MGT111.pdf

Table of Contents
MODULE 8
Chapter 7. ORGANIZING AND STAFFING
7.1 Organization Theories for Effective Business 1-3
Management
7.2 Staffing and its Concept 3-4
7.3 Nature of Staffing 4-5
Assessment Activities 6
MODULE 9
Chapter 8. STAFFING
8.1 Recruitment and Selection 7-8
8.2 Training Process 8-9
8.3 Compensation: Its Function and Importance 10-12
Assessment Activities 13-15
MODULE 10
Chapter 9. LEADING
9.1 Leading vs. Managing 16-17
9.2 Theories of Motivation 17-19
9.3 Styles of Leadership 19-20
MODULE 11
Chapter 10. CONTROLLING
10.1 Controlling and its Nature 24-25
10.2 Planning and Controlling 25-26
10.3 Importance of Control 26
10.4 The Control Process 26-27
10.5 Types of Control 27-28
10.6 Areas of Control 28-29
10.7 Control Methods and System 29-30
MODULE 12
Chapter 11. INTRODUCTION TO THE FUNCTIONAL AREAS OF MANAGEMENT
11.1 Human Resources Management 33-34
11.2 Marketing Management 34
11.3 Operations Management 34-35
11.4 Financial Management 35
11.5 Material and Procure Management 36
11.6 Office Management 36-37
11.7 Information and Communication Technology Management 37
MODULE 13
Chapter 12. SPECIAL TOPICS IN MANAGEMENT
12.1 The Family Business 41-42
12.2 Forms of Business and Legal Requirements 42
12.3 Roles of Family Business in an Improving Economic Status 42-43
Organization and Management Project Instructions 46-47
MODULE 14
Organization and Management 2nd Quarter Examination

ASIAN INSTITUTE OF COMPUTER STUDIES (AICS)
1
This module is clearly the continuation of the previous chapter, which is organizing.
However, this module also contains the next vital duty after planning and
organizing: staffing. For now, let us start where we left off last chapter.
Organizational theory is the sociological study of formal social organizations, such
as businesses and bureaucracies, and their interrelationship with the environment
in which they operate.
It complements the studies of organizational behavior and human resource
studies. Organization theory means the study of structure, functioning, and
performance of organization and the behavior of individual and groups within it.
Organizations are said to have risen in the United States within a variety of social
and historical contexts.
Several of those factors are
credited with making
organizations viable and
necessary options for citizens,
and they built on one another
to bring organizations to the
level of importance that they
are today.
In 1820, about 20% of the
United States population
was dependent on a
wage income. That
number increased to 90%
by 1950. Generally,
farmers and craftsmen
were the only ones by
1950 who were not
dependent or working for someone else; prior to that, most people were able to
survive by hunting and farming their own food, making their own supplies, and
remaining almost fully self-sufficient.
As transportation became more efficient and technologies further developed, self-
sufficiency became an economically poor choice.
The development of organizations demands a higher level of skillset from workers
as it continues to grow. It also builds precautionary measures on cutting edge
technology. It amplifies the need for specialization and accounts of functionalism
invarious organizations and their respective societies. Throughmuch advancement
in the interaction of capitalistic bureaucracies, the development organizations is
what has driven contemporary firms to thrive in its modern day society.
As organizations are implemented over time, many people experimented as to
which one was best. These theories of organizations include Bureaucracy,
2
nd
QUARTER
MODULE
8
WEEK:_____
At the end of this module, you are expected to:
• Apply organization theories for effective business management
• Discuss the staffing and its concept, and
• Evaluate the nature of staffing.
KEY QUESTIONS
• In your own perspective, what
do you think is the most
effective organization theory?
• Why is staffing considered as a
vital task in an organization?
CHAPTER 7. ORGANIZING AND STAFFING
7.1 Organization Theories for Effective Business
Management

2
Rationalization (Scientific Management), and the Division of Labor. Each theory
provides distinct advantages and disadvantages when implemented.
Rational System Perspective:
In a rational organization system, there are two significant parts- specificity of goals
and formalization. Goal specification provides guidelines for specific tasks to be
completed along with a regulated way of resources to be allocated. Formalization
is a way to standardize organizational behavior. As a result, there will be stable
expectations, which create the rational organizational system.
Scientific Management:
Taylor analyzed how to maximize the amount of output with the least amount of
input. This was Taylor’s attempt to rationalize the individual worker:
i. Divide work between managers and workers
ii. Provide incentive system (based on performance)
iii. Scientifically trained workers
iv. Create a science for each individual’s responsibilities
v. Make sure work is done on time/efficiently
Division of Labor:
The division of labor is the specialization of individual labor roles. It is often
associated with increasing output and trade. According to Adam Smith, the division
of labor is efficient due to three reasons- occupational specializations, saving from
not changing tasks, and machines taking the place of human labor.
Occupational specialization leads to increased productivity and distinct skill. Also,
Smith argued that human and physical capital must be similar or matched; if the
skill workers were matched with technological improvements, there would be
major increase in productivity.
Although the division of labor is often viewed as inevitable in a capitalistic society,
there are several specific problems that may arise. They may include a lack of
creativity, monotony, and lack of mobility. Creativity will naturally suffer due to
monotonous atmosphere that the division of labor creates. Doing the same
routines may not be for everyone. Also, employees aren’t familiar with other parts
of the job. They cannot assist employers of different parts of the system.
Theory 1: Weber's Ideal of Bureaucracy
•Official Jurisdiction on all areas are ordered by rules or laws already
implemented, There is an office hierarchy; a system of super- and
subordination in which there is supervision of lower office by higher ones.
•The management of the modern office is based upon written rule, which are
preserved in original form. Office management requires that of training or
specialization. When the office is developed/established t requires the full
working capacity of individuals. Rules are stable and can be learned.
Knowledge of these rules can be viewed as expertise within the bureucracy
(these allow for the management of society).
•When a bureacracy is implemented, they can provide accountability,
responsibility, control, and consistency. The hiring of employees will be an
impersonal and equal system. Although the classical perspective encourages
efficiency, it is often criticized as ignoring human needs. Also, it rarely takes
into consideration human error or the variability of work performances
(each worker is diferent).
Theory 2: Modernization Theory
•Modernization "began when a nation's rural population started moving from
the countryside to cities". It deals with the cessation of traditional methods
in order to pursue more contemporary effective methods of organization.
•Modernization theory arose in the context of decolonization in Africa and
Asia and the early years of Cold War. It grew out efforts to understand how
recently independent nations and other 'Third World' countries might
achieve economic and political development similar to that of the US and
northern Europe, which were viewed as the products of a linear and
potentially universal process of rationalization and progress.
•Urbanization is an inevitable characteristic of society because the formation
of industries and factories induces profit maximization. It is fair to assume
that along with the increase in population, as a result of subseqeunt
urbanization, is the demand for an intelligent and educated labor force.

3
Staffing can be defined as one of the most important functions of management. It
involves the process of filling the vacant position of the right personnel at the right
job, at the right time. Hence, everything will occur in the right manner.
It is a truth that human resource is one of the greatest for every organization
because in any organization all other resources like – money, material, machine,
etc., can be utilized effectively and efficiently by the positive efforts of human
resource.
Therefore, it is very important that each and every person should get right position
in the organization so as to get the right job, according to their ability, talent,
aptitude, and specializations so that it will help the organization to achieve the pre-
set goals in the proper way by the 100% contribution of manpower. Thus, it can be
said that staffing is an essential function of every business organization.
Functions of Staffing:
1. The first and foremost function of staffing is to obtain qualified personnel
for the right jobs, therefore, it leads to maximum productivity and higher
performance.
2. It helps promoting the optimum utilization of human resource through
various aspects.
3. Job satisfaction and morale of the workers increases through the
recruitment of the right person.
4. Staffing helps to ensure better utilization of human resources.
5. It ensures the continuity and growth of the organization, through
development managers.
It is clear that staffing is vested in the human resource (HR) unit, their selected
tasks include the following:
1. Recruitment – which involves activities related to the development of a
pool of applicants for jobs in the organization;
Theory 3: Hawthorne Study
•The hawthorne study suggested that employees have social and
psychological needs along with economic needs in order to be motivated to
complete their assigned tasks. This theory of management (as also discussed
in the first chapter) was a product of the strong opposition against the
'scientific and universal management theory of taylor and fayol'. This theory
was a response to the way employees and how they were deprived of their
needs and ambitions.
•In Hawthorne study, the management attempts to improve the
interpersonal skills through motivations, leading, communication, and
counseling.
•This study encourages managers to acquire minimal knowledge of
behavioral sciences to be able to understand and improve the interactions
between employees.
Theory 4: Contingency Theory
•The Contigency Theory is a class of behavioral theory that claims that there
is no best way to organize a corporation, to lead a company, or to make
decisions. An organizational, leadership, or decision making style that is
effective in some situations, may not be successful in other situations. The
optimal organization, leadership, or decision making style depends upon
various internal and external constraints (factors).
• The growth of modernization took place beginning in the 1950s. For the
ensuing decade, people analyzed the diffusion of technological innovations
within Western society and the communication that helped it disperse
globally. This first "wave" as it became known had some significant
ramifications.
• First, economic development was enhanced from the spread of new
technological techniques. and the second, modernization supported a more
educated and thus a more qualified labor force. The second wave took place
between the years 1960 and 1970.
7.2 Staffing and its Concept

4
2. Selection – which is related to decisions on who to hire from the pool
created by recruitment tasks;
3. Training and Development – which involves the continuous development
of the workforce;
4. Performance Appraisal – the measurement of an employee’s performance;
and
5. Reward System Design – which includes the plans for monetary and fringe
between benefits of employees.
Importance of Staffing
Efficient Performance of Other Functions
For the efficient performance of other functions of management, staffing is its key.
Since, if an organization does not have the competent personnel, then it cannot
perform the functions of management like planning, organizing, and control
functions properly.
Effective Use of Technology and Other Resources
What is staffing and technology’s connection? Well, it is the human factor that is
instrumental in the effective utilization of the latest technology, capital, material,
etc. the management can ensure the right kinds of personnel by performing the
staffing function.
Optimum Utilization of Human Resources
The wage bill of big concerns is quite high. Also, a huge amount is spent of
recruitment, selection, training, and development of employees. To get the
optimum output, the staffing function should be performed in an efficient manner.
Development of Human Capital
Another function of staffing is concerned with human capital requirements. Since
the management is required to determine in advance the manpower
requirements. Therefore, it has also to train and develop the existing personnel for
career advancement. This will meet the requirements of the company in the future.
The Motivation of Human Resources
In an organization, the behavior of individuals is influenced by various factors which
are involved such as education levels, needs, socio-cultural factors, etc. Therefore,
the human aspects of the organization have become very important and so that
the workers can also be motivated by financial and non-financial incentives in order
to perform their functions properly in achieving the objectives.
Building Higher Morale
The right type of climate should be created for the workers to contribute to the
achievement of the organizational objectives. Therefore, by performing the
staffing function effectively and efficiently, the management is able to describe the
significance and importance which it attaches to the personnel working in the
enterprise.
• Blue-collar workers (i.e., those working on the machines and engaged in
loading, unloading, etc.) and white collar workers (i.e., clerical employees).
• Managerial and Non-Managerial Personnel
• Professionals (e.g., Chartered Accountant, Company Secretary)
People-Centered
Staffing can broadly view as people-
centered function and therefore it is
relevant for all types of organization. It
is concerned with categories of
personnel from top to bottom of the
organization.
7.3 Nature of Staffing

5
REFERENCES
Books
Supplement to Chapter 4: Staffing, pp. 51-58, Organization and
Management: Concepts, Caselets, and Exercises (2016)
Electronic Source
Modernization Theory - International Encyclopedia of the Social and
Behavioral Sciences, 2001, retrieved from
https://www.sciencedirect.com/topics/economics-econometrics-and-
finance/modernization-theory
Organizational Theories by A. Bhardawaj retrieved from
https://www.economicdiscussion.net/organizational-
structure/organizational-theories/31783
Human Skills
Staffing function is mainly concerned with
different types of training and development
of human resource and therefore the
managers should use human relation skill in
providing guidance and training to the
subordinates. If the staffing function is
performed properly, then the human
relations in the organization will be cordial
and mutually performed In an organized
manner.
Responsibilityof Manager
Staffing is the basic function of management
which involves that the manager is
continuously engaged actively associated
with the recruitment, selection, training, and
appraisal of his subordinates.
Therefore, the activities are performed by the
chief executive, departmental managers, and
foremen in relation to their subordinates.
ContinuousFunction
Staffing Function is to be performed
continuously which is equally important for a
new and well-established organization. Since in
a newly established organization, there has to
be recruitment, selection, and training of
personnel. As we compare that, the
organization which is already a running
organization, then at that place every manager
is engaged in various staffing
activities.Therefore, he is responsible for
managing all the workers in order to get the
work done for the accomplishment of the
overall objectives of an organization.

6
Directions. Identify what organization theory is asked based on the given
description. Write your answer on the space provided before each number.
Choices can be found on the box below.
__________1) This theory suggested that employees have social and psychological
needs along with economic needs to be motivated to complete their assigned
tasks.
__________2) A system wherein there are two significant parts- specificity of goals
and formalization.
__________3) This theory It deals with the cessation of traditional methods in
order to pursue more contemporary effective methods of organization.
__________4) It is often associated with increasing output and trade.
__________5) A behavioral theory that claims that there is no best way to organize
a corporation, to lead a company, or to make decisions.
__________6) Its attempt to rationalize the individual worker includes division of
work between managers and workers.
__________7) It is often viewed as inevitable in a capitalistic society.
__________8) A theory that grew out efforts to understand how recently
independent nations and other 'Third World' countries might achieve economic
and political development similar to that of the ‘First World’ countries.
__________9) This study encourages managers to acquire knowledge of behavioral
sciences to be able to understand and improve the interactions between
employees.
__________10) This theory emphasizes on the existence of office hierarchy; a
system of supervision and subordination.
Directions. Paste at least 5 cutouts or printed copies of job hiring
posters/advertisements. Make sure that it includes job description and job
specifications/qualifications. If the space provided is not enough, paste the
cutouts/printed copies on a separate sheet of bond paper to be passed along with
this activity sheet.
Activity 1: All About Theories
Weber’s Ideal of Bureaucracy Contingency Theory
Hawthorne Study Rational System Perspective
Division of Labor Modernization Theory
Scientific Management
Activity 2: Job Searching

7
A business needs to establish procedures in the hiring of employees. The criteria as
to what are to be considered need to be set, including a job analysis requirement.
Job analysis is the procedure through which the duties of given job positions and
the characteristics of people who should fill them are determined. As job positions
need to be staffed, the job fill them are determined. As job positions need to be
staffed, the job requirements need to be spelled out and used to develop job
descriptions and specifications. A job description is a list of what the job entails,
while a job specification is a list of the kind of people for the job. Job descriptions
and specifications include the following:
1. Work Activities, like teaching, encoding, painting, and selling;
2. Human Behavior, like communicating, writing, and deciding;
3. Tools Used, such as computers, sewing machines, and power tools;
4. Performance Standards, like one hundred sewn dresses per eight-hour
shift and ten cars sold per month;
5. Job Context, like work at night, teaching on weekends and holidays, and
work from home; and
6. Human Requirements, like a master’s degree for college teachers, board
passers for accountants, work experience for supervisory work, specific
physical characteristics for computers, and computer literacy for most
jobs.
Job analysis information is used to decide or determine:
1. The person to hire;
2. The compensation for the job;
3. Job standards as basis for actual performance;
4. Training and development programs; and
5. Unassigned tasks and duplication of assignments.
Figure 1. The Recruitment Process Flowchart
8.1 Recruitment and Selection
2
nd
QUARTER
MODULE
9
WEEK:_____
• Analyze the process of recruiting, selecting, and training employee,
• Examine the functions and importance of compensation, and
• Differentiate wages and performance evaluation, appraisal, reward system, employee relations and
movement.
KEY QUESTIONS
• How does the recruitment and
training process differ from
one another?
• Why does the compensation
scheme play a big role in hiring
an applicant?
CHAPTER 8. STAFFING
Determine the job
positions to be
filled.
Build a pool of job
applicants.
Require the job
applicants to
submit application
forms.
Screen the
applicants.
Call selected
applicants to tests,
including medical
and drug tests.
Short list applicants
for interview.
Interview
applicants; make
final choice.
Hire chosen
applicant.

8
Building a pool of applicants’, as shown in figure 1, is done through HELP WANTED
advertisements in newspapers, job recruitments websites, trade journals, flyers,
television advertisements, employment agencies, business associates, and friends.
Candidates for employment are required to submit application forms, resume,
curriculum vitae (CV), and/or biodata.
Most companies have pre-printed application forms. Pre-printed forms are also
shown available in office supplies stores. The prospective employers screen the
applicants from the pool, and subject them to a battery of tests. The tests may
include some of the following, dependent on the specifications of the job:
1. Intelligence Quotient (IQ) Test
2. Aptitude Test
3. Motor and Physical Abilities Test
4. Personality Test
5. Achievement Test
6. Work Sampling Test
7. Background and Reference Check
The candidates who pass the tests are made to go through the requisite medical
examinations and drug tests. The applicants who pass the medical tests are short-
listed for interviews, and subjected to interview sessions, again dependent on the
job level and/or job specifications, by supervisors and/or managers.
When the applicant passes all the aforementioned tests, the recruitment process
is completed, and the job applicant is hired.
After the applicant is hired, he/she goes through job orientation. Job orientation is
the procedure for providing new employees with basic background information
about the enterprise. This information covers personnel policies on working hours,
performance review, salaries and remuneration, vacation leaves and other
employee benefits, and safety rules and regulations. The company’s organization
charts and charts of operations are also provided during the orientation. The new
hire is introduced and to the persons with whom he/she will interact. This is
considered as the socialization phase of the orientation.
Many students see on-the-job training (OJT) as a school-related program. The OJT
program is, simultaneously, a training program where a new hire is tasked to learn
a job by actually doing it. The new hire or trainee usually assigned to an
experienced supervisor who acts as mentor. The understudy, trainee, or new hire,
is ‘coached’ by the mentor.
Job rotation is an OJT form. Under this program, an employee is moved from one
work assignment to another so that he/she can be trained in new job or work tasks.
Job rotation ensures a pool of employees trained in a multiple work assignment,
whereby replacement of tardy, absent, or resigned employees is possible.
Apprenticeship training involves having a trainee study under a master craftsman.
Most vocational school students divide their time and between classroom
instruction and apprenticeship training under a master craftsman.
Geographically separated employees may be trained through video conferencing.
This is called distanced learning and is usually done by multinational companies
and domestic enterprises with workplaces in different parts of the country, like the
Philippines. Distant groups of employees communicate with their lecturers and
with each other using audio-visual equipment. To enhance interaction, soft and
hard copies of learning manuals are sent to the training participants (sounds like
what you are doing right now with your schooling: distance learning, wherein you
are given modules and you study at home). Well-prepared training guides and well-
planned presentations are a must for distance learning programs.
The training process comprises of a series of steps that needs to be followed
systematically to have an efficient training program. The training is a systematic
activity performed to modify the skills, attitudes and the behavior of an employee
to perform a particular job.
8.2 Training Process

9
1. Needs assessment: The first step in the training process is to assess the
need for training the employees. The need for training could be identified
through a diagnosis of present and future challenges and through a gap
between the employee’s actual performance and the standard
performance.
The needs assessment can be studied from two perspectives: individual
and group. The individual training is designed to enhance the individual’s
efficiency when not performing adequately. And whereas the group
training is intended to inculcate the new changes in the employees due to
a change in the organization’s strategy.
2. Deriving Instructional Objectives: Once the needs are identified, the
objectives for which the training is to be conducted are established. The
objectives could be based on the gaps seen in the training programs
conducted earlier and the skills developed by the employees.
3. Designing Training Program: The next step is to design the training
program in line with the set objectives. Every training program
encompasses certain issues such as: Who are the trainees? Who are the
trainers? What methods are to be used for the training? What will be the
next level of training? Etc. Also, the comprehensive action plan is designed
that includes the training content, material, learning theories, instructional
design, and other training requisites.
4. Implementation of the Training Program: Once the designing of the
training program is completed, the next step is to put it into the action. The
foremost decision that needs to be made is where the training will be
conducted either-in-house or outside the organization.
Once it is decided, the time for the training is set along with the trainer
who will be conducting the training session. Also, the trainees are
monitored continuously throughout the training program to see if it is
effective and is able to retain the employee’s interest.
5. Evaluation of the Training Program: After the training is done, the
employees are tasked to give their feedback on the training session and
whether they felt useful or not. Through feedback, an organization can
determine the weak spots if any, and can rectify in the next session. The
evaluation of the training program is a must because companies invest
huge amounts in these sessions and must know its effectiveness in terms
of money.
Thus, every firm follows the series of steps to design an effective training
program that serves the purpose for which it was intended.
Compensation can be defined as the results or rewards that the employees receive
in return for their work. Compensation includes payments like bonuses, profit
sharing, overtime pay, recognition rewards and sales commission, etc.
Compensation can also include non-monetary perks like a company-paid car,
company-paid housing, and stock opportunities. Compensation is a vital part of
human resource management, which helps in encouraging the employees and
improving organizational effectiveness.
From a manager’s point of view, the compensation package offered to a company’s
employees is essential not only because it costs money, but because it is likely to
be the primary reason the employees work for the firm.
Needs Assessment
Setting Objectives
Designing
Implementation
Evaluation
8.3 Compensation: its Functions and Importance

10
Compensation packages with good pay and advantages can help attract and retain
the best employees. A quick survey of employees about compensation is likely to
expose an expectation that wages are fair and cover basic living expenses, keep up
with inflation, leave some money for savings (perhaps for retirement) and leisure,
increment over time.
A company’s compensation scheme also informs a great deal about the firm’s
values and cultures. Employees often look at what a company pay rather than what
it says. In many aspects, people behave as they are rewarded.
A compensation scheme projects what the company expects of its employees. For
example, is quality is an essential value, then it should be implemented through
some element of the total compensation system.
Objectives of Compensation Policy
Clearly, managing a firm’s compensation policy is a complex task as it facilitates
systematically administered and equitable salaries, reconciles employees’ career
aspirations with respect to earnings, aligns employees’ personal objectives with
those of the organization, and keeps the firm’s costs under control.
To summarize, compensation management is a synchronized practice that includes
balancing the work-employee relation by facilitating monetary and non-monetary
benefits for employees.
Importance of Compensation
A good compensation is a must for every business organization, as it gives an
employee a reason to stick to the company.
An organization gains from a structured compensation management in the
following ways
Allure suitable staff Keep qualified personnel
Develop reward
structures that are
equitable with logical
and fair pay relationships
between differently
valued jobs.
Manage pay structures
to mirror inflationary
effects.
Assure that rewards and
salary costs handle
changes in market rates
or organizational change.
Abide with legal
requirements
Appraise performance,
duty, and loyalty, and
provide progression.
Maintain compensation
levels and differentials
under review and control
salary or wage costs.
• It tries to give proper refund to the employees for their contributions
to the organization.
• It discovers a positive control on the efficiency of the employees and
motivates them to perform better and achieve specific standards.
• It creates a base for happiness and satisfaction of the workforce that
limits the labor turnover and confers a stable organization.
• It enhances the job evaluation process, which in return, helps in
setting up more realistic and achievable standards.
• It is designed to abide with the various labor acts and thus does not
result in conflicts between the employee union and the management.
This creates a peaceful relationship between the employer and the
employees.
• It excites an environment of morale, efficiency, and cooperation
among the workers and ensures satisfaction to the workers.

11
In short, we can say that compensation management is required as it encourages
the employees to perform better and show their excellence as well as provides
growth and development options to the deserving employees.
Types of Compensations
We have learnt about what compensation is and its importance, However, when it
comes to an organization, be it private or public, compensations are further divided
into the following:
These are the two types of compensation that need to be managed and have its
own contribution in the development of the organization. Moving forward, we will
see the different components of compensation.
Components of Compensation
Components as a whole is made up of an employee after retirement or in case of
some accident or injury. Now we shall see the key elements or components that
make compensation.
Some of these allowances are as follows:
Dearness Allowance – this allowance is given to protect real income of an
employee against price rise. Dearness allowance (DA) is paid as a percentage of
basic pay.
House Rent Allowance – companies who do not provide living accommodation to
their employees pay house rent allowance (HRA) to employees. This allowance is
calculated as percentage of salary.
City Compensatory Allowance – this allowance is paid basically to employees in
metros and other big cities where cost of living is comparatively more. City
compensatory allowance (CCA) is normally fixed amount per month, like 30 per
cent of basic pay in case of government employees.
•Wages mark hourly rates of pay, and salary marks the monthly rate
of pay of an employee. It is irrelevant of the number of hours put in
by an employee working in the firm. These are subject to annual
increase.
Wages and Salary
•Allowances can be defined as the amount of something that is
allowed, especially within a set of rules and regulations or for a
specified purpose. Various allowances are paid in addition to basic
pay
Allowances
•It is naturally made up of salary
payments and health benefits. The
creation of salary ranges and pay
scales for different positions within
an organization are the central
responsibility of compensation
management staff.
•Direct compensation that is in line
with the industry standards facilitates
employees with the assurance that
they are getting paid fairly. This helps
the employers not to worry about the
costly loss of trained staff to a
competitor.
Direct
Compensation
•It focuses on the personal
encouragements of each individual to
work. Although salary is essential,
people are most productive in jobs
where they share the company’s
values and priorities.
•These benefits can include things like
free staff development courses,
subsidized day care, the chance for
promotion or transfer within the
company, public recognition, the
ability to effect change or bring some
changes in the workplace, and service
to others.
Indirect
Compensation

12
Transport Allowance/Conveyance Allowance – some companies pay transport
allowance (TA) that accommodates travel from the employee’s house to the office.
A fixed amount is paid every month to cover a part of travelling expenses.
In recent years, a great deal of attention has been directed to the development of
compensation systems that go beyond just money. We can say that all the
components of compensation management play a very important role in the life of
an employee.
In particular, there has been a marked increase in the use of pay-for-performance
(PrP) for management and professional employees, especially for executive
management and senior managers. Compensation is a primary motivation for most
employees.
REFERENCES
Books
Supplement to Chapter 4: Staffing, pp. 51-58, Organization and
Management: Concepts, Caselets, and Exercises (2016)
Electronic Sources
HRM - Compensation Management retrieved from
https://www.tutorialspoint.com/human_resource_management_compe
nsation,html
Staffing: Definition, Meaning, and Functions retrieved from
https://www.toppr.com/guides/business-studies/staffing/introduction-
to-staffing-and-its-meaning/
Training Process retrieved from https://businessjargons.com/training-
process.html
•Incentive compensation is performance-related remuneration paid
with a view to encourage employees to work hard and do better.
Both individual incentives and group incentives are applicable in
most cases. Bonus, gain-sharing, commissions on sales are some
examples of incentive compensation.
Incentive and Performance-Based Pay
•Fringe benefits include employee benefits like medical care,
hospitalization, accident relief, health and group insurance,
canteen, uniform, recreation, and the likes.
Fringe Benefits/Perquisites

13
Directions. Interview someone you know who is currently hired in a company, firm,
establishment, etc. A face-to-face interview is not obligatory. You are free to use
any social media platforms to complete this activity. The series of questions you
will ask him/her is given below. Make sure you complete the profile of the
interviewee.
Directions. Based on the answers of the interviewee, answer the following
questions below. Observe proper grammar. Any form of cheating is prohibited.
•Name:
•Age:
•Company Name:
•Job Position:
•Years of Employment in the Current Company:
The Profile of the Interviewee
What did you consider in applying for the job you
currently have?
What are the preparations you made in applying for
this job?
During the application process you had, what
moment/experience do you remember the most?
Do you think searching for a job is easy? Why or
why not?
If you are to apply for a job, what aspects would you
like to consider?
If you are to apply for a job, what preparations do
you think you should make?
From interviewing someone who has experienced
the application process, what lesson can you get in
this activity?
Activity 1: Someone Experienced I Activity 1: Someone Experienced II

14
Directions. Encircle the letter of the correct answer. Use black/blue pen only. Any
forms of cheating and erasures are prohibited. Submit on the scheduled date given
by the instructor.
1. It is a type of compensation that focuses on the personal encouragements
of each individual to work.
a. Direct Compensation
b. Indirect Compensation
c. Incentives
2. It is the procedure through which the duties of given job positions and the
characteristics of people who should fill them are determined.
a. Job Analysis
b. Recruitment Process
c. Apprenticeship Training
3. This allowance is paid basically to employees in metros and other big cities
where cost of living is comparatively more.
a. Dearness Allowance
b. House Rent Allowance
c. City Compensatory Allowance
4. Through this, an organization can determine the weak spots if any, and can
rectify in the next session of the training program.
a. Feedback
b. Provided Lunch and Snacks
c. Motivational Speaker
5. The company’s compensation scheme is essential to be said in the training
process because ___________________.
a. Employees rarely look at what a company can offer financially but on
the company goals and objectives.
b. Employees often look at what a company pay rather than what it says.
They behave as they are rewarded.
c. Employees do not care much about the monetary fund it can get from
the company but on the values and virtues it can learn from the
establishment.
6. This marks the monthly rate of pay of an employee.
a. Wages
b. Salary
c. Allowance
7. A list of what the job entails.
a. Job Analysis
b. Job Specification
c. Job Description
8. It is a procedure for providing new employees with basic background
information about the enterprise.
a. Job Analysis
b. Recruitment Process
c. Job Orientation
9. Managing a firm’s compensation policy is a complex task because
___________.
a. It includes balancing the work-employee relation by facilitating
monetary and non-monetary benefits for employees.
b. It includes analyzing the skills of an employee and if he/she is fit for the
position he/she will have.
Activity 2: Choose Wisely

15
c. It includes ensuring a training program for the newly hired employees
to their new working task/assignment.
10. Consider the following statements:
A: Compensation does not include non-monetary perks.
B: Direct Compensation helps the employers to worry about the costly loss
of trained staff to a competitor.
C: It is not an objective of a compensation policy to abide with legal
requirements.
a. Of the three statements, only statement A is true.
b. Of the three statements, only statement C is false.
c. None of the statements are true.

16
Most of us often mistake leadership ang management as the same thing but in
essence, they are very different. The main difference between the two is that
leaders have people that follow them, while managers have people who simply
work for them.
Leadership is about getting people to comprehend and believe in the vision you set
for the company and to work with you on achieving your goals, while management
is more about administering and making sure the day-to-day activities are
happening as they should.
Though leadership and management are not the same thing, they must go hand in
hand. When you are trying to inspire, encourage, and engage your staff, you have
to be both a manager and a leader. When you want your employees, whether
permanent or temporary, to be more productive you have to know which role is
best suited to get them there. Managing a team is more about maintenance─
keeping a well-oiled machine going. However, when individual employees are in
need of new energy and a boost to morale, focusing on leadership is the way to go.
While leadership is about inspiring, management is about planning.
Managers are about business; leaders are about people. Management is the brain
behind the business. They strategize the plans and analyze statistics that boost the
bottom line and promote the company image.
Leaders hone in more on the individual workers, providing support and
encouragement they need to do their best work.
Managers oversee; leaders guide. Managers check in on their employees and
often observe from a distance, focusing on the overall process as a whole. Leaders
guide their staff through steps and stages, working with them to create a more
efficient and effective workplace. Of course, sometimes, these roles overlap, so it
is not uncommon for managers and leaders to wear interchangeable hats.
Managers are task-oriented; leaders are goal-oriented. Managers assign duties
and provide their employees on time and organized, as well as measure success by
examining the deliverables. Leaders look at the goal, the desired and result, and let
their employees accomplish their goals by choosing their own means. They provide
support and training when necessary but tend to work toward the bigger picture.
Managers plan projects; leaders motivate the team. While management outlines
the objectives for a new project or process, leaders motivate the team to get there.
Milestones are mapped out by managers, and they are often the ones to delegate
and assign the tasks. Leaders conduct the committee meetings, facilitate
collaboration and give the team feedback on their progress.
Managers measure value; leaders create it. When it comes down to
understanding if the job was done right, managers have the tools to get results.
They measure outcomes, analyze data and develop strategies for the next project
on the horizon. However, leaders are often in the thick of it working alongside their
9.1 Leading vs. Managing
2
nd
QUARTER
MODULE
10
WEEK:_____
• Differentiate leading to managing,
• Identify the different theories of motivation,
• Evaluate styles of leadership, and
• Appreciate the role of communication in directing people within the organization.
KEY QUESTIONS
• How can we say that someone
is a leader? Or a manager?
• Why is communication
considered a substantial part
of an organization?
CHAPTER 9. LEADING

17
crew every step of the way. They enable their employees to be more productive by
leading by example.
Motivation plays a big role in boosting the employees’ morale. It is defined as the
physiological process of providing purpose and intention to behavior− it explains
why people behave the way they do. By using motivation theories, management
caninspire customers to choose the brandandencourage employees totake action
and become self-directed.
The most important motivational theories on describing people’s need are
Maslow’s Hierarchy of Needs, Alderfer’s ERG Theory, and McClelland’s Acquired
Needs Theory.
Maslow’s Hierarchy of Needs
This theory indicates that people satisfy their needs in a specific order, from
bottom to top, as follows:
1. Physiological Needs
- Food, water, sex, and
shelter;
2. Safety and Security
- Protection against threat
and deprivation;
3. Social Needs
- Friendship, affection,
belonging, and love;
4. Ego
- Independence,
achievement, freedom,
status, recognition, and
self-esteem;
5. Self-actualization
-Realizing one’s full potential, becoming everything one is capable of being.
The theory specifies that people satisfy their physiological needs first, then proceed
to gratify their safety and security needs, then social, ego, and then self-
actualization. Once a set of needs is satisfied, it is no longer considered as potent
motivator.
Maslow’s theory is considered simplistic and found to be an inaccurate human
motivation theory. For instance, workers in hazardous jobs often do not ignore
their safety and security needs because they need to fulfill their physiological
desires first.
An essential learning from this theory, however, is the need for self-actualization,
which directs organization to look at human resource not just as a business cost,
but an asset that should be developed.
Alderfer’s ERG Theory
Existence, relatedness, and growth (ERG) are the three sets of needs under the
Alderfer theory.
Existence needs are all material and physiological needs, relatedness needs are
satisfied through mutual sharing of thoughts and feelings, as they are about
9.2 Theories of Motivation
Self-
Actualization
Esteem
Love/Belonging
Safety
Physiological
Existence
Needs
Relatedness
Needs
Growth
Needs

18
Need for
Achievement
Need for
Affiliation
Need for
Power
relationships, while growth needs encourage people to creatively and efficiently
change themselves or their environments.
Existence Needs
These are constantly and pervasively important in the work setting. Some of them
are job security, suitable working conditions, reasonable working hours, pay and
fringe benefits.
• Provide our basic material existence requirements.
• They include Maslow’s physiological and safety needs.
Relatedness Needs
These needs focus on how people relate to their social environment.
It involves the relationship with significant others─ family, supervisors, co-workers,
subordinates, friends, and so on.
• The desire we have for maintaining important interpersonal relationships.
• These social and status desires require interaction with others.
• They align with Maslow’s social need and the external component.
Growth Needs
These needs are those that compel a person to make creative or productive efforts
for him or herself.
The satisfaction of growth is what a person needs to experience in a sense of
completeness as a human being.
• An intrinsic desire for personal development. These include the intrinsic
component from Maslow’s esteem category and the characteristics
included under self-actualization.
The ERG theory postulates that the needs can occur simultaneously unlike
Maslow’s theory. The importance of both theories for managers in their leadership
functions is the knowledge that self-actualization and/or growth needs are
essential motivators for work accomplishment.
McClelland’s Acquired Need Theory
The key needs for managers, according to McClelland, are achievement, affiliation,
and power needs. Achievement means an orientation toward success and goal
realization. Affiliation reflects a strong wish to be liked, while power refers to the
need to persuade or be in command of other people.
The need theories have been used in job design, training needs, and empowerment
advances by managers and leaders of diverse industries.
1. Need for Achievement (nAch)
The drive to excel, to achieve a set of standards, to strive to succeed.
Features of people with Need for Achievement (nAch) includes:
• They seek personal responsibility for finding solutions to problems,
• They want to receive rapid feedback on their performance so they
can tell easily when they are improving or not.
• They can set moderately challenging goals. High achievers are not
gamblers; the dislike succeeding by chance.
• High achievers perform best when they perceive their probability
of success as 50-50.
Personal Power
Institutional Power
Which needs make the
best manager?

19
• They like to set goals that require stretching themselves a little.
2. Need for Power (nPow)
The need to make others behave in a way that they would not have
behaved otherwise. Need for Power (nPow) features are:
• The desire to have an impact, to be influential, and to control
others.
• Individuals high in nPow enjoy being ‘in-charge’.
• Strive for influence over others.
• Prefer to be placed into competitive and status-oriented
situations.
• Tend to be more concerned with prestige and gaining influence
over others than with effective performance.
3. Need for Affiliation (nAfl) are:
• This need has received the least attention from researchers.
• Individuals with a high affiliation motive strive for friendship.
• Prefer cooperative situations rather than competitive ones.
• Desire relationships involving a high degree of mutual
understanding.
Leadership style is the manner and approach providing direction, implementing
plans, and motivating people. As seen by the employees, it includes the total
pattern of explicit and implicit actions performed by their leader.
Leadership styles are on a continuum, ranging from autocratic at one end, to
laissez-faire at the other, with a variety of styles in between. Great leaders can
inspire political movements and social change. They can also motivate others to
perform, create and innovate.
As you start to consider some of the people who you think of as great leaders, you
can immediately see that there are often vast differences in how each person leads.
Fortunately, researchers have developed different theories and frameworks that
allow us to better identify and understand these different leadership styles.
Illustration by Joshua Seong, Verywell
Lewin’s Leadership Styles
In 1939, a group of researchers led by psychologist Kurt Lewin set out to identify
different styles of leadership. While further research has identified more distinct
types of leadership, this early study was very influential and established three
major leadership styles that have provided a springboard for more defined
leadership theories.
Autocratic
Authoritarian
Leadership
•Authoritarian leaders, also known as autocratic leaders, provide clear
expectations for what needs to be done, and how it should be done. This style
of leadership is strongly focused on both command by the leader and control of
the followers. There is also a clear division between the leader and the
members. Authoritarian leaders make decisions independently, with little or no
input from the rest of the group.
9.3 Styles of Leadership

20
Leaders and their leadership skills plays an important role in the growth of any
organization. A leader should then have the ability to maintain good interpersonal
relations with the followers or subordinates and motivate them to help in achieving
the organizational objectives.
Now that it has been clear to us the importance of motivation and leadership in
the organization, it is time to focus on the role of communication and its
significance in the organization.
Effective communication is a building block of successful organization. In other
words, communication acts as organizational blood. The importance of
communication in an organization can be summarized as follows:
1. Communication promotes motivation by informing and clarifying the
employees about the task to be done, the manner they are performing, the
task, and how to improve their performance if it is not up to the mark.
2. Communication is a source of information to the organizational members
for decision-making process as it helps identifying and assessing alternative
course of actions.
3. Communication also plays a crucial role in altering individual’s attitudes
i.e., a well-informed individual will have better attitude than a less-
informed individual. Organizational magazines, journals, meetings and
various other forms of oral and written communication help in molding
employee’s attitudes.
4. Communication also helps in socializing. One cannot survive without
communication.
5. Communication also assists in controlling process. It helps controlling
organizational members behavior in various ways. There are various levels
of hierarchy and certain principles and guidelines that employees must
follow in an organization. They must comply with organizational policies,
perform their job role efficiently and communicate any work problem and
grievance to their superiors. Thus, communication helps in controlling
function of the management.
An effective and efficient
communication system requires
managerial proficiency in delivering
and receiving messages. A manager
must discover various barriers to
communication, analyze the reasons
for their occurrence and take
preventive steps to avoid those
barriers. Thus, the primary
responsibility of a manager is to
develop and maintain an effective communication system in the organization.
9.4 Role of Communication
Democratic
Participative
Leadership
•Participative leadership, also known as democratic leadership, is typically the
most effective leadership style. Democratic leaders offer guidance to group
members, but they also partici pate in the group and allow input from other
group members. Participative leaders encourage group members to participate,
but retain the final say in the decision-making process. Group members feel
engaged in the process and are motivated and creative. Democratic leaders
tend to make followers feel like they are an important part of the team, which
helps foster commitment to the goals of the group.
Laissez-Faire
Delegative
Leadership
•Delegative leaders offer little or no guidance to group members and leave the
decision-making up to group members. While this style can be useful in
situations involving highly-qualified experts, it often leads to poorly defined
roles and a lack of motivation.

21
REFERENCES
Books
Leading, Chapter 5, pp. 62-68, Organization and Management: Concepts,
Caselets, and Exercises (2016)
Electronic Sources
Acquired Needs Theory – Need for Achievement, Power and Affiliation
retrieved from https://www.iedunote.com/acquired-needs-theory
Chapter 1: Introducing Organizational Communication, Zink, J. retrieved
from
https://granite.pressbooks.pub/organizationalcommunication/chapter/ch
apter-1/
ERG Theory of Motivation retrieved from https://www.iedunote.com/erg-
theory
Leadership retrieved from https://www.toppr.com/guides/business-
studies/directing/leadership/#:~:text=Leaders%20and%20their%20leader
ship%20skills,the%20growth%20of%20any%20organization.&text=A%20l
eader%20should%20have%20the,in%20achieving%20the%20organization
al%20objectives.
Leadership Styles retrieved from
http://www.nwlink.com/~donclark/leader/leadstl.html
Leadership Styles and Frameworks You Should Know (2020, August 3)
retrieved from https://www.verywellmind.com/leadership-styles-
2795312
The Difference Between Leadership and Management (2018) retrieved
from https://www.nextgeneration.ie/blog/2018/03/the-difference-
between-leadership-and-
management#:~:text=Leadership%20is%20about%20getting%20people,a
re%20happening%20as%20they%20should.
The Difference Between Leading and Managing retrieved from
https://burnettspecialists.com/the-difference-between-leading-and-managing/

22
Directions. Think of someone you consider as a leader: whether it is someone you
know, someone in your family, or in your friends and neighborhood, or someone
in the politics, business, sports entertainment, or other industries. Complete the
table below with his/her profile.
Directions. Make a poster on a separate sheet of short bond paper about the
essence of communication in an organization. The poster will then be passed
along with this activity sheet. (15 points)
Your post will be graded based on this rubric.
Criteria Very Good
5
Good
4
Fair
3
Poor
2
Score
Required
Elements
The poster
includes all
required
elements as
well as
additional
information.
All required
elements are
included on
the poster.
Only few
required
elements are
missing on
the poster.
Several
required
elements are
missing on
the poster.
Attractiveness The poster is
exceptionally
attractive in
terms of
design, layout
and neatness.
The poster is
attractive in
terms of
design,
layout and
neatness.
The poster is
acceptably
attractive
though it
may be a bit
messy.
The poster is
distractingly
messy or
very poorly
designed. It
is not
attractive.
Graphics
Relevance
All graphics
are related to
the topic and
make it easier
to
understand.
Most of the
graphics are
related to
the topic
and make it
easier to
understand.
Some of the
graphics are
related to
the topic
and make it
easy to
understand.
Graphics do
not relate to
the topic
and it is hard
to
understand.
Activity 1: A Leader’s Profile
Insert Picture
Name:
Age:
Industry:
Why do you consider him/her as a
leader?
What do you think is his/her
leadership style? Why do you
consider this as his/her style?
Is he a good leader? Why or why
not?
Activity 2: A Leader’s Profile

23
Directions. On the space provided before each number, write T if the statement is
true, and F if the statement is false.
__________1) Management is more about boosting the employee’s moral while
leadership focuses on the maintenance of the team.
__________2) Based on Lewin’s study on leadership styles, democratic leadership
is the most effective style.
__________3) Maslow’s hierarchy of needs specifies that people satisfy their
safety and security first then proceed to gratify their physiological needs.
__________4) Like Maslow’s theory, Alderfer’s ERG theory postulates that the
needs cannot occur simultaneously.
__________5) The desire we have for maintaining important interpersonal
relationships is under the existence needs.
__________6) As for McClelland’s Acquired Needs Theory, people with Need for
Achievement (nAch) feature seeking personal responsibility for finding solutions to
problems.
__________7) A well-informed individual has a better attitude than a less-informed
individual.
__________8) Authoritarian leaders consider the suggestions of his team members
and make decisions based on his findings with the team’s suggestions.
__________9) An intrinsic desire for personal development is what growth needs
are implying.
__________10) Maslow’s theory is considered simplistic and found to be an
accurate human motivation theory.
Activity 3: Choose Wisely

24
After discussing the importance of choosing tasks and assigning these developed
tasks to people, as well as the putting of the right man in the right job, it is now
time to focus on the nature of controlling.
Controlling is known as an essential feature of scientific management. In fact, much
of the precision of managerial education is focused on the improvement of control
techniques. It is generally used for putting restraints over the elements of being
controlled. In managerial terminology, control is ensuring work accomplishment
according to plans. It is a process that
guides activity towards some
predetermined goals.
Without control, a manager cannot do
the complete job for managing. All the
other functions are the preparatory steps
for getting the work done and controlling
is concerned with making sure that there
is proper execution of these functions. It
ensures work accomplishment according
to plans.
Managerial control is defined as the
systematic process through which
managers regulate organizational activities to make them consistent with
established expectations detailed in plans, targets, and standards of performance.
Ernest Dale defines it as “the modern concept of control envisages system that not
only provides a historical record of what has happened and provides data that
enable the chief executive or the departmental head to take corrective steps if he
finds he is on the wrong track.”
Based on the above definitions the following natures or characteristics of
controlling can be presented below:
•Actually control is a follow-up action to the other functions of
management performed by managers to control the activities
assigned to them in the organization.
1. Control is a Function of a Management
•Control is designed to evaluate the actual performance against
predetermined standards set-up in the organization. Plans serve as
the standards of desired performance. Planning sets the course in
the organization and control ensures action according to the chosen
course of action in the organization.
2. Control is Based on Planning
10.1 Controlling and its Nature
2
nd
QUARTER
MODULE
11
WEEK:_____
• Discuss the nature of controlling,
• Describe the link between planning and controlling,
• Distinguish control methods and systems, and
• Apply management control methods and techniques in accounting and management.
KEY QUESTIONS
• How importantis controlling in
the organization?
• Is there a relationship
between planning and
controlling?
CHAPTER 10. CONTROLLING

25
Planning and controlling are closely linked. They are inter-related to each other. In
fact, the two are rightly called as ‘Siamese Twins’ of management. Every objective,
every goal, every policy, every procedure, and every budget become standard
against which actual performance is compared.
Planning sets the ship’s course and controlling keeps it on course. When the ship
begins to veer off the course, the navigator notices it and recommends a new
heading designed to return the ship to its proper course. Once control process is
over its findings are integrated into planning to prescribe new standards for
control.
•It involves continuous review of standards pf performance and
results in corrective action, which may lead to changes in other
functions of management.
3. Control is a Dynamic Process
•Control depends upon the information regarding actual
performance. Accurate and timely availability of feedback is
essential for effective control action. An efficient system of
reporting is required for a sound control system. This requires
continuing monitoring and review of the operations.
4. Information is the Guide to Control
•The performance of control is achieved only when corrective action
is taken on the basis of feedback information. It is only action,
which adjust performance to predetermined standards whenever
deviations occur. A good system of control facilities timely action so
that there is minimun waste of time and energy.
5. The Essence of Control is Action
•Control is not a one-step process but a continuous process. It
involves constant revision and analysis of standards resulting from
the deviations between actual and planned performance.
6. It is a Continuous Activity
•An executive can take corrective action only when he has been
delegated necessary authority for it. A person has authority to
control these functions for which he is directly accountable.
Moreover, control becomes necessary when authority is delegated
because the delegator remains responsible for the duty. Control
standards help a manager expad his span of management.
7. Delegation is the Key to Control
•Control involves comparison between actual and standards. So,
corrective action is designed to improve performance in future.
8. Control Aims at Future
•Control is a basic or primary function of management. Every
manager has to exercise control over the subordinates'
performance, no manager can get things done without the process
of controlling. Once a plan becomes operational, follow-up action is
required to measure progress, to uncover deficiencies and to take
corrective actions.
•Therefpre, control is an essential managerial function at every level.
The process of management is incomplete without controlling.
9. Control is a Universal Function of Management
•The function of controlling is positive. It is to make things happen
i.e., to achieve goal with instead constraints, or by means of the
planned activites. Controlling should never be viewed as being
negative in character.
10. Controlling is Positive
10.2 Planning and Controlling

26
Without the basis of planning, controlling activities becomes baseless and without
controlling, planning becomes a meaningless exercise. In absence of controlling, no
purpose can be served by.
The Control Process
Following are the steps involved into the process of control:
1. Establish the Standards:
Within an organization’s overall strategic plan, managers define goals for
organizational departments in specific, precise, operational terms that
include standards of performance to compare with organizational
activities. However, for some of the activities the standards cannot be
specific and precise.
10.3 Importance of Control
10.4 The Control Process
Establish performance
standards.
Measure actual performance.
Compare actual performance
versus performance standards.
Take corrective action.
Revise standards when
necessary.
Guides the
Management in
Achieving Pre-
determined
Goals:
•The continuous flow of information about projects
keeps the long range of planning on the right track. It
helps in taking corrective actions in future if the
performance is not up to the mark.
Ensure Effective
Use of Scarce
and Valuable
Resources
•The control system helps in improving organizational
efficiency. Various control devices act as motivators
to managers. The performance of every person is
regularly monitored and any deficiency if present is
corrected at the earliest.
Facilitates
Coordination
•Control helps in coordination of activities through
unity of action. Every manager will try to coordinate
the activities of his subordinates in order to achieve
departmental goals.
Leads to
Delegation and
Decentralization
of Authority
•A decision about follow-up action is also facilitated.
Control makes delegation easier/better.
Decentralization of authority is necessary in big
enterprises. The management cannot delegate
authority without ensuring proper control.
Spares Top
Management to
Concentrate on
Policy Making
•For control processes management’s attention is not
required every now and then. The management by
exception enables top management to concentrate
on policy formulation.

27
Standards, against which actual performance will be compared, may be
derived from past experiences, statistical methods, and benchmarking
(based upon industry practices). As far as possible, the standards are
developed bilaterally rather than top management deciding unilaterally,
keeping in view the organization’s goals. These standards may be tangible
or intangible.
2. Measure Actual Performance:
Most organizations prepare formal reports of performance measurements
both quantitative and qualitative (where quantificationis possible) that the
managers review regularly. These measurements should be related to the
standards set in the first step of the control process.
3. Compare Performance with the Standards:
This step compares actual activities to performance standards. When
managers read computer reports or walk through their plans, they identify
whether actual performance meets, exceeds, or falls short of standards.
Typically, performance reports simplify such comparison by placing the
performance standards for the reporting period alongside the actual
performance for the same period and by computing the variance─ that is,
the difference between each actual amount and the associated standard.
The manager must know of the standard permitted variation (both positive
and negative). Management by exception is most appropriate and practical
to keep insignificant deviations away.
4. Take Corrective Action Then Revise Standards When Necessary:
When performance deviates from standards, managers must determine
what changes, if any, are necessary and how to apply them. In the
productivity and quality-centered environment, workers and managers are
often empowered to evaluate their own work. After the evaluator
determines the cause or causes of deviation, he or she can take the fourth
step─ corrective action.
The corrective action may be to maintain status quo (reinforcing success),
correcting the deviation, or changing standards. The most effective course
may be prescribed by policies or may be best left up to employees’
judgment and initiative. The corrective action may be immediate or basic
(modifying the standards themselves).
Since problems can occur at any time during a process, it is important to have a few
different ways to manage issues. A manager’s toolbox should be equipped with
three types of controls: Feed Forward Control, Concurrent Control, and Feedback
Control.
Here are some examples of how a proactive and preventative approach can help
to avoid problems later on:
• Thoroughly interviewing a candidate can tell a human resource manager much
about how this person would fit into the organization. A rushed interview may
result in hiring the wrong person for the job.
Feed Forward or Preliminary
Quality Control
•This type of control involves
identifying and preventing
problems in an organization
before they occur. This is a focus
on inputs.
•Feed forward controls are
proactive and preventative. These
controls are helpful to the
manager since it allows the
manager to plan a work
effectively: they can regulate
resources like employees, raw
materials and capital ahead of
time. This means that future
problems can be avoided.
Concurrent Control
•Concurrent controls involve
identifying and preventing
problems in an organization as the
occur. This means that systems
are monitored in real-time.
•Concurrent controls begin with
standards and all employee
activity is measured against the
standard. Usually these include
quality control standards. This
means that products and services
can be checked as they are being
produced or performed to be sure
that the highest quality product or
service is being produced or
provided.
10.5 Types of Control

28
• Running a background checks and drug testing employees is important. An
emergency room is no place for employees with criminal backgrounds or drug
problems. For example, hiring a drug user can result in patient medication
discrepancies, employee accidents and injuries, higher liability claims and
absenteeism.
• Another feedforward control might be offering employees a good health
insurance plan. When employees are healthy, they reliably come to work. This
cuts down on absenteeism.
Control system ensures (1) orderly efficient conduct of business and (2) adherence
to management policies. The areas of control are (1) information, (2) finance, (3)
employee behavior, and (4) operations.
Information should be available at the right time and the right place. Often, in the
desire to have complete and accurate information, there is a need to wait long to
the point that information become stale. Internal and external deadlines are
imposed on financial reporting. For example, at the end of each banking day, the
bank balances actual cash with balance per records. At the end of the month, result
of operations and financial position are determined. The deadlines set by the SEC,
BIR, SSS, PhilHealth, and HDMF are to be met monthly, quarterly, and annually.
Failure to meet deadlines means penalties and interestfor the delayed compliance.
In obtaining loans, reports to prove credit worthiness are required by credit
grantors.
The accounting andgovernmentforms are designed to containinformation needed
by internal users as well as external users. The sales invoice, for example, shows
relevant data for the seller and buyer. Signatures on business forms (1) pinpoint
responsibility, (2) grant authority, and (3) consummate a transaction as when the
buyer acknowledges delivery of products in good condition.
Review of forms is done by
systems analysts and
government units to
better serve their
purpose. Frequently used
government forms are
those of the BIR for tax
compliance and those of
SSS, HDMF, and PhilHealth
for reports on employees.
Finance controls include
budgets. Actual
transactions are
compared with budget. Overbudget and underbudget call for explanations.
Standard costs are set and compared with actual costs. Variances are analyzed and
explained. There should be immediate recording of transactions to minimize
opportunity for manipulation. No one person should be in control of a transaction.
There should be counterchecking. However, make sure that controls do not lead to
too much delay.
Feedback or Output Control
•Feedback is a process in which information about the past or the present is
used to influence the present or the future. As part of a chain of cause-and-
effect that forms a circuit or loop, actions are said to 'feed back' into
themselves.
•Feedback helps an organization seeking to improve its performance make the
necessary adjustments. Feedback serves as motivation for many people in the
workplace. When employees receive negative or positive feedback, they
decide how to apply it in their daily work. Feedback for a system as a whole
also provides common points of discussion for management and allows a
holistic appraisal of how processses can be improved.
10.6 Areas of Control
Control
System
Information
Finance
Employee
Behavior
Operations
Areas of Control

29
Equipment enhances control. Use of computers speedsup recording and reporting.
Equipment leads to efficiency in operations, producing outputs on scheduled time
and at budgeted costs.
Another significant control area is employee behavior. At point of entry, the
employee fills up an application form and submits papers to support resume.
Employee is subjected to tests and interviews. Physical medical examinations cap
the hiring process. The documents form part of the hiree’s permanent file. This file
together with current file keep track of the employee’s performance. The
permanent file as well as the current file become a monitoring file.
Now that we have clear idea of how a control system works, we can look at the
different ways inwhich managers can regulate the activities of individuals and units
so that they are consistent with organization goals and standards. Here we review
six main ways of achieving control: personal controls, bureaucratic controls,
outputs control, cultural controls, control through incentives, and market controls.
Personal Controls
As the name implies, personal control is control by personal contact with and direct
supervision of subordinates. Personal control consists of making sure through
personal inspection and direct supervision that individuals and units behave in a
way that is consistent with the goals of the organization. Personal control can be
very subjective, with the manager assessing how well subordinates are performing
by observing and interpreting their behavior.
Bureaucratic Controls
Bureaucratic Control, following Max Weber, is typically defined as control through
a formal system of written rules and procedures. This control consists of the
standard operating procedures and policies that prescribe correct employee
behavior. Bureaucratic control methods rely primarily on prescribing what
individuals and units can and cannot do─ that is, on establishing bureaucratic
standards. Examples of these are the use of timecards for attendance, wearing of
uniform, proper use of company facilities, among others. A reward system
recognizes employees’ adherence to company rules and regulations.
Output Controls
Output controls can be used when managers can identify tasks that are complete
in themselves in the sense of having a measurable output or criterion of overall
achievement that is visible. For example, the overall achievement of an automobile
factory might be measured by the (measure of productivity) and the number of
defects found per 100 cars produced by the factory (a measure of quality).
Cultural Control
Organizational culture consists of the values and assumptions that are shared
among employees of an organization. Cultural control involves regulating behavior
by socializing employees so that they internalize the values and assumptions of the
organization and act in a manner that is consistent with them. When this occurs,
employees tend to engage in self-control─ they regulate their own behavior so that
it is congruent with organizational goals.
Control through Incentives
Incentives are devices used to encourage and reward appropriate employee
behavior. Many employees receive incentives in the form of annual bonus pay.
Incentives are usually tied to the performance metrics used for output controls. For
example, targets linked to profitability might be set to measure the performance
of a subunit, such as a product division. To create positive incentives for employees
to work hard to exceed those targets, they may be given a share of any profits
above those targeted.
Market Controls
Market controls involve regulating the behavior of individuals and units within an
enterprise by setting up an internal market for some valuable resource such as
capital. Market controls are usually found within diversified enterprises organized
into product divisions, where the head office might act as an internal investment
bank, allocating capital funds between the competing claims of the different
product divisions based on an assessment of their likely future performance.
10.7 Control Methods and Systems

30
Within this internal market, all cash generated by the divisions is viewed as
belonging tithe head office. The division then have to compete for access to the
capital resources controlled by the head office. Because they need that capital to
grow their divisions, the assumption is that this internal competition will drive
divisional managers to look forays to improve the efficiency of their units.
Managers can use six different control methods to regulate the behavior of
individuals and units within their organization. In practice, few managers rely on
just one control method.
Most organizations mix methods to achieve control. Some personal controls might
be used to manage relationships with direct reports; bureaucratic controls are
frequently used to set standards for budgets and capital spending; output controls
aroused for relatively self-contained units that produce a measurable output; and
incentives may be also tied to the metrics used for output controls.
Both cultural and incentive controls can induce employees to regulate their own
behavior in a manner that is consistent with the goals of the organization, and
market controls might help allocate capital resources between competing divisions
within diversified enterprises. Each control method has its own advantages and
disadvantages.
REFERENCES
Books
Controlling, Chapter 6, pp. 72-79, Organization and Management:
Concepts, Caselets, and Exercises (2016)
Electronic Sources
Controlling: Meaning, Nature, and Principles (Diksha, S.) retrieved from
https://www.businessmanagementideas.com/management/functions/co
ntrolling-meaning-nature-and-principles/3576
Managerial Control, (Salini, S.) retrieved from
https://www.businessmanagementideas.com/management/controlling/
managerial-control/20469
Managerial Control Process: It’s Characteristics, Importance, Techniques
and other Details, (Chand, S.) retrieved from
https://www.yourarticlelibrary.com/management/managerial-control-
process-its-characteristics-importance-techniques-and-other-
details/5383
Methods of Control – Principles of Management retrieved from
https://www.wisdomjobs.com/e-university/principles-of-management-
tutorial-293/methods-of-control-9415.html
Organizational Controls: Feedforward, Concurrent & Feedback. (2012,
December 11). Retrieved from
https://study.com/academy/lesson/organizational-controls-feedforward-
concurrent-feedback.html.
Relationship Between Planning and Controlling retrieved from
https://www.managementstudyguide.com/relationship-planning-
controlling.htm
Types of Control retrieved from
https://courses.lumenlearning.com/boundless-
management/chapter/types-of-control/

31
Directions. Search for any movie line that suggests being in or out of control. Paste
five screenshots of movie lines on the space provided below. Examples are given.
Berlin from Money Heist
Nick Dunne from Gone Girl
Activity 1: Movie Lines

32
Directions. Identify what is asked based on the given description. Write your
answers on the space provided before each number.
__________1) A process in which information about the past or the present is used
to influence the present or the future.
__________2) These are devices used to encourage and reward appropriate
employee behavior.
__________3) Without the basis of this, controlling activities becomes baseless.
__________4) To this is where actual performance will be compared, may be
derived from past experiences, statistical methods, andbenchmarking (based upon
industry practices).
__________5) Is defined as the systematic process through which managers
regulate organizational activities to make them consistent with established
expectations detailed in plans, targets, and standards of performance.
__________6) Type of control which are proactive and preventative.
__________7) Consists of the values and assumptions that are shared among
employees of an organization.
__________8) This control consists of the standard operating procedures and
policies that prescribe correct employee behavior.
__________9) In the control process, this is a step next to comparing actual
performance versus performance standards.
__________10) Type of control that is on-going and is monitored in real-time.
Directions. Below are example scenarios of different types of control:
Feedforward, Concurrent, and Feedback Controls. Identify what type of control is
implied on each statement. Rewrite them under their control type.
1. At St. Joseph’s Hospital, a new facility was designed with identical rooms,
non-slip floors, and glass walls to reduce errors in patient care and to
increase employee safety.
2. Pete works for Home Depot at the paint counter. Customers often ask to
match a color already in their home—a fabric, a rug, or an older paint. He
has a talent for this and can do it quickly if the base colors are standardized.
His first step is a visual check of his base colors—a white, a blue, a red, and
a yellow.
3. Running background checks and drug testing employees before hiring
them.
4. Many manufacturing operations include devices that measure whether the
items being produced meet quality standard.
5. An organization establishes a goal of increasing its profit by 12 percent next
year. To ensure that this goal is reached, the organization must monitor its
profit on a monthly basis. After three months, if profit has increased by 3
percent, management might assume that plans are going according to
schedule.
Feedforward Control
•
•
•
Concurrent Control
•
•
•
Feedback Control
•
•
•
Activity 2: Identification
Activity 3: Control Scenarios

33
Human Resources Management (HRM) deals with formal system for the
management of people within an organization. In the past, HRM was called
personnel management. Every employee’s initial interaction is with the HRM
personnel, and each employee’s work life is purposely tracked by HRM units and
activities.
It is often repeated that the human resource is the most important asset of all
organizations. Financial statements attest to this declaration─ the highest cost
percentages are attributed to salaries, wages, and benefits of personnel.
Manpower, after all, is required to run the machines, design the work areas,
interact with clientele, and deliver the goods and services of enterprises.
The nature of the human resource management has been highlighted in its
following features:
1. Inherent Part of Management: Human resource management is inherent
in the process of management. This function is performed by all the
managers throughout the organization rather that by the personnel
department only. If a manager is to get the best of his people, he must
undertake the basic responsibility of selecting people who will work under
him.
2. Pervasive Function: Human Resource Management is a pervasive function
of management. It is performed by all managers at various levels in the
organization. It is not a responsibility that a manager can leave completely
to someone else. However,
he may secure advice and
help in managing people
from experts who have
special competence in
personnel management and
industrial relations.
3. Basic to all Functional
Areas: Human Resource
Management permeates all
the functional area of
management such as production management, financial management,
and marketing management. That is every manager from top to bottom,
working in any department must perform the personnel functions.
4. People Centered: Human Resource Management is people centered and is
relevant in all types of organizations. It is concerned with all categories of
personnel from top to the bottom of the organization. The broad
classification of personnel in an industrial enterprise may be as follows : (i)
Blue-collar workers (i.e. those working on machines and engaged in
loading, unloading etc.) and white-collar workers (i.e. clerical employees),
(ii) Managerial and non-managerial personnel, (iii) Professionals (such as
Chartered Accountant, Company Secretary, Lawyer, etc.) and non-
professional personnel.
11.1 Human Resources Management
2
nd
QUARTER
MODULE
12
WEEK:_____
• Explain the nature and role in the firm of the following functional areas of management:
(a) Human Resources Management, (b) Marketing Management, (c) Operations Management,
(d) Financial Management, (e) Material and Procurement Management, (f) Office Management, and
(g) Information and Communication Technology Management.
KEY QUESTIONS
• How do these different areas
sync to the success of the
organization?
• What area do you think is the
most crucial part of the
organization?
CHAPTER 11. INTRODUCTION TO THE FUNCTIONAL AREAS OF MANAGEMENT

34
5. Personnel Activities or Functions: Human Resource Management involves
several functions concerned with the management of people at work. It
includes manpower planning, employment, placement, training, appraisal
and compensation of employees. For the performance of these activities
efficiently, a separate department known as Personnel Department is
created in most of the organizations.
6. Continuous Process: Human Resource Management is not a one-shot
function. It must be performed continuously if the organizational
objectives are to be achieved smoothly.
7. Based on Human Relations: Human Resource Management is concerned
with the motivation of human resources in the organization. The human
beings cannot be dealt with like physical factors of production. Every
person has different needs, perceptions, and expectations. The managers
should give due attention to these factors. They require human relations
skills to deal with the people at work. Human relations skills are also
required in training performance appraisal, transfer, and promotion of
subordinates.
Marketing management is
the functional management
area that is closest to
customers. Its activities
relate to identifying
customer’s needs and
interpret these back to the
enterprise for its business
reaction. That is why it is
deeply considered both as a
science and an art. Its two primary roles are to attain and retain target customers.
The following are the features of marketing concept:
1. Focus on Customer Needs – The needs of consumer are studied, and these
become the basis of all product related activities such as designing, pricing,
distribution, packaging, etc.
2. Providing Consumer Satisfaction – Every organization aims at providing
maximum consumer satisfaction by understanding his needs and designing
an appropriate product. The success of an organization is directly related
to the consumer satisfaction it provides.
3. Integrated Marketing Management – Marketing management is only a
part of the total managerial functions of an organization such as finance
management, production management, human resources management,
etc. All these functions are integrated in order to provide maximum
satisfaction to the consumer. Thus, all the functional areas of an
organization are integrated.
4. Achieving Organizational Goals – Modern marketing states that an
organization must aim at maximizing consumer satisfaction and in the
process enable itself to achieve its goals such as growth, market share and
reasonable amount of profit or return on investment.
5. Innovation – Innovation is an important tool to provide consumer
satisfaction. Innovative methods must be used to understand the
consumer, design an appropriate product and offer it to the consumer.
Operation Management (OM) is the functional management area that is
responsible for managing the process of creation of goods and services. It involves
planning, organizing, coordinating, and controlling all the resources needed to
produce a company’s goods and services. It plays a critical role in the organization
and supply chain. Without OM, there would be no products to sell.
A few Operations Management jobs include transaction processing (banks), crew
scheduling, communications, and dispatching (transport services), and efficient use
of machines, space, and personnel (manufacturing).
11.2 Marketing Management
11.3 Operations Management

35
The nature of operations can be better understood by viewing the manufacturing
function as:
1. Operations as a System – A system is
defined as the collection of
interrelated entities. The system
approach views any organization as an
arrangement of interrelated parts that
interact in ways that can be
specified and to some extent,
predicted. Production is viewed as a
system which converts a set of inputs
into a set of desired outputs.
2. Operations as a Conversion/Transformation Process - The
conversion/transformation sub-system can be considered as the core of
the Operations since it consists of processes or activities wherein workers,
materials, machines, and equipment are used to convert inputs into
outputs.
3. Operations as a Means of Creating Utility – ‘Utility’ is the power of
satisfying human needs. During the process of converting raw materials
into finished goods, various types of utilities are created while adding value
to the outputs.
It is obvious that finance is the lifeline of any business─ that is why financial
management is an organic function of an organization. Any organization needs
finances to obtain physical resources, carry out the production activities and other
business operations, pay compensation to the suppliers, etc. In other words,
financial management is the area concerned mainly with raising funds in the most
economic and suitable manner, using these funds as profitably as possible.
The nature of financial management are:
1. Financial Management as an
Integral Part of Overall
Management - Just like the other
areas of management, financial
management is an integral part of
overall management. Financial
considerations are involved in all
business decisions, that is why it
really is significant throughout the
organization.
2. Its Essence: Valuation of the Firm – the central focus of financial
management is valuation of the firm. That is financial decisions are
directed at increasing/maximization/optimizing the value of the firm.
3. It involves risk-return tradeoff – decisions on investment involve choosing
of types of assets which generate returns accompanied by risks. The higher
the risk, returns might be higher and vice versa. So, financial manager has
to decide the level of risk the firm can assume and satisfy with the
accompanying return.
4. It affects the survival, growth, and vitality of the firm – It is indeed the
lifeline of the business. The amount, type, sources, conditions, and cost of
finance squarely influence the functioning of the unit.
5. Financial management is a concern of every concern – finance functions,
i.e., investment, rising of capital, distribution of profit, are performed in all
firms – business or non-business, big or small, proprietary or corporate
undertakings.
6. It has a system on its own – financial management is a sub-system of the
business which has other subsystems like production, marketing, etc. In
systems arrangement financial sub-system is to be well-coordinated with
others and other sub-systems well matched with the financial subsystem.
11.4 Financial Management

36
Material and procurement
management ensures that all the
products are at the right place at the
right time. This area oversees
inventory management, managing
and planning materials, the logical
procurement of goods and services,
and delivering 𝑘 + 𝑠 products to
customers. The employees in this area
develop and implement important
guidelines and processes so that
logistics, supply chain, materials management, and procurement are more
effective and efficient.
Material management covers all aspect of material costs, supply, and utilization.
The following functions are assigned for material management:
1. Production and Material Control – on the basis of orders received or
anticipated demand for goods, production schedules are prepared. With
these production schedules, the requirement of parts and materials are
determined. The material and procurement management ensures that
every type or part of material is made available so that production is
carried on smoothly.
2. Purchasing – on the basis of requisitions issued by other departments, the
purchasing department is authorized to make buying arrangements. In
regular intervals, this department keeps contracts with suppliers and
collect quotations. It is possible for the organization to purchase proper
quality goods at reasonable prices by the effort of this department.
3. Non-production Stores – non-production materials like office supplies,
perishable tools and maintenance, repair and operating supplies are
maintained as per the needs of the business. The availability of these stores
is essential though they may not be required daily. The non-availability of
such stores may lead to stoppage of work.
4. Transportation – transporting of materials from suppliers is an extensive
function of the material and procurement management. The traffic
department is responsible for arranging transportation service. The
vehicles may be purchased for the business or these may be chartered
from outside. It all depends upon the quantity and frequency of buying
materials. The purpose is to arrange cheap and quick transport facilities for
incoming materials.
5. Materials Handling – another concern of the material and procurement
management is the movement of materials within a manufacturing
establishment and the cost of handling materials is keptunder control. This
departmentensure that there are no wastages or losses of materials during
their movement.
6. Receiving – the receiving department is responsible for the unloading of
materials, counting the units, determining their quality, and sending them
to stores, etc. The purchasing department is also informed about the
receipt of various materials.
Office management is not only necessary
to business organization but also essential
to non-business organization. This part of
management is concerned with the
systematic management of office work in
order to achieve the objective of the office.
The office management is mainly
concerned with achieving a specified purpose and make the best use of the
personnel by using the most appropriate machines, and equipment, the best
possible methods of work and by providing the most suitable environment.
Following are the essential elements of office management:
11.5 Material and Procurement Management
11.6 Office Management

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