Two_Elements_of_Management

Discuss two of the fundamental management tasks in a business, namely planning, organising, leadership and control TABLE OF CONTENTS Page Introduction 2 1. Planning 2 1.1 The Importance of Planning 2 1.2 The Dimensions of Planning 2 1.3 The Planning Process 2 1.3.1 Factors of Goals Setting 2 1.3.2 Organisational Goals 2 1.4 Developing the Plan 3 1.5 Implementation of the Selected Plan 4 2. Control 4 2.1 Importance of Control 4 2.2 Control Process 5 2.3 Focus of control 6 2.4 Characteristics of an Effective Control System 6 Conclusion 6 Bibliography 7 INTRODUCTION: I have chosen planning and control as these 2 elements are closely linked. All the tasks in management are important but these to me are the most important. The organisation could have the most experienced staff and state of the art technology but if they do not have a plan for the future and control measures in place all their resources will be wasted. They will not know how to use them for the maximum benefit of the organisation. 1. PLANNING: Planning is the first task of Management. None of the other subsequent tasks (organising, leadership and control) can be fulfilled if planning is not done first. 1.1. THE IMPORTANCE OF PLANNING: There are several reasons why planning is vital to an organisation: - It gives the organisation direction; goals are set and worked towards. It also reduces risks as you are aware of threats in the environment and how to overcome or avoid them. - Promotes coordination and cohesion between departments and employees of an organisation. Everyone is working towards the same predetermined goal. The tasks and goals of the different departments’ all fit into the organisation’s goal. - It forces managers to consider what threats and opportunities there will be in the future. It also makes organisation aware of new technology that becomes available. - Most importantly it promotes stability to the organisation, as there are no surprises in the business environment, the organisation has anticipated and planned for them. 1.2. DIMENSIONS OF PLANNING: There are 3 dimensions of planning, i.e. Determination Dimension: What the organisation wants to achieve and by when' Decision – Making Dimension: What is the best way to achieving the goal, this entails choosing the most effective and productive plan. Future Dimension: Enables the organisation to be proactive when dealing with the market and macro environment. All the above dimensions can be clearly identified in the Planning process: 1.3. THE PLANNING PROCESS: 1.3.1 The organisation needs to set goals before any plans can be made. What goals are formulated is dependant on 4 factors: Mission of the organisation: This is what the organisation stands for, what differentiates the organisation from other similar organisations, what it does and where it is heading. Environment: The organisations needs to be aware of what is happening in the environment to ensure plans are realistic and achievable. This also alerts the organisation when plans need to be revised due to any changes in the environment. The organisation has no control over the environment but by continuous assessment changes can be anticipated and planned for. Values: This refers to the organisation’s values. It encompasses ethical standards, social responsibility, treatment of staff, etc. All of these values impact the organisations goals. Experience: The organisations’ experience in its specific industry and the experience of its management both affect the goals set by the organisation. 1.3.2 Organisational goals are divided by the 3 tiers of the Organisation and flow into each other. They are listed below: Strategic Goals: - Are set by Top management - Are long term goals that define the Organisation and sets it apart from its competition. - Takes into account a host of factors including, the 4 above mentioned factors of organisational goals. - These goals MUST be clear since the next level in the structure bases its goals on them. Tactical or Functional Goals: - Set by middle or functional managers - Are medium or short term goals set to achieve the long term objectives as stated by Top management. Operational Goals: - Set by lower management. - Are short terms goals set to achieve the objectives set by Middle management. Regardless of which level is setting a goal, there are a few basic rules that will apply. 1. It should satisfy the initial requirements of the Organisation. 2. Everyone must know the importance of the goals 3. All goals should be measureable; you must be able to assess staff and the organisation’s performance. 4. All staff and management must know their responsibilities. 5. It should not conflict with any other goals set. This means it must be compatible with departments on the same management level and with levels below. 6. Employees’ salaries must be in line with their responsibilities. 7. All staff must buy into the goal and be willing to work towards. Keeping the above in mind there are 2 ways for management to approach the task of goal setting: Hierarchical: Top Management set the goals that employees must work towards. Bottom Up/Management by Objectives: Goals are set by superiors and subordinates. This method can be used at any level. This method assists in the setting of the goal as well as the planning and control steps that must follow. The choice of which approach to take will depend on the following: - Size of the organisation - The organisational structure - The corporate culture that exists in the organisation - Leadership style of Top Management - What is the current environment (micro and market) of the organisation. Once the goals have been set, the organisation now needs to develop plans to reach the goals. 1.4 DEVEOPLING THE PLAN: More than 1 plan should be developed, all the plans are then assessed and the best plan chosen. When assessing the plans, the main factors that should be considered are: External Factors – what is happening in the market' What are the laws and regulations that need to adhered to' Can we use these factors as opportunities or can we ascertain any threats that can be averted' SWOT Analysis of the organisation: what are our strengths' Will the plan expose our weaknesses' Cost of the Plans: Which is the best option when cost is weighed against advantages and return on investment' As with goals, plans need be set at different levels to achieve different objectives: Strategic Planning: - Are long term plans set by Top Management, these are broad; overall strategies to help the mission of the organisation, the plans are focused on the entire organisation. - The time frames are set between 3 and 10 years. - Constant environment scanning is done to take advantage of the opportunities and to minimise risks. - Various long term strategies can be utilised to achieve the mission. Tactical Planning: - Are medium term plans set out by Middle Management - All departments’ plans are components of long term goals. - Plans set on this level are vital, as the long term strategies are vulnerable to the environment in which the organisation operates. Operational Planning: - Set by Lower Management, are usually no longer than 12 months. - Are components of the Tactical plans. - These plans are set for day to day activities. Example of plans at different levels: Strategic (Top Management) – Increase Market share by 8% within the next 5 years Tactical (Middle Management) – introduce new exclusive products to draw more customers. Have marketing set promos and sales team to more out door activations. Operational (Lower Level) – May increase inventory to accommodate sampling and get part time staff to man out door stands. 1.5 IMPLEMENTATION OF THE SELECTED PLAN This is the final step in planning. The next 3 elements of Management now come into play. Organisation – allocate responsibilities to staff and resources to be used. An organisational structure must be set up; this is the link between departments, positions and tasks. Leadership – Management needs to set the plan in motion, control the plan and steer the activities according to plan. Control – Checks and balances to see that the plan is working and if adjustments need to be made. 2. CONTROL: Control is closely linked with planning; control is used by management to ensure that the objectives and goals set are attained. In this management process information is gathered to alert management if goals and objectives are being met and if not what corrective action must be taken. 2.1 IMPORTANCE OF CONTROL: - Without control, effective planning cannot take place. - It helps spot weakness in growing organisations - Problems are identified before they can cause crises in the organisation - Can monitor if subordinates are doing their jobs properly - Allows the organisation to cope with environmental changes and uncertainty - With increasing competition in the market, cost and quality control become more important - Control forces you to use resources effectively and to cut down wastage - Control often results in better quality. 2.2 CONTROL PROCESS: There are 4 steps in the control process. Establish Performance standards: - Set a standard, this is a planned target that actual performance will be compared to - The standard must be relevant, realistic and measureable and must be checked at strategic times. - Standards should be set in the planning phase and the responsibility should fall to 1 person. - In a nutshell performance standards help management to distinguish between acceptable and unacceptable performance. Measure Actual Performance: - The information collected on the actual performance must be constant and accurate, if accuracy cannot be guaranteed, and then control will be ineffective. - Observations and measurements must occur at strategic points as per the control system - Need to decide what and how much information must be gathered' And to whom it must be reported' - The time between performance and measurement must be as short as possible so deviations can be identified as early as possible. - In some big organisations only huge gaps in actual and planned performance is reported to top management, smaller gaps are dealt with subordinates. This allows top management to concentrate on problem areas. This system is called Control be exception Evaluate the Deviations: - The determination of the performance gap between the performance standard and the performance actual - Firstly, the gap must be a true reflection, it must be determined if the performance standard and performance actual were realistically set' If not further investigation in the deviation will be moot and a waste of time - Secondly, is the gap significant enough to warrant further evaluation' There should be a maximum and minimum limit of accepted deviations set, only those that exceed either limit will be investigated - Thirdly, all reasons and activities responsible for the gap must be identified so you can take the appropriate correct action. Take Corrective Action: - Managers have 3 options if performance standard is not met: - Actual performance can be improved to reach the standard - Strategies can be revised to accomplish the standard - Performance standard can be lowered or raised to make them more realistic in light of the existing environment. An example of the Control process in action: - Company wants to increase production of cars by 5% over 3 years. - Establish Standard: Need to manufacture 2 more cars a month. - Measure Actual Performance: Production reports are viewed and only 1 extra card has been manufactured. - Evaluate the Deviations: The gap is 1 car short, need to ascertain why' What were the reasons for not meeting the standard' Eg. No overtime approved, raw materials for 1 extra car not ordered, etc - Take corrective Action: Overtime could be approved, raw material orders increased or it could be decided the cost would be prohibitive and the strategy could be changed to match the standard. 2.3 FOCUS OF CONTROL: What should be controlled' - This should be determined by management, should be the most strategic points in the organisation. - These are usually Physical Resources, financial resources, human resources and information resources - 2.3.1 Physical Resources: These are assets and encompass the control of inventory, quality and equipment. Inventory is kept to control cost while ensuring you have sufficient stock to prevent delays in production and deliveries. The methods are a few systems used to control inventory, one of them is Just in Time (JIT) systems - materials are bought based on orders for the finished product. Material arrives just in time to start manufacturing, or in time for the next line in production. For this system to work materials need to be in perfect order and deliveries made on time. The labour force must also be reliable. Quality Control: Steps taken by management to ensure the level of quality will satisfy the customer and be beneficial to the company. It is the setting of the standard that is in line with customer purchases and necessary to be competitive in the market. One of the systems used by management is benchmarking – what is the competition doing very effectively' 2.3.2 Financial Control: This is concerned with Financial resources that flow into (revenue, return on investment), are held by (working capital, cash) and flow out of (salaries, expenses) the organisation. Most common instrument in Financial Control is budgetary control. - Helps management coordinate resources, departments and projects. - Provides guidelines on how to use resources. - Set the standards vital to the control process. - Makes evaluation of resource allocation, departments and units possible. 2.3.3 Control of Information Resources: Information must be accurate, timely and relevant. The faster the feedback from plans and strategies, the more effective the control system. 2.3.4 Control of Human Resources: Main instrument used is Performance Management. The performance of individuals and groups are assessed and compared to predetermined standards. 2.4 CHARACTERISTICS OF AN EFFECTIVE CONTROL SYSTEM: Integration – more effective if integrated with planning Flexibility – should be able to make timely changes to plans without a need for a new control system Accuracy – must be accurate and objective, showing all deviations and errors from the plan Timeliness – control data must be supplied regularly as needed. CONCLUSION: Due to space constraints, I have not expanded much on all the various methods of control. I have instead pointed out the need for control and provided a few examples. I do hope however that I have highlighted how closely linked the 2 tasks are and the importance of them. Planning takes the company to where it wants to be in the future. Managers use planning to determine how goals are going to be achieved. Control ensures that the plan is being followed and can indentify whether there are any deviations. It also alerts management if the plans need to be revised. Control by its definition also restricts wastage of resources and with planning helps steer the organisation to profitability by seeing goals realised and cutting costs associated with waste. BIBLIOGRAPHY: Introduction to Business Management, 7th Edition Editors: Du Toit, Erasmus and Strydom Pages: 145 – 165 and 274 – 290