Pride/Hughes/Kapoor Business, 10th Edition

Audio Review Transcript
Chapter 6 Understanding the Management Process

2. Describe the four basic management functions: planning, organizing, leading and motivating, and controlling

As they try to coordinate people and resources, managers perform four basic functions: planning, organizing, leading and motivating, and controlling. Frequently, managers engage in these activities simultaneously. Let’s look at these functions individually to better understand what each really entails. First, planning is establishing organizational goals and deciding how to accomplish them. Planning starts with a statement of the company’s mission. A mission states the basic purpose that makes an organization different from others. After the mission statement is written to describe a firm’s purpose, the firm goes through the process of establishing its major goals and objectives, and allocating the resources to achieve them. This process is called strategic planning. What is the difference between a goal and an objective? A goal is an end result that an organization is expected to achieve over a one-to-ten-year period. An objective, on the other hand, is a specific statement detailing what the organization intends to accomplish over a shorter period of time. Usually this time period is one year or less. Goals and objectives may focus on a variety of factors—not just the usual growth and income. Goals are set for each level of an organization, based on what each level is responsible for. It is critical that the goals be consistent and mutually supportive. Sometimes compromises have to be made, though, through a process called optimization. By using optimization, managers balance the needs of two or more potentially conflicting sets of goals. But nothing will happen beyond the thinking stage if the organization doesn’t have a plan. A plan is an outline of the actions by which the organization intends to achieve its goals and objectives. There are four primary types of plans. The broadest set of plans is called a strategic plan, which provides a guide for basic policy setting and decision making. Strategy is set by the board of directors and top management to achieve a firm’s long-term goals—perhaps a 5- or 10-year period. The second type of plan is called a tactical plan, a narrower, smaller-scale plan developed to implement a strategy. Tactical plans usually cover a 1- to 3-year period. Several tactical plans may be required to implement one part of a strategy. The third type is an operational plan, which is designed to implement a tactical plan. An operational plan usually has a duration of one year or less. Finally, most organizations realize that not everything always goes according to plan, so they develop contingency plans, which outline alternative courses of action that may be taken if the organization’s other plans are disrupted or become ineffective.
The second major managerial function is organizing. Organizing is the grouping of resources and activities to accomplish an end result in an efficient and effective manner. As organizations grow, the need for more and specialized people also grows. The organizing function is concerned with what people do, to whom they report, and how people can best take part in the organization’s activities.
The third managerial function deals with the human aspect of the organization and consists of leading and motivating. Leading is the process of influencing people to work toward a common goal, whereas motivating is the process of providing reasons for people to work in the best interests of the organization. Together, leading and motivating are often referred to as directing. The directing function is critical, since the human factor is so important to the success of an organization. A lot of research has been done on motivation—learning what makes people do what they do. This has helped managers do their jobs much better. 
The last of the four managerial functions is controlling. Controlling is the process of evaluating and regulating ongoing activities to ensure that goals are achieved. Controlling consists of three steps: (1) setting standards, (2) measuring actual performance, and (3) taking corrective action. These steps are actually circular in nature and are repeated until the goal is achieved. (LO 2 ends)