Chapter 13 management of organization function

MANAGEMENT OF ORGANIZATIONAL

FUNCTIONS

CHAPTER-13

AUTHORS:DR. K IRAN NERKARDR. VILAS CHOPDE

The success of any organization depends on the effi ciency of its organizational functions.

The business environment of an organization is full of uncertainties.

An organization should make its functions flexible and effi cient to overcome any adverse situation.

An organization should also define its functions clearly for the accomplishment of goals and objectives in the allotted time.

The operative functions of an organization, namely, human resource management, marketing management, financial management, production and operations management, and information systems management.

DEFINE ORGANIZATIONAL FUNCTIONS

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Human Resource (HR) refers to the workforce of an organization that is employed to achieve organizational goals.

The key characteristics of HR are as follows: Possess a particular set of skills used for creating wealth Makes the use of mental as well as physical abilities for

earning money Encompasses unique traits, such as knowledge, skills,

attitude, and experience Exhibits different behavior of human beings in different

situations

HUMAN RESOURCE MANAGEMENT


HRP can be comprehended as the process of developing and determining objectives, policies, and programs to procure, develop, util ize, and retain human resource for achieving the goals and objectives of an organization.

The importance of HRP in a new organization is: Anticipating future human resource requirements in an organization Preventing the shortage and surplus of human resource in the

organization Identifying the skills and competencies of human resource for a

particular job Regulating various HR activities, such as selection, training, and

performance appraisal, of the organization Ensuring a continuous supply of human resource as per the demand Evaluating the current status of the available human resource and

estimating the human resource needs in future Ensuring overall organizational planning, which forms the basis of

other HR activities, such as job analysis, selection, and training

HUMAN RESOURCE PLANNING (HRP)


Recruitment is a process of identifying and attracting effi cient candidates for vacant positions in the organization.

The purposes of recruitment in a new organization are as follows: Enlarging the adequate pool of talented candidates at minimum

cost Identifying the present and future needs of the organization in

alignment with HRP and job analysis Facilitating the success of the selection process by decreasing

the chances of consideration of under qualified or overqualified candidates

Assessing the effi ciency of different recruitment methods Identifying the potential job applicants, who would be

appropriate candidates for the organization

RECRUITMENT


Selection is the process of staffi ng the right type of candidates for various positions in the organization.

It involves time, eff ort, and money in selecting the right type of applicant for the job; therefore, it is a critical process that should be carried out with utmost care.

Selection involves rejecting unfi t applicants and off ering employment to the suitable candidates only, whereas recruitment aims to attract a pool of candidates for the job.

Selection is one of the most important processes of human resource management.

A poor decision made in haste at this juncture would result in a great emotional hardship and expenses for both the individual and the organization.

SELECTION


Induction provides information to the new employees about the organization’s background, values, strength, rules and regulations, and business practices.

The induction program includes the following: Word of welcome to the new employee Presentation of organization’s key policies, philosophy,

values, and functions Providing important documents, such as offer letters and

contract letters to the employee Introduction to the existing employees or work team

INDUCTION


Orientation involves introduction of a new employee to his/her profi le in the organization.

The orientation program includes the following: Discussing of the roles, responsibilities, and tasks related to

the job position Explaining the work methods to perform effi ciently Describing the expectations of the organization from the

employee

ORIENTATION


Placement is the process of assigning a specifi c job and its associated grade and responsibility to each of the selected candidates.

The benefi ts of placement are: Helps new employees to get along with people in the

organization Improves the morale of the employees Helps in reducing employee turnover Helps in reducing absenteeism Keeps high spirit of work for the employees’ Avoids misfit between the employee and the job Avoids mistakes and accidents Guides the new employee to work as per the predetermined

objectives of the organization

PLACEMENT


Training may be defi ned as the process of enhancing the knowledge, skil ls, aptitude, and abil it ies of an employee for doing a specifi c job in an effi cient manner.

The advantages of training are: Helps to improve the quantity and quality of work output by enhancing

knowledge, skills, and productivity of employees Reduces the learning time and cost required to reach the acceptable level of

performance Brings uniformity in the performance of employees Involves identifying promising employees and training them for higher jobs,

which, in turn, prevents managerial obsolescence Helps employees to make better and economical use of materials and

equipment Facilitates less industrial accidents and damages to machinery and equipment Reduces the need for detailed and constant supervision of workers by making

them self-reliant Improves the employees' job satisfaction and morale by developing positive

attitude among them

TRAINING HUMAN RESOURCE


Performance appraisal is such a mechanism that helps the organization to understand the abilities and competencies of its each employee.

The objectives of performance appraisal are: Improves the performance of employees Determines the training and development needs of employees Helps the organization to achieve its strategic goals Represents a future-oriented activity Leads to the self-development of employees Provides effective feedback to employees, which, in turn, helps them to

improve their performance or get rewarded for their good performance Lays a foundation for various employee policies related to transfers,

promotions, layoffs, or terminations Reduces internal confl icts and employee grievances Helps the organization to decide compensation and incentives to be paid

to the employees

PERFORMANCE APPRAISAL


Compensation is a monetary value or non-monetary reward that an organization off ers to its employees in exchange of services rendered by them.

The types of compensation provided by the organization are: Skill-based Pay

Refers to the compensation that depends not only on the job but also on the potential of the employee.

Team-based Pay Refers to the remuneration that is given to teams where a group

of people work together. Variable Pay

Refers to the reward that is based on the performance of the employee on his/her job.

COMPENSATION AND ITS TYPES


Marketing management can be described as a process of creating, building, and maintaining benefi cial products.

A market consists of diff erent types of customers; therefore, an organization divides the market as per the customers’ gender, age, tastes, attitudes, and personalities.

These divided customer groups are called market segments in making rough estimates of the market demand for the product.

Marketing is a vast fi eld of operations, which can be understood in terms of three main functions of the entrepreneur, which include exchange or selling, physical supply or storage and warehousing, and facilitation or market research.

MARKETING MANAGEMENT


•Refers to a promotional technique of marketing communication that is used to target a huge number of geographically dispersed audiences.

Advertising

•Refers to the type of marketing in which the organizations reach customers directly without any intermediary.

Direct Marketing

•Refers to face-to-face selling in which a sales representative tries to convince the customer to purchase a product by explaining or demonstrating its features.

Personal Selling

•Refers to a traditional element of marketing communication. It is used to increase the sales of a product by offering incentives, gifts, and schemes provided to customers at the time of purchase.

Sales Promotion

•Refers to the process in which organizations maintain a relationship with the customers, shareholders, employees, distributors, partners, competitors, and the government.

Public Relations (PR)

PROMOTIONAL MARKETING TECHNIQUES


Branding is a process of giving a unique name, image, and identity to a product for diff erentiating it from others and creating emotional association with customers.

The legalized protection of a brand can be done by having the trademark.

A brand becomes the trademark when it is legally registered with the authorized agency.

Sustaining the brand means the continuity of delivering the same quality of products to customers.

A brand enables an organization to command premium price for a product.

BRANDING


Financial management refers to the functions involved in the management of financial resources.

The three elements of financial management are:

FINANCIAL MANAGEMENT


• Refers to scheduling the usage of financial resources, such as the raising of fund, deciding the amount of fund, and ensuring low cost and low risk in the raised finance.

Financial Planning

• Refers to the process of supervising and monitoring the financial operations of the organization.

Financial Control

• Helps the organization in taking various decisions that involve the usage of funds.

Financial Decision-Making

Cash flow is the movement of money in and out of a business during a specific period of time.

Types of Cash flow are:

MANAGING CASH FLOW


• Refers to cash inflows generated from the operations of a business.

Operational Cash Flow

• Indicates cash received by selling assets or paid by making capital expenditures, acquisitions or investments that benefit the organization in the long run.

Investment Cash Flow

• Shows the cash received or paid as a result of financial activities, such as issuing or repurchasing stocks, receiving or paying loans and dividends.

Financial Cash Flow

An organization maintains financial accounts or records in a book called book of accounts.

A book of accounts includes the following: All sales and purchases of goods by the organization All sums of money received and expended by the

organization The assets and liabilities of the organization The cost of labor, materials, and other items utilized for

different activities, such as manufacturing, processing, or mining

Maintaining up-to-date accounts is the key to success in business; therefore, every entrepreneur should try to keep and maintain the book of accounts.

MAINTAINING ACCOUNTS OR RECORD KEEPING


Production and operations management is the field of management that deals with supervising, designing, and redesigning business operations in the production of goods and services.

It ensures the effi cient utilization of resources, so that the needs of existing and potential customers can be satisfied.

Production and operations management is all about managing processes that convert inputs, such as labor, material, and expenses, into outputs, including goods and services.

Generally, production and operations management aspires to enhance the content of value-added activities in any specified process.

PRODUCTION AND OPERATIONS MANAGEMENT


Productivity is the effi ciency of converting inputs, such as labor, materials, equipment, finance, time and space, technology and management skills into tangible outputs, such as goods, services, enhanced sales, and greater customer satisfaction.

The methods of measuring productivity are:

PRODUCTIVITY


• Refers to the ratio of output produced to input of labor.

Output/Labor ratio

• Refers to the ratio of the real value of output to the collective labor and capital input. It is an indicator of efficiency of total factor productivity.

Multifactor Productivity (MFP)

Quality control refers to a process by which entrepreneurs review the quality of all factors involved in production.

The three tools for quality control are:

QUALITY CONTROL


• Refers to the method that detects quality problems at the end of the production process before they reach the final customer.

Inspection

• Refers to the method that focuses the efforts on improving quality.

Quality Assurance

• Refers to the process that ensures quality is being checked at every stage of the production process.

Total Quality Management (TQM)

An information system plays an indispensable role in supporting the decision-making process of an organization by providing accurate and relevant information.

The four types of information systems are: Transaction Processing System (TPS)

Refers to a type of information system that serves the information requirements of individuals at the operational level of an organization.

Management Information Systems (MIS) Refers to an integrated system designed to provide the information to

middle level managers through internal sources. Decision Support System (DSS)

Refers to a computer-based information system that supports the organizational decision-making process by providing useful information.

Executive Information System (EIS) Refers to the system designed to help top management in making

strategic decisions.

INFORMATION SYSTEM AND ITS TYPES


Managing organizational functions involve several interrelated tasks, such as targeting customers, increasing market share, sourcing funds, producing products and services, incorporating advanced technology.

The diff erent functions of an organization can be broadly classifi ed under fi ve major functions, namely, human resource management, marketing management, fi nancial management, production and operations management, and information system management.

The human resource management function of an organization needs to be managed properly as it is the most productive resource that creates a long lasting advantage for the organization by uti l izing its ski l ls and knowledge.

The marketing management function of an organization helps persuading customers and increasing the market share.

An effi cient management of fi nancial function of an organization results in identifying the new investment opportunities and proper allocation of resources.

Managing information systems helps in implementing advanced technology in the organization and getting an edge over its competitors.

RECAP


Chapter 13 management of organization function

Education

Transcript of Chapter 13 management of organization function