears the case from both parties and makes a rule or judgment on it

Role of Trade Unions

 A Trade Union assist workers in dealing with a conflict that arises in the workshop
between management and themselves, they help to settle disputes between workers and
management.

Purpose of Trade Unions

 To represent the worker's interest

 To negotiate on behalf of workers for better wage and salaries, fringe, benefit, and
improved working condition.
 To settle disputes between management and workers
 To Educate their members about their rights and responsibilities

Key Terms

6
  Trade Unions- is a mediatory body that helps to settle disputes between workers and
management

 Collective bargaining – negotiations between a representative of workers and employers

 Shop Stewart – a union representative

 Industrial action – measure taken by the workforce or trade union to put pressure on
management to settle an industrial dispute in favor of employees

 Conciliation/Mediation – the use of a third party in industrial disputes to encourage both

employer and union to discuss an acceptable compromise

 Arbitration –resolving an industrial dispute by using an independent third party to judge

and recommend a solution

 Grievance procedure- the agreed process of attempting to resolve an industrial dispute

Guidelines for Establishing Good Relations Between Employer and Employee

i. Maintain good communication with workers to avoid misunderstanding

ii. Adopt good management styles to guide workers to the desired
actions required
iii. Provide good working condition to motivate workers to work efficiently
iv. Motivate workers with adequate compensation to build trust loyalty and
employees self- worth
v. Establish grievance procedures to help to eliminate industrial actions since there

is an opportunity for dialogue

VALUE OF TEAMWORK IN AN ORGANIZATION

Teamwork

 This is consist of grouping workers together to work cooperatively to achieve the same
goal

Advantages

 Team members can share ideas, so the quality of decision making is improved
 Fosters the participative approach, this gives a feeling of belonging
 Improves morale- group interaction and participation can motivate workers
 Encourages innovation- fewer experience workers can learn from working with more
experienced workers
 Boosts productivity -allows workload to be shared equally among members according to
each member’s strength
 Establishes a strong relationship- strong relationships are developed

Disadvantages

 Personality clashes may exist between team members

 More time is needed to make decisions and solve conflicts as more people are involved
 Some persons may prefer to work as an individual and not as a team resulting in some
members doing all the work

COMMUNICATION PROCESS

7
  The communication is the exchange of information between people or groups with
feedback

Strategies for Effective Communication

 Manages will have to consider the following factors before deciding on the best
communication methods:

 Medium [ oral, written, visual or electronic]

 Cost
 Speed
 Quantity of data to be sent
 Barrier to communication and how to overcome them

Communication Channels

 Formal channel - include letters, memos, reports, hosting a meeting, suggestion boxes
 Informal channels [also called the ‘grapevine’]- transmits messages that may or
may not be true and sometimes result in much confusion in the organization.

Communication Methods

Written Communication

Examples – letters, memo’s, reports, minutes in a meeting, press release, bulletins and notices,
emails

Advantages Disadvantages

Provides written document No immediate response

Can be sent to persons far away Maybe misinterpreted

Can confirm, explain or clarify an oral Can be costly and time-consuming to create
message

Oral Communication

Examples – face to face conversations or meetings, interviews, telephone calls

Advantages Disadvantages

Provides direct contact Can be affected by noise

Can be varied to suit the need of the receiver Can be quickly forgotten

Allows for instant feedback There might not be any written record

Visual Communication

8
Examples – photographs, films, graphs, charts, body language [gestures, posture, facial
expression]

Advantages Disadvantages

More interactive May be difficult to interpret

Easier to remember May require time to interpret

Creates greater interest Maybe expensive

Electronic Communication

Examples – internet and emails, fax messages, video conferencing, mobile telephones

Advantages Disadvantages

Great speed Cannot always be received

Creates interest It expensive

Encourage response Risk of communication o

overload