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Ch1.

Nature and Functions of Management


- Yogesh Kamath

Nature and Functions of Management - Chapter Outline


Importance- definition Case: The transformation of PwC India Managerial Functions

Process of Management

Roles of a manager
Levels of Management Managerial Skills Management - an art or a profession Professional versus family management Thats been one of my mantras focus and simplicity. Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But its worth it in the end because once you get there, you can move mountains."

Importance of Management
Management is a critical element in the economic growth of a country- By bringing together the four factors of production (viz., men, money, material and machines), management

enables a country to experience a substantial level of economic development.

A country with enough capital, manpower and other natural resources can still be poor if it does not have competent managers to combine and coordinate these resources.

Poor economic growth of many Asian and African countries very well illustrates this point.

Without management, a country's resources of production remain Resources and never become Production. Peter Drucker

Importance of Management: A tale of two countries

India
Plentiful in Land Minerals Water Manpower Soil Sunlight Forests

Switzerland
Plentiful only in Water Forest lands

Management is nothing more than motivating other people - Lee Iacocca

Importance of Management: A tale of two countries


GDP

$1.8728 trln

$659.3 bln

Indias GDP?
So, much should you pay if you were to buy all the good and services produced in India in the year 2011-2012???

101,639,010,000,000
That is more than 1 crore crore!!!

Importance of Management: A tale of two countries


GDP per Capita

$83,325

The difference is a difference in Management or lack of it

$1,508

Defining Management
Management is the art of getting things done through people.
Mary Parker Follett

A manager is one who contributes to the organisation's goals indirectly by directing the efforts of others and not by performing the task himself.

Management is process consisting of planning, organising, actuating (motivating) and controlling, performed to determine and accomplish the objectives by the use of people and resources. George R Terry
Planning - Managers think of their actions in advance. Their actions are usually based on some method, plan, or logic, rather than on a hunch.

Organising - Managers coordinate the human and material resources of the organisation.
Actuating - Managers motivate and direct subordinates. Controlling - Managers attempt to ensure that there is no deviation from the norm or plan. If some part of their organisation is on the wrong track" managers take action to remedy the situation.

Case PwC Managing to come back strong


The crisis of credibility

Jhootta Satyam

Satyam
Satyam was established in 1987. 4th fastest growing IT company in India. 9 % market share 40,000 employees Revenue $2.1 billion It is the first company of India listed in three International Exchanges i.e. NYSE, DOW and EURONEXT Raju was awarded CNBCs Asian Business Leader Corporate Citizen award Satyam was the 2008 winner of the coveted Golden Peacock Award for corporate Governance ;)

Satyam Shock!

Bse - Share prices fell down from Rs 544 in 2008 to Rs 11.50 on 10th Jan 2009 NYSE - $ 29.10 in 2008 to $ 1.80 in March 2009

Maytas Acquisition. Investors Aborted.

Board Members Resigned. On 7th Jan., 09, Chairman resigned after announced involvement in fraud.

Satyam - A 100 lie


Inflated figures for cash and bank balances of INR 5,040 cr. (as against INR 5,361 crore reflected in the books).

Operating Profit were artificially boosted from the actual


61 cr. to 649 cr. Showed 53,000 employees on paper when the actual figure was 40,000 Satyam also showed an interest earning of Rs. 376 cr. that was fictitious. Satyam to buy Maytas Prop ($1.3 bn) & 51% stake in Maytas Infra ($300 mn) Deal to be financed by Satyams surplus cash

Valuation of Maytas turned out to be fraudulent


Raju and family own up to 35% stakes in Maytas. Raju was siphoning the money from Satyam to Maytas since last 6 years. With Satyam in deep cash crunch, Raju wanted to buy Maytas to cover up Satyams inflated cash. Last attempt to fill the fictitious assets with real ones failed.

The PwC role

PwC was Satyams satutory auditor during the time. The Indian arm of PwC was fined $6 million by U.S. Securities and Exchange Commission for not following the code of conduct and auditing standards. They paid a total of $50 million in fine and related expenses
The image of PwC took a major dent with no company wanting to associate their name with the Auditing and consulting firm The next year 17 partners and 170 employees left to join rival KPMG.

PwC transformation
The People

Ketan Dalal, Micael Surface, Deepak Kapoor, Shyamlal Mukherjee, Mark Driscoll, Bharti Ramola

How did they Manage to come back


The Leader
Deepak Kapoor took over the charge post the departure of Ramesh Raian who was chairman during the Satyam episode and resigned soon thereafter. Kapoor joined PwC India way back in 1978. Also a member of the Institute of Secretaries of India and the Institute of Certified Fraud Examiner, USA. As the chairman, Kapoor had the daunting task of transforming PwC in India.

It did take us by surprise at that time, but a lot of water has flowed under the bridge since then. While it may be construed as a professional lapse, investigations by the regulators have revealed that there was no connivance, no complicity. Satyam gave us an opportunity to transform ourselves and we are doing so at a rapid pace

How did they Manage to come back


The Strategy
Drawing on the PwC experience, the team focussed on quality, invested in resources, and became more attentive to clients needs. This involved investing in people and accelerating training programmes. Over the last four years, PwC has invested in grooming talent in a big way, their TnD budget has doubled in the last 2 years. PwC has also brought on board a number of experts, with domain knowledge on specific subjects, some from outside the field of audit and accounting. The power of 2 model one domain expert and one accounting and legal expert for any client meet. Has also head hunted top executives from the industry in India and abroad. Apart from building and grooming talent, PwC has also embarked on initiatives aimed at beefing up systems and becoming more client-centric. A centre of excellence has been put in place in Mumbai. A repository of legal cases and judgments currently dealing with national cases, this centre facilitates sharing of knowledge for all PwC employees.

How did they Manage to come back


The Strategy
Employee benefits flexible timings, work from home for expecting female employees and an option to join back the company after a sabbatical of 3-5 years, focus on global exposure etc Deepak Kapoor. "We do not overpay nor are we the best paymasters in the industry." Kapoor follows a hands-on, hands-on strategy. He gives space to people to grow but can be relied on in case of any difficulties encountered enroute. 30% of PwC workforce is women, with many in the top position. Bharti Ramola, market leader, who holds the distinction of being the first non-accountant and lady partner at PwC; she joined the firm in 1984. In a bid to give more quality time for clients, PwC has taken a conscious decision to focus on a certain type of clients. And, in the process, it has said 'no' to a few clients including multinationals, with the aim of building a stronger franchise with the Indian group of companies. Dedicated teams to service clients over a 3-5 year period are being built. PwC is positioning itself as a multi-disciplinary, multi-resource firm with expertise across sectors; it is no longer just another chartered accounting and auditing firm.

PwC transformation
The Result
ln 2011-12, one of the most challenging years globally for audit firms, the total income of PwC India mirrored a top line growth of 16 per cent, the fastest amongst all the other BRICS countries, where PwC has a presence.

The BIG-4 of accounting and consulting

The BIG-4 of accounting and consulting - India

The BIG-4 of accounting and consulting - India

Life @ Google

Functions of Management Management is creative problem solving.


The verb manage comes from the Italian maneggiare (to handle especially tools), which in turn derives from the Latin manus (hand).

This creative problem solving is accomplished through the functions of management: planning, organizing, leading and controlling. The intended result is the use of an organization's resources in a way that accomplishes its mission and objectives.

Functions of Management
Different experts have classified functions of management.

According to George & Jerry, There are four fundamental functions of management i.e. planning, organizing, actuating and controlling .

According to Henry Fayol, To manage is to forecast and plan, to organize, to command, & to control. Whereas Luther Gullick has given a keyword POSDCORB where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

Functions of Management
But the most widely accepted are functions of management given

by KOONTZ and ODONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.

Functions of Management: Planning


It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals.

According to KOONTZ, Planning

is deciding in advance what to do, when to do & how to do.

Functions of Management: Planning


A plan is a future course of actions. It is an exercise in problem solving & decision making.

Planning
Determination of courses of action to achieve desired goals. Systematic thinking about ways & means for accomplishment of pre-determined goals. Necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and It also helps in avoiding confusion, uncertainties, risks, wastages

Functions of Management: Organizing


It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals.

According to Henry Fayol, To

organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnels.

Functions of Management: Organizing


To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves: Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.

Functions of Management: Staffing


It is the function of manning the organization structure and keeping it manned.

According to Kootz & ODonell, Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure.

Functions of Management: Staffing Staffing involves:


Manpower Planning (estimating man power in terms of searching,
choose the person and giving the right place)

Recruitment, selection & placement Training & development Remuneration (salary) Performance appraisal Promotions & transfer

Functions of Management: Directing


It is that part of managerial function which Motivates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work.
Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives.

Functions of Management: Directing


Directing has following elements:
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the subordinates with zeal to work. Positive, negative, monetary, nonmonetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

Functions of Management: Controlling


According to Theo Haimann, Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation.

According to Koontz & ODonell Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished.

Functions of Management: Controlling


Therefore controlling has following steps:
Establishment of standard performance Measurement of actual performance Comparison of actual performance with the standards and finding out deviation if any Corrective action

Functions of Management

Planning Organizing Staffing Directing Controlling

SUCCESS

Process of Management

A model is a simplification of the real world, used to convey complex relationships in more understandable terms. The relationships described above are by no means as straightforward as our model implies.

Key Managerial Roles (Mintzberg)


Key Management Roles

Interpersonal Roles
1. Figurehead 2. Leader 3. Liaison

Informational Roles
1. Monitor 2. Disseminator 3. Spokesperson

Decisional Roles
1. Entrepreneur (Innovator) 2. Disturbance handler 3. Resource Allocator 4. Negotiator

Key Managerial Roles (Mintzberg)


Role Role Role Interpersonal Interpersonal Interpersonal Figurehead
Figurehead Figurehead
Leader Leader Leader Liaison Liaison Liaison

Description Description Description


Symbolic Symbolic head; head; required required to to show show Symbolic head; required to show face face in in social social & & legal legal conditions. conditions. face in social directing & legal conditions. Motivating Motivating & & directing subordinates subordinates Motivating & directing subordinates Networking Networking outside outside for for information information Networking outside for information & & favours favours & favours Scan Scan the the environment environment for for information information Scan the environment for information Networking Networking within within the the organization organization Networking within outsiders; the organization Transmit Transmit intent intent to to outsiders; expert expert Transmit intent to outsiders; expert Opportunity Opportunity finding& finding& reacting reacting Opportunity finding& reacting Handling Handling unexpected unexpected disturbance disturbance Handling unexpected disturbance Initiating/approving Initiating/approving changes changes Initiating/approving changes Getting Getting best best deal deal for for Organization Organization Getting best deal for Organization

Examples Examples Examples


Ceremonial, Ceremonial, Ceremonial, Civic Civic etc. etc. Civic etc. Project Project plan plan Project plan Industry Industry Industry Group Group meets meets Group meets Reports Reports Reports Meetings Meetings etc. etc. Meetings etc. Board Board Meets Meets Board Meets Strategy Strategy Plan Plan Strategy Plan Contingency Contingency Contingency Budgeting Budgeting Budgeting Contracts Contracts Contracts

Informational Informational Informational Monitor


Monitor Monitor Disseminator Disseminator Disseminator Spokesperson Spokesperson Spokesperson

Decisional Decisional Decisional Entrepreneur

Entrepreneur Entrepreneur Trouble Trouble shooter shooter Trouble shooter Resource Resource allocator allocator Resource allocator Negotiator Negotiator Negotiator

Levels of Management
First-line managers Responsible for day-to-day operations. Supervise people performing activities required to make the good or service. Ex - Crew leader, supervisor, head nurse, or office manager Middle managers Supervise first-line managers. Are responsible to find the best way to use departmental resources to achieve goals. Ex - Sales manager, branch manager, or department head Top managers Responsible for the performance of all departments and have crossdepartmental responsibility. Ex - CEO, president, or vice president Individual Contributors (ICs) Non-management operative employees. Workers in the organization who are supervised by first-line managers. Ex Shopfloor workers, Specialists/Technicians

Management Levels and Functional Areas

Relative Amount of Time That Managers Spend on the Four Managerial Functions

Managerial skills
A Skill is an individual's ability to translate knowledge into action. Hence, it is manifested in an
Conceptual Skills Diagnostic Skills Communication Skills Technical Skills Interpersonal Skills

individual's performance. Skill is not necessarily inborn.

It can be developed through practice


and training.

Decision-Making Skills

Management Skills

Time-Management Skills

Managerial Skills

Technical Skills:
Application of specialized knowledge or expertise acquired though formal training & its use.

Skills Needed
Top mgnt

Human Skills:
Ability to work with people, understand and motivate groups & individuals.
Middle mgnt

Conceptual Skills:
Mental ability to recognize, analyze, diagnose and think through complex situations. Supr. level

Management A science or an Art?


We can call a discipline scientific if its
1. methods of inquiry are systematic & empirical;

2. information can be ordered and specified; and 3. results are cumulative and communicable.

The word science is used to denote two types of systematic knowledge


1. Natural or exact 2.Behavioural or inexact

We place management in the category of Behavioral Science. BUT A theoretical body of lessons and principles which a manager has learnt in a classroom will not secure the aimed results unless he/ she also has the skill( or art) of applying such principles and body of knowledge to his/ her special problem.

Management: Science or Art?


The Science of Management
Assumes that problems can be approached using rational, logical, objective, and systematic ways. Requires technical, diagnostic, and decision-making skills and techniques to

solve problems.

The Art of Management


Decisions are made and problems solved using a blend of intuition, experience, instinct, and personal insights. Requires conceptual, communication, interpersonal, and time-management skills to accomplish the tasks associated with managerial activities.

Management A professsion?
Mcfarland gives following characteristics of a profession: Existence of an organized and systematic knowledge.

Formalized methods of acquiring training and experience.


Existence of an association with professionalisation as its goal. Existence of an ethical code to regulate the behaviour. Charging the fees base on service.

Professional management Vs family management


The phrase "professional management" is also sometimes used as an antithesis to "family management". It is said that all family managements must be replaced by professional management-managers by birth should yield place to managers by profession.

This view is not totally correct because there is nothing basically wrong in
perpetuating a family dynasty so long it also continues to be dynamic. A study covering 30 nations around the world points out that : 75%of all firms in the world are family firms. In some of these firms inheritance has been continuing for centuries.

Professional management Vs family management


Tata Group was founded in 1868 by Jamsetji Tata as a trading company. It has operations in more than 80 countries across six continents. Tata Group has over 100 operating companies each of them operates independently. Out of them 32 are publicly listed Kikkoman Corporation of Japan- the worlds leading supplier of soya sauce, descendants of the founders still control and run the firm after 17 generations since its birth, more than 300 years ago. The phenomenal progress of Ford Motors , Exxon, Walmart, TATA, Reilance, Birla etc. bears testimony to the quality of leadership, and vision of respective families of Ford, Rockefeller, Watson, and the Ambanis.

Thank you ;-)

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