ORGANIZATION AND

MANAGEMENT
MODULE
DEFINITION AND NATURE OF STAFFING

The managerial function of staffing involves manning the organization structure through
proper and effective selection, appraisal and development of the personnel to fill the roles
assigned to the employers/workforce.

Staffing puts the right person for the right job

According to Theo Haimann, “Staffing pertains to recruitment, selection, development, and

compensation of subordinates.”

Some modern management experts also include the function of staffing as an important
management practice. Without human resources, no organization can get off the ground, let
alone do business and make profits. Even the most labor efficient business models like online
marketing and consulting require expertise in the form of knowledgeable individuals whose job
it is to identify trends, do research and provide business plans or solutions to problems.

 Some distinct features of staffing function are given as:

 Staffing is an important function because it puts the right man in the right job (effective).

 It is an ongoing activity as employees keep leaving and joining the company, they also retire
from time to time leaving empty places in various positions. It is continuous yet nothing is
permanent

 Efficiency (compensation, etc.) is a prime focus of this function as managing people is the
toughest job there is, everything must be accounted for, leaves, payments, benefits, medical
allowances, social security accounting and much more.

Staffing is really an essential part of human resources management. It facilitates

procurement and placement of right people on the right jobs. The nature of staffing function is
discussed below:

1. Staffing is People-centered

Staffing is people centered and is vital in all types of organizations. It is concerned with
the entire types of personnel starting from top to bottom of the organization. The broadcast
classification of personnel may be as follows:

Blue-collar workers: (those working on the machines and engaged in loading, unloading and
involving manual labor, “dirty jobs”).

White-collar workers: (clerical employees mostly found in offices)

2. Staffing is an Important Managerial Function

Staffing function is the most important managerial act along with planning, organizing,
directing, and controlling. The operations of these four functions depend upon the manpower
(who will occupy when the person is absent) which is available through staffing function.
(human resources and availability of the person)

3. Staffing is a Pervasive Activity

As staffing function is carried out by all mangers and in all types of concerns where business
activities are carried out. It is applicable to all
 4. Staffing is a Continuous Activity

This is because staffing function continues throughout the life of an organization due to the
transfers and promotions that take place. Employees resign/retire and other employees will come
to the organization

STAFFING PROCESS AND STEPS INVOLVED IN STAFFING

1. MANPOWER REQUIREMENTS

The very first step in staffing is to plan the manpower inventory required by a concern in
order to match them with the job requirements and demands. Therefore, it involves forecasting
and determining the future manpower needs of the concern. (who and how many are needed)

2. RECRUITMENT

Once the requirements are notified, the concern invites and solicits applications according to
the invitations made to the desirable candidates. (inform the public that you are looking for hires)

3. SELECTION

This is the screening step of staffing in which the solicited applications are screened out
and suitable candidates are appointed as per the requirements. (orienting people)

4. ORIENTATION AND PLACEMENT

Once screening takes place, the appointed candidates are made familiar to the work units and
work environment through the orientation programs. Placement takes place by putting right man
on the right job.

5. TRAINING AND DEVELOPMENT

Training is a part of incentives given to the workers in order to develop and grow them
within the concern. Training is generally given according to the nature of activities and scope of
expansion in it. Along with it, the workers are developed by providing them extra benefits of in-
depth knowledge of their functional areas. Development also includes giving them key and
important jobs as a test or examination in order to analyze their performances.

6. REMUNERATION

It is a kind of compensation (reward, wage) provided monetarily to the employees for their
work performances. This is given according to the nature of job- skilled or unskilled, physical or
mental, etc. Remuneration forms an important monetary incentive for the employees. (equal
chances)

7. PERFORMANCE EVALUATION

In order to keep a track or record of the behavior, attitudes as well as opinions of the workers
towards their jobs. For this regular assessment is done to evaluate and supervise different work
units in a concern. It is basically concerning to know the development cycle and growth patterns
of the employees in a concern. (are employees performing well)

8. PROMOTION AND TRANSFER

Promotion is said to be a non-monetary incentive in which the worker is shifted from a

higher job demanding bigger responsibilities as well as shifting the workers and transferring
them to different work units and branches of the same organization. (higher the position, higher
the responsibility)

HUMAN RESOURCE PLANNING

Human resource planning (HRP) identifies people with the right skills and assigns them
corresponding tasks in the company. HRP is a critical component in determining the
organization’s manpower complement or the number of people that are currently employed in
the organization.

JOB ANALYSIS

This is the procedure for determining the duties and skill requirements for a job or
position, as well as other qualifications sought for in an employee or applicant. (qualities,
position, duties and experiences which serve as guide)

JOB DESCRIPTION

This is a written summary of the duties, responsibilities, reporting relationships, and the job
specifications for each job or position in the company. It provides a clearer view of what the job
is all about and minimizes irregularities in the performance of the actual job. There is no
standard format in writing a job description, but the following are its essential parts:

 Job title or position

This describes the exact name of the job like Human Resource Manager or Human Resource
Assistant, Production Manager, etc. (Ex: ABM Teacher, Production Manager)

 Reporting relationships

This includes the job title for the position’s immediate supervisor. For example, in the case of
a human resource manager, the immediate supervisor may be the vice president for human
resources or a human resource director. (Ex: Teacher -> Head)

 Job classifications

In large companies, job titles have different job classes or levels. Classification provides the
rank of the job in comparison to the overall importance of other jobs.

 Job description

This portion provides a description of the job and an overview of its duties and responsibilities.

 Specific duties and responsibilities

This describes the functions of the job in detail. Usually, the specific functions start with a
verb to show an element of action. For example: “assists the vice president for human resources
in the implementation of human resource policies and procedures.” (Specific activity to be
performed by the employee)

 Job specification

It provides the minimum qualifications for a particular job such as educational background,
experience, skills, and personal qualities. These qualifications are required of the employee or
applicant so that he or she effectively performs the responsibilities required of the job. In some
companies, a job description also contains the working conditions and the equipment used on the
job.

RECRUITMENT, SELECTION, AND TRAINING & DEVELOPMENT

A. RECRUITMENT

The recruitment and selection are the major function of the human resource department
and recruitment process is the first step towards creating the competitive strength and the
strategic advantage for the organizations. Recruitment process involves a systematic procedure
from sourcing the candidates to arranging and conducting the interviews and requires many
resources and time.

A recruitment process is an organization-specific model of how the sourcing of new

employees is undertaken. Typically, the ownership of the recruitment process resides within the
human resources function, although again this may differ depending on the specific
organizational structure.

A recruitment process can be broken down into respective parts. Whilst the naming and
exact process steps are unique to an organization, a typical recruiting process may commence
with the identification of a vacancy, then the preparation of a job description, database
sourcing, role marketing, response management, shortlisting, interviews, reference
checking, and selection. It is more about inviting the applicants rather than hiring them. Shows
that people are needed in the organization.

TYPES OF RECRUITMENT
A. INTERNAL RECRUITMENT
 It is a recruitment which takes place within the concern or organization. Internal sources of
recruitment are readily available to an organization.
 Internal recruitments are primarily:
 Transfers
 Promotions
 Re-employment of ex-employees - This is one of the internal sources of recruitment in
which employees can be invited and appointed to fill vacancies in the concern. There are
situations when ex-employees provide unsolicited applications also.
B. EXTERNAL RECRUITMENT
 External sources of recruitment have to be solicited from outside the organization. External
sources are external to a concern. But it involves lot of time and money. (outside of
organization)
External sources of recruitment include:
EMPLOYMENT AT FACTORY LEVEL
 This a source of external recruitment in which the applications for vacancies are presented on
bulletin boards outside the factory or at the gate. This kind of recruitment is applicable
generally where factory workers are to be appointed.
ADVERTISEMENT
 It is an external source which has got an important place in recruitment procedure. The
biggest advantage of advertisement is that it covers a wide area of market and scattered
applicants can get information from advertisements. Medium used are newspapers and
television.
EMPLOYMENT EXCHANGES
 There are certain employment exchanges which are run by the government. Most of the
government undertakings and concerns employ people through such exchanges. Now-a-days
recruitment in government agencies has become compulsory through employment exchange.
EMPLOYMENT AGENCIES
 There are certain professional organizations which look towards recruitment and employment
of people, i.e. these private agencies run by private individuals supply required manpower to
needy concerns.
EDUCATIONAL INSTITUTIONS
 There are certain professional institutions which serve as an external source for recruiting
fresh graduates from these institutes. This kind of recruitment done through such educational
institutions is called as campus recruitment. They have special recruitment cells which help
in providing jobs to fresh candidates.
RECOMMENDATIONS
 There are certain people who have experience in a particular area. They enjoy goodwill and a
stand in the company. There are certain vacancies which are filled by recommendations of
such people.
LABOR CONTRACTORS
 These are the specialist people who supply manpower to the factory or manufacturing plants.
Through these contractors, workers are appointed on contract basis, i.e. for a particular time
period. Under conditions when these contractors leave the organization, such people who are
appointed have to also leave the concern.

Take note of the following:

Placement is said to be the process of fitting the selected "person at the right job or place, i.e.
fitting square pegs in square holes and round pegs in round holes"

SOURCES OF APPLICANTS
TYPES OF APPLICANTS TO JOB POSITIONS IN THE COMPANY:

1. INTERNAL APPLICANTS
 These are company employees who are considered for promotion to higher positions.
Promoting an employee to a vacant position in the company incurs lesser cost than hiring as
new employee since the internal applicant is already familiar with the job he or she will be
occupying. Through promotion, employees are also motivated to work harder.

2. EXTERNAL APPLICANTS
 These are individuals who are recruited by the company or directly apply to join the
company. A company can choose from several options when recruiting external applicants.
The traditional means of recruitment include advertisement and notices in print media such
newspapers and magazines.

EQUAL EMPLOYMENT
There are certain issues that companies should consider during the recruitment stage.
Foremost, among them is equal employment opportunity which ensures that an applicant is not
discriminated against because of his or her age, color, race, religion, civil status, or gender.
Companies are not careful about imposing age requirements for certain positions or having
preferences for graduates from certain colleges or universities.

B. SELECTION
 RECRUITMENT SELECTION
 Recruitment is considered to be a positive  Selection is a negative process as the
process as it motivates more of candidates inappropriate candidates are rejected here.
to apply for the job.  Selection involves choosing the best candidate
 It creates a pool of applicants. with best abilities, skills and knowledge for the
 It is just sourcing of data. required job.
 (Selecting, removing and hiring)
Employee selection is the process of putting right men on right job. It is a procedure of
matching organizational requirements with the skills and qualifications of people.

Effective selection can be done only when there is effective matching. By selecting best
candidate for the required job, the organization will get quality performance of employees.

Moreover, organization will face less of absenteeism and employee turnover problems. By
selecting right candidate for the required job, organization will also save time and money. Proper
screening of candidates takes place during selection procedure.

All the potential candidates who apply for the given job are tested. But selection must be
differentiated from recruitment, though these are two phases of employment process

The employee selection process takes place in given order:

1. Preliminary Interviews
 It is used to eliminate those candidates who do not meet the minimum eligibility
criteria laid down by the organization. The skills, academic and family background,
competencies and interests of the candidate are examined during preliminary
interview.
2. Application Blanks
 The candidates who clear the preliminary interview are required to fill application
blank. It contains data record of the candidates such as details about age,
qualifications, reason for leaving previous job, experience, etc.
3. Written Tests
 Various written tests conducted during selection procedure are aptitude test,
intelligence test, reasoning test, personality test, etc. These tests are used to objectively
assess the potential candidate. They should not be biased.
4. Employment Interviews
 It is a one to one interaction between the interviewer and the potential candidate. It is
used to find whether the candidate is best suited for the required job or not. But such
interviews consume time and money both.
5. Medical Examination
 Medical tests are conducted to ensure physical fitness of the potential employee. It will
decrease chances of employee absenteeism.
6. Appointment Letter
 A reference check is made about the candidate selected and then finally he is
appointed by giving a formal appointment letter.

C. TRAINING & DEVELOPMENT

Training and development refer to two distinct processes in employee development. The
company helps the employees improve their skills through training. It is an organized
activity that increases and enhances employees’ knowledge and skills on their job to improve
their current performance.

Development is the enhancement of the competencies of employees by giving them

opportunities for greater responsibilities as well as challenging tasks that will help them achieve
their total growth.

NEW EMPLOYEE ORIENTATION PROGRAM

The initial training of newly hired employees includes an orientation. The new employee
orientation program aims to provide new employees with relevant information about the
company such as the company’s history, vision and mission, culture, products and services
provided, work hours, dress code, and company policies
The program also introduces new employees to their immediate superior and co-
employees within the department.
Lastly, the members of top management are introduced. Some companies with big
manufacturing plants permit new employees to do an ocular visit of the facility.

THE TRAINING PROCESS

Training is an important investment a company can make with their employees. The
training process ensures that the implementation of training programs results in benefits for
employees.
The training process includes pre-training assessment, designing the training program,
implementation, and evaluation

2. PRE-TRAINING ASSESSMENT
It is important to conduct an initial assessment of the needs of employees before training is
conducted. This allows the trainer to identify which aspects of the trainees need
improvement. After the assessment, the objectives of the training program are formulated.
Training objectives are translated into the expected changes and improvements that must be
displayed by the trainees at the end of the training program.

3. DESIGNING THE TRAINING PROGRAM

Once the objectives are formulated, it is time to design the training program. The training
program identifies the training methods to be used, the time frame for implementations, dates
and venues, evaluation methods, resource persons or speakers, and training cost. The trainer can
employ a variety of training techniques depending on the training objectives.

These are some of the most common techniques used by companies to in their training programs:
LECTURE
 It is the oldest and most popular method of teaching where the trainer or speaker gives
a speech explaining a topic or concept. Lectures are often used in combination with
other techniques in a training program.
DEMONSTRATION
 This method is utilized to show how something works or how to perform a task. A
demonstration is accompanied by a lecture to make it more effective.
COMPUTER-BASED TRAINING
 This utilizes computer programs to teach knowledge and skills, and does not require
face-to-face interaction with a trainer.
PROGRAMMED INSTRUCTION
 This is a form of computer-based training that uses an instructional program that
 employs a variety of content such as text, graphics, and multimedia. The program is
stored in the company’s system and participants can access the program through a
network.
VIRTUAL REALITY
 This method allows the participants to experience a 3D environment. It enables the
participants to experience simulation showing possible job situations.
CASE STUDY
 This method presents a particular situation and trainees discuss and decide on a
solution to an organizational problem highlighted in the case.
ROLE-PLAYING
 This method presents actual work situations for analysis and participants are asked to
act out specific roles. Some examples of work situations include employees in conflict,
misinterpretation of a memo, and a crisis meeting among others.
TEAMBUILDING
 This is a training program that utilizes activities that encourage employees to work in
groups. These activities provide opportunities for employee to build rapport with their
colleagues, enhance their social skills, be sensitive to the feelings of others, and
improve over-all teamwork in the company.

4. TRAINING IMPLEMENTATION
At this stage, the trainer delivers the training program utilizing the selected techniques.
The trainer is an important component to the success of the training implementation. An
effective trainer is someone who has enthusiasm and passion regarding the topic, has a good
working knowledge of the topic, has a good sense of humor, and possesses good posture and a
dynamic appearance.

5. TRAINING EVALUATION

To measure the effectiveness and success of training and development programs, the
following criteria for evaluation can be used:
o Reactions
o Results
o Recall
o Retrieval

Take note of the following:

The four R’s are essential for any change or modification of behavior on the part of the
employees. Thus, a training or development program is considered a success after it passes these
criteria.
Evaluation is a continuous process as the company seeks to continually implement better
training and development programs for their employees.

COMPENSATION
Compensation is any tangible equivalent or reward for services rendered or for the
performance of a task performed in the organization. Direct compensation is monetary in
nature and given in the form of salaries, wages, commissions, bonuses, and allowances. Indirect
compensation is given in the form of services and non-monetary benefits such as hospitalization,
summer outings, vacation leaves, and sports fests.

Compensation varies from one position to another. A highly specialized position is

given a higher salary compared to those that require lesser skills. If there is a demand for
highly-skilled jobs, the corresponding pay is higher for employees that have the corresponding
skills because there are many companies that would like to get their services. On the other hand,
companies looking to hire employees with average skill often offer compensation that is a little
over the minimum.

COMPENSATION GUIDELINES
 Compensation decisions are influenced by the nature and environment of a
particular industry. For example, the pharmaceutical, banking, telecommunications,
and hotel industries offer attractive compensation packages. The government also
imposes regulations and restrictions on salaries of employees like the minimum wage
law.
Take note of the following!
 Minimum wages in the Philippines is expected to reach P537.00/day by the end of
2020 according to Trading Economics global macro models and analysts expectation
 Compensation is usually time-based. The term salary refers to compensation given
to professionals on a monthly or semi-monthly basis. The term wage refers to on a
weekly or daily basis and usually applies to manual workers such as carpenters,
plumbers, electricians, and the like. Base pay or basic pay is the fixed part of pay. It
is the minimum payment for the tasks rendered by the employee based on his or her
or job title.
 Companies ensure the confidentiality of individual salaries and require employees
to exercise discretion in discussing their salaries or giving out information related to
compensation. Should information regarding pay leak out, it may result in
demotivation, jealousy, and conflict among employees.

COMMON MODES OF PAYMENT

1. PAYMENT FOR TIME WORKED
 Majority of employees are paid on the basis of time worked. Monthly-paid employees
are those who are paid each day of a particular month including unworked rest days,
special days, and regular holidays. Daily paid employees are paid on the basis of the
days they actually worked and unworked regular holidays. Payments for time worked
have adjustments based on any of the following:
A. Across-the-board increase: Pay adjustments provided to all employees with the same rate
regardless of rank.
B. Merit increase: Salary or wage increase given to employees on the basis of performance.
C. Cost-of-living allowance (COLA): A monetary allowance given to employees to help them
cope with the prevailing conditions of the economy related to the standard of living and
increasing prices of commodities due to inflation.
D. Seniority pay: This is given to employees based on the number of years of service in the
company.
2. FLAT RATES
 Firms with flat rates do not consider skills and seniority as factors for giving
compensation. Companies pay their employees the same amount regardless of rank.
3. COMPENSATION
 Through incentives, these are payments based on output. The most popular forms of
incentive pay are the following:
A. Merit pay: This is given in recognition of outstanding performance and based on the results
of a performance evaluation. The merit pay is a one-time payment given as an incentive for
outstanding performance in a certain task or project, or for an outstanding evaluation of job
performance within a certain period of time.
B. Piece rate pay: This is given to employees who are paid a fixed rate per product produced.
For example, seamstresses working in a garments factory are given wages based on the
number of pieces of clothing they make.
C. Commission: This is compensation based on an achieved sales quota. Companies usually
pay their sales associates commissions based on their sales performance. For example, car
companies usually pay their sales representatives a commission for every unit they sell.
D. Group incentives: This is given to a team that has achieved a particular sales or production
target. The group is given a commission upon reaching a prescribed target. Group effort is
essential in attaining this incentive as all members of the team are rewarded.
4. PAYMENT BASED ON SKILLS
 This is based on the number of skills the employees gain while working for the
company. In order to avail of this particular compensation, an employee must acquire
a certain skill prescribed by the company. His or her pay increase is then based on the
new skill acquired. This mode of payment is not widely used in the Philippines
because companies prefer to give other compensation packages.
5. PAYMENT BASED ON KNOWLEDGE OR CREDENTIALS
 Continuous learning is one of the motivations for an employee to attend seminars and
conferences related to his or her field of expertise. Compensation is therefore given to
employees who attend seminars and conferences and gain additional knowledge that
improve their performance in the company. Attending conferences also aids the
employee in accumulating points for higher ranking and eventual pay increase.
6. EXECUTIVE PAYMENT
 This is payment given to chief executive officers, the chairman of the board, and other
members of top management. Executive payment is high since the success of the
organization depends on the overall skills of the executive officers.
7. SPECIAL PAYMENT
 This is additional compensation given in special cases. It includes the following:
A. Overtime pay: This covers work done beyond the normal schedule of eight hours a day, and
are given on top of the basic salary. The rates depend on the day and number of hours
worked. The minimum overtime pay rates also vary according to the day the overtime work
is performed. They are determined as follows:
 For work in excess of eight hours performed on ordinary working days, overtime pay is 25%
of the hourly rate.
 For work in excess of eight hours performed on a scheduled rest day, a special day, and a
regular holiday, overtime pay is at 30% of the hourly rate.
B. Holiday pay: This is payment for an unworked regular holiday based on the employee's
daily rate. An employee is paid 100% of his or her daily rate (minimum wage and COLA)
even if he or she does not report for work, provided that he or she was present or on leave
with pay on the work day preceding the holiday. If an employee works on a regular holiday,
he or she is paid 200% of his daily rate.
C. Premium pay: This is payment given to employees who work during rest days and special
holidays.
D. Night differential payment: This is an additional 10% of basic rate for each hour of work
performed between 10:00pm to 6:00am. COLA is not included in the computation of night
shift differential.
E. Service charge: This refers to fees charged to cover services related to the production of a
product or provision of service. Establishments such as restaurants, hotels, and bars often
charge a service charge above their regular fees.
F. Severance or separation pay: It is the duty of the firm to provide separation pay to
employees who are terminated with authorized cause.
G. Retirement pay: An employee who is 60 or 65 years old shall receive one-half month salary
for every year of service provided that he or she has rendered five years of continuous service
to the company.
H. Thirteenth month pay: All employees are entitled to thirteenth month pay provided that
they have worked for at least one month in a calendar year. This is given not later than
December 24 of that particular year.

PERFORMANCE APPRAISAL
 Performance appraisal refers to the process where employee performance is documented
and evaluated. This is also known as performance review or performance evaluation.

 An appraisal determines whether employee performance is effective and conforms to

company standards and expectations. This is done periodically by the company and
management decides on how frequently it is conducted and the means by which employees
are appraised.
 Evaluation is an important aspect of a company's performance management system as it
provides concrete information based on which the over-all performance of the company can
be assessed. Formal evaluation is highly preferred and recommended as opposed to the
informal evaluation which is done by simple observation.
 Over the years, performance appraisal has expanded from mere decision-making regarding
salary or promotion to addressing other employee-related concerns that affect long-term
organizational performance.
The following are the purposes of performance appraisal:
NEEDS ASSESSMENT
 Performance evaluation provides relevant information about the specific training needs
of employees.
EMPLOYEE MOVEMENTS
 It helps management decide who will be promoted by providing proof of meritorious
performance.
BASIS FOR MERIT INCREASE
 Performance appraisal gives strong proof for merit increases.
LEGAL CONCERNS
 If there are questions regarding certain decisions like termination, the appraisal
becomes the basis for justifying such action. The results of appraisal are also used to
address issues on rewards, layoff, and employee transfer.
DEVELOPMENT
 A series of performance appraisals tracks the growth of employees. The appraisals
serve as evidence for identifying career paths and determining personnel development.
CHANNEL OF COMMUNICATION
 Appraisal provides a good venue for discussion regarding performance and other
issues an employee and his or her immediate supervisor. It becomes an avenue for
ironing out differences and articulating certain career concerns or questions on
performance ratings.
SOURCE OF MOTIVATION
 Performance evaluation is one of the best ways to keep employees motivated. It is one
way to boost employee morale and encourage them to make a good impression and
give an outstanding performance in their job.

EMPLOYEE RELATIONS
Effective employee relations management is an essential component that contributes to
the success of a company. The following elements are considered in establishing and
maintaining good employee relations.

1. Drive for commitment

 When a company fosters good relationship between management and employees, the
latter is more likely to become loyal and committed to the organization. It is very
important to always win employees over and gain their loyalty to the organization.
2. Harmonization of terms and conditions of employment
 Management should ensure that employees are provided good work conditions and
benefits as stated in their employment contracts. In doing so, the general satisfaction of
 employees is assured as well as their continued motivation to do well in their jobs.
3. Emphasis on mutuality
 Management must be inclusive and employees must feel that managers are also a part
of the work team.
4. Policies and practices for communication
 Clear and honest communication between employees and management is a vital
component of labor relations that will ensure continuous and harmonious relationship
among members of the company.

EMPLOYEE MOVEMENTS
Employee movements are inevitable and are often the result of evaluation or structural
changes within an organization. An organization can move its employees either vertically or
horizontally.

 Vertical movement entails the movement of an employee from a lower position to a higher
one.
 Horizontal movement involves the transfer of an employee to another department or
position with similar responsibilities or status.

1. Promotion is a movement to a higher level or position. Companies have different criteria on

promotion. The usual criterion is a combination of tenure and meritorious performance.
 Tenure refers to the number of years in service of, an employee while meritorious
performance refers to an excellent or outstanding performance of an employee. Some
companies may have a clear preference for tenure based on loyalty of the employee
or performance may have more weight on the basis of how much the employee
contributes to the achievement of corporate goal
2. Demotion is a movement to a lower level or position. A common reason for an employee's
demotion is inefficiency or poor performance.
3. Transfer is a movement to another position but with the same level or scope of
responsibility. It can also mean a transfer to another branch or location but the employee
still occupies the same tasks. In some cases, an employee may have another position but the
level is still the same
4. The last type of movement is separation or an employee's departure from the organization.
It may take the following forms:
RESIGNATION
 This is an employee's voluntary decision to leave the organization. The usual reasons for
employee resignation are to look for better opportunities in other companies and avail of
higher salaries and benefits.
SEPARATION WITH AUTHORIZED CAUSE
 More commonly known as layoff. This is the company's decision to terminate employees
due to business reasons. One of the more common reasons is redundancy, wherein the
introduction of a new technology will duplicate some of the existing functions of certain
jobs. The current job holders of such functions will be given an appropriate severance
package when they leave the organization. The severance package consists of a considerable
monetary package to enable employees to maintain their standard of living during the period
that they are unemployed.
SEPARATION WITH JUST CAUSE
 This occurs when an employee is terminated due to theft, fraud, and other serious offenses.
In this case the employee does not receive any severance pay from the company. Apart from
being terminated from the company, an employee who was found to have committed grave
offenses may also be subjected to legal sanctions. An employee who receives an
unfavorable evaluation at the end of his or her probationary period can also be terminated.
 RETIREMENT
 This refers to the end of a worker's employment with the company due to old age, illness, or
infirmity. There is no prescribed age for retirement, although many companies set the
normal retirement age for employees at 60 years old. Some companies, however, set their
retirement age at 65. The retiring employee is given a retirement package as mandated by
law along with other voluntary benefits from the company.

REWARD SYSTEMS
Companies also provide additional payments and benefits on top of the employees' basic
salaries. These form part of the company's rewards systems and are given to motivate
employees as they perform their tasks.

Contingent Pay
This is a pay scheme which is given on top of the basic pay rate and is based on the
employee's performance, competency, contribution, and skills. Contingent pay can be applied to
individuals or groups.

Individual contingent pay can be implemented along five schemes. These are as follows:
PAY FOR PERFORMANCE SCHEME
 On top of the basic pay, an employee is given a bonus based on performance. This pay
scheme serves to motivate employees to perform well in their jobs. Employees are
encouraged to fully participate in attaining the company's objectives. One disadvantage is
that the basis for providing the reward may be subjective. Therefore, the company should
have a good performance management system that relies on the quality and not the quantity
of work.
PAY FOR COMPETENCY
 This is based on the knowledge, skills, and abilities that employees have that they apply on
the job. This encourages enhancement of competencies among employees but may be
difficult to assess since it ignores output levels. An excellent competency framework is
required in order to implement this scheme.
PAY FOR CONTRIBUTION
 It focuses on the combination of employee competencies and output levels. This scheme
provides employees the opportunity to simultaneously develop their competencies and
increase their output levels. However, this may be difficult to manage because managers will
have to assess both the competencies and performance of employees at the same time.
PAY FOR SKILLS
 This payment depends on the skills acquired by the employee. This requires a worker to
undergo training and gain certification for certain skills or competencies. The advantage of
this scheme is that it encourages employees to learn more skills and avail of trainings and
development programs.
PAY FOR SERVICE
 This is usually paid yearly on the basis of an employee's continued service. This scheme
treats all employees equally regardless of performance, skills acquired, or competence level.
However, implementing rewards based on length of service fails to reward those who
contribute more to the achievement of company objectives despite being with the company
for only a short period.

Group contingency pay, on the other hand, may be implemented through two means:
1. Team-based pay
 This is given to groups of employees who have related jobs and are assigned to work on a
certain project. The reward is based on the achievement of a certain quota or service delivery
standard. Team-based pay is usually given at a rate proportionate to an employee's basic pay.
Other companies, however, distribute the pay equally among team members. This scheme is
 effective for highly cohesive groups. However, this may also spark conflict within the team
as employees who consider themselves to be contributing more to the achievement of the
team are likely to be disappointed if bonuses are divided equally.
2. Organization-wide pay
 This is given to employees on the basis of the achievement of organizational goals. There are
two types of organization-wide payments.
A. Gainsharing
 This is based on a bonus plan where employees are encouraged to fully contribute to the
company’s performance. Gainsharing primarily emphasizes increased productivity and
improved performance of employees. The achievements of the company are compared to a
set baseline and based on this, the gains of the company are calculated and become the bases
for bonuses given to employees. An example of gainsharing is when a company gives a
bonus to its employees when its sales revenues surpass the sales targets.
B. Profit sharing
 This refers to a scheme where employees share in the profits of the company either through
cash payments or shares of stocks. The value of the incentive is determined by the
management. Usually, the management decides which portion of the profits will be shared
with employees.

LEADERSHIP
Leading involves the social and informal sources of influence that one uses to inspire
action taken by others. As one of the four functions of management, leading can be both
extremely important and challenging.
Leading is stimulating people to be high performers. It includes motivating and
communicating with employees, individually and in groups. Leading involves close day-to-day
contact with people, helping to guide and inspire them toward achieving team and organizational
goals. This can take place in teams, departments, and divisions, as well as at the tops of large
organizations. A good leader inspires employees, boosts morale and encourages effective
communication among employees.

Excellent leadership can even increase the organization’s income. There are some
qualities that can enhance leaders, but without which, they can still be effective. Strong character
is one the leadership qualities that is essential to all leaders. It is a wide range of traits that
collectively identifies a person. This includes values, morals, and methods. In order for a person
to be a good leader, he must generally have a clear and distinct identity, and he must be aware of
it.

Many people consider leadership to be an art, and many consider management to be a

science. Organizational leadership is a blending of the art and the science in order to give a
company direction.
Learning organizational leadership does not require a college degree and can be applied
in a variety of diverse careers.

DIFFERENCE BETWEEN LEADING AND MANAGING

More often than not, managing and leading are used interchangeably. However, if we
take into consideration the technical aspects of both, they are actually quite different from each
other.
Leadership is distinguished from management by the nature of the relationship between
the manager and his or her subordinates. Management is more transactional in nature.
The manager, as the superior officer, relays his or her instructions to subordinates who are
expected to comply with them. Compliance, meanwhile, is motivated by expected rewards.
 Within the framework of management, managers and employees perform their assigned
tasks because they are paid to do it. On the other hand, leadership is defined by cooperation,
mutual trust, and esteem. Leaders engage their subordinates in a more democratic manner, and
every action of the subordinate is voluntary and not done out of obligation.
Leadership also encourages workers to focus on goals, anticipate challenges, and work
together to address difficulties.
Based on this distinction, it is possible for managers to perform the functions of
management without possessing leadership skills. What is ideal, though, is for managers to have
and exercise leadership skills to ensure that management is conducted more successfully. The
personal nature of leadership, however, requires managers to establish boundaries with their
subordinates to maintain professionalism in the conduct of their duties. Management is really
broad, leadership is an intimate setting. Leadership is within management

MOTIVATION
Motivation is defined as the process that initiates, guides, and maintains goal-oriented
behaviors. Motivation is what causes us to act, whether it is getting a glass of water to reduce
thirst or reading a book to gain knowledge. It involves the biological, emotional, social, and
cognitive forces that activate behavior.
In everyday usage, the term motivation is frequently used to describe why a person does
something. For example, one might say that a student is so motivated to get into an accountancy
program that she spends every night studying.
The term motivation refers to factors that activate, direct, and sustain goal-directed
behavior. Motives are the “why” of behavior the needs or want that drive behavior and explain
what one does. One does not actually observe a motive; rather, we infer that one exists based on
the behavior we observe.
Motivation are internal and external factors that stimulate desire and energy in people to be
continually interested and committed to a job, role or subject, or to make an effort to attain a
goal. Motivation results from the interaction of both conscious and unconscious factors such as
the:
► Intensity of desire or need,
► Incentive or reward value of the goal, and
► Expectations of the individual and of his or her peers.

LEADERSHIP THEORIES
Leading is a complex process. It involves influencing others to accomplish a mission, task,
or goal. There are number of leadership theories that describe the characteristics and behavior of
successful leaders as well as different leadership styles that managers can apply in various
situations.
1. Great Man Theory
 The Great Man theory evolved around the mid-19th century. Even though no one was able to
identify with any scientific certainty, which human characteristic or combination of, were
responsible for identifying great leaders.
 Everyone recognized that just as the name suggests; only a man could have the characteristic
(s) of a great leader. The Great Man theory assumes that the traits of leadership are intrinsic.
 This theory sees great leaders as those who are destined by birth to become a leader.
 Leaders are born not made
2. Trait Theory
 The trait approach to leadership was one of the earliest theories of leadership. Although it is
not a fully articulated theory with well- developed hypotheses, the trait approach formed the
basis of the earliest leadership research.
 This approach focuses on the personal attributes (or traits) of leaders, such as physical and
personality characteristics, competencies, and values.
 It views leadership solely from the perspective of the individual leader. Implicit in this
approach is the assumption that traits produce patterns of behavior that are consistent across
situations.
 That is, leadership traits are considered to be enduring characteristics that people are born
with and that remain relatively stable over time.
3. Behavioral Theories
 In reaction to the trait leadership theory, the behavioral theories are offering a new
perspective, one that focuses on the behaviors of the leaders as opposed to their mental,
physical or social characteristics.
 Thus, with the evolutions in psychometrics, notably the factor analysis, researchers were able
to measure the cause and effects relationship of specific human behaviors from leaders. From
this point forward anyone with the right conditioning could have access to the once before
elite club of naturally gifted leaders. In other words, leaders are made not born.
4. Contingency Theories
 The Contingency Leadership theory argues that there is no single way of leading and that
every leadership style should be based on certain situations, which signifies that there are
certain people who perform at the maximum level in certain places; but at minimal
performance when taken out of their element. Each has a different leadership styles

LEADERSHIP STYLES
Different types of leadership styles exist in work environments. Advantages and
disadvantages exist within each leadership style. The culture and goals of an organization
determine which leadership style fits the firm best. Some companies offer several leadership
styles within the organization, dependent upon the necessary tasks to complete and departmental
needs.
1. Laissez-Faire (leave alone)
 A laissez-faire leader lacks direct supervision of employees and fails to provide regular
feedback to those under his supervision. No supervision
 Highly experienced and trained employees requiring little supervision fall under the
laissez-faire leadership style. However, not all employees possess those characteristics.
 This leadership style hinders the production of employees needing supervision. The
laissez-faire style produces no leadership or supervision efforts from managers, which
can lead to poor production, lack of control and increasing costs.
2. Autocratic
  The autocratic leadership style allows managers to make decisions alone without the
input of others. Managers possess total authority and impose their will on employees. The
leaders have to make the decision alone
 No one challenges the decisions of autocratic leaders. Countries such as Cuba and North
Korea operate under the autocratic leadership style.
 This leadership style benefits employees who require close supervision. Creative
employees who thrive in group functions detest this leadership style.
3. Participative
 Often called the democratic leadership style, participative leadership values the input of
team members and peers, but the responsibility of making the final decision rests with the
participative leader. Participants can give input and can give idea.
 Participative leadership boosts employee morale because employees make contributions
to the decision-making process. It causes them to feel as if their opinions matter.
 Advantage: When a company needs to make changes within the organization, the
participative leadership style helps employees accept changes easily because they play a
role in the process.
 This style meets challenges when companies need to make a decision in a short period.
4. Transactional
 Managers using the transactional leadership style receive certain tasks to perform and
provide rewards or punishments to team members based on performance results. You are
more on task-oriented, you believe on giving rewards or even sanctions. Your people will
be lead with the motivation of others.
 Managers and team members set predetermined goals together, and employees agree to
follow the direction and leadership of the manager to accomplish those goals.
 The manager possesses power to review results and train or correct employees when team
members fail to meet goals. Employees receive rewards, such as bonuses, when they
accomplish goals.
5. Transformational
 The transformational leadership style depends on high levels of communication from
management to meet goals. Leaders motivate employees and enhance productivity and
efficiency through communication and high visibility. They aim to be an inspiration, they
are more of transforming people
 This style of leadership requires the involvement of management to meet goals. Leaders
focus on the big picture within an organization and delegate smaller tasks to the team to
accomplish goals.

COMMUNICATION IN THE WORKPLACE

Communication is important in organizing jobs and making sure that all tasks and jobs
are accomplished to achieve goals. Communication can take several forms: verbal, written, and
expressed or body language. Moreover, communication is more effective if one uses a
combination of these forms.
 For example, a manager making a presentation to top management ensures that
information is provided in his or her slides and handouts. During the actual presentation, he or
she presents a confident demeanor through body language and posture, and speaks clearly and
well.

Communicating and talking are different things. Talking is just simple goal of ensuring
that the message is understood by the receiver. On the other hand, communicating entails
successfully getting the message across to another person.

Communication is essential in the workplace since the successful accomplishment of

tasks depends on how clearly instructions are conveyed and understood by all members of the
organization. There are, however, barriers that hamper effective communication. The seven
barriers to effective workplace communication are as follows:

BARRIERS TO COMMUNICATION IN THE WORKPLACE

1. Physical barriers
These barriers refer to areas that bar people from gaining access such as closed office doors,
screens, and separate areas for employees of different ranks. Large working areas may also
install separation between departments. Research shows that one way to limit physical barriers is
placing work areas closer together. Proximity aids in communication and closeness among co-
workers.
2. Perceptual barriers
Perception refers to how people look at things. A problem arises when people have different
perspectives about their situation or environment. Often, miscommunication occurs because
some people interpret a situation differently from others. Perceptual barriers have a negative
effect on decision-making which bring about a failure in achieving results.
3. Emotional barriers
These barriers consist of fear, mistrust, and suspicion. These emotions tend to restrict or
block communication lines. Emotional barriers prevent people from expressing their true
feelings, resulting in employees not being open with each other. This may lead to feelings of
vulnerability and a fear of interacting with others. All these negative feelings can interrupt one's
development in communicating with others.
4. Cultural barriers
Joining a group may have both positive and negative effects. When individuals adopt certain
behavioral patterns of a group, they are rewarded through acts of recognition, approval, and
inclusion. However, cultural differences groups may make communication difficult.
5. Language barriers
People from different countries do not speak the same language. Differences in words,
expressions, and even gestures hamper communication. This difficulty is experienced by
multinational companies that employ foreigners and expatriates who do not speak the local
language.
6. Gender barriers
There are distinctions in the speech patterns of men and women that may cause
misinterpretations. Men are generally more straightforward in their interactions while women are
more emotional. Also, it has been observed that men and women have differences when it comes
to the volume of voice, pitch, and intonation.
7. Interpersonal barriers
Interpersonal relationships and personal attitudes can be barriers to communication. Some
individuals are uncomfortable about interacting with others. They prefer to be alone, while others
are friendlier and enjoy interacting with others.
 Now that you have fully understood our first topic which is all about communication in
the workplace, let me guide you to our next topic which is management of change and diversity
in the workplace.

MANAGEMENT OF CHANGE AND DIVERSITY IN THE WORKPLACE

Managers are faced with the challenge of dealing with change both in the internal and
external environment of the business firm. In order to successfully address changes, a manager
must be equipped with the necessary knowledge and skills to guide the company in formulating
plans, implementing changes in processes and operations, and revising aspects of the company
that are no longer relevant to the present conditions.
 Diversity is also an important issue in management. In particular, the increasingly global
nature of business requires managers to be able to deal with people coming from different
countries and cultures.
 Awareness of and respect for cultural diversity is key in establishing business relations,
satisfying customer needs, and ensuring that the organization moves as one in realizing
corporate goals.

Managers should prepare their employees to embrace change. They should also be aware that
organizational culture is dynamic and should shift and adapt to internal and external changes.

Management of Organizational Culture

 Organizational culture consists of the shared set of beliefs and behavior that contribute to
the social and psychological environment within an organization. It is a product of the
organization's history, products and services, market or clientele, of employees, management
style, technology, and the local or national culture.
 The organizational culture often defines the identity of the workers, their views regarding the
organization, behavior, work ethic, and even their personal values
 An entire organization may be defined by a single culture, or several cultures may exist in its
various departments. One department may have certain views, values, or priorities that may
not be shared by other departments. This may lead to friction between departments or
divisions since the differences in perspectives may lead to different interpretations of actions.

Managing Organizational Change

 Every organization goes through a period of that is usually brought about by changes in the
business environment. Organizations are expected to respond to changes in both its
internal and external environments.
 The current pace of development in modern society is characterized by continual change.
The products, services, and technology that are prevalent now may become obsolete in the
succeeding months. This is why businesses and organizations must always be informed of the
latest innovations and emerging trends. Take advantage of them by implementing changes in
their operations, products, and even management style.
 Managers must also ensure that their employees are able to adjust to changes by constant
training and implementation of development programs.
 As global managers immerse themselves in different cultures, they must possess the
following competencies that will help them cope with cultural diversity and better relate to local
cultures.
MULTICULTURAL COMPETENCIES
1. Global managers should possess multicultural communication skills.
Managers have to be knowledgeable in at least one foreign language and be ready to interact
people from different cultures. They need to have a good comprehension of a foreign language,
particularly its nuances, in order to avoid misunderstandings.
2. Global managers should cultivate relationships with people of different cultures.
They should be sensitive to cultural differences and use these to the benefit of the company that
they are representing.
3. Global managers should exercise flexibility.
Since they work with different cultures, global managers should know how to interpret different
behaviors coming from different nationalities. For example, expect a firm long handshake from
the people of Brazil. In France, a quick and light handshake is more acceptable.
4. Successful global managers should have a more contemporary or cosmopolitan view of the
world.
The manager should be aware that the global community where the company operates in is
comprised of diverse cultures. Therefore, global managers should strike a balance in merging
significant aspects of these cultures to bring about the successful operation of the company.
5. Global managers should quickly adjust to a certain culture.
They should not be easily affected by culture shock and should quickly immerse themselves in a
foreign environment.
6. Global managers should know how to build multicultural teams.
Managers should capitalize on cultural diversity and select the best aspects of cultures that would
aid in the achievement of corporate objectives. In establishing departments or work teams,
managers should not only look into qualifications of workers, but should also consider their
cultural backgrounds as some cultures may have traits that could prove useful to the job at hand.
Managing a multicultural team is also a challenge so the manager must be able to handle conflict
or misunderstanding whenever it arises.

FILIPINO AND FOREIGN CULTURES IN ORGANIZATIONS

Filipino-owned organizations exhibit a different organizational culture as compared to

their foreign counterparts. Filipino and foreign culture in organizations exert a big influence on
how managers do their functions and how their subordinates respond to their rules/regulations
and leadership styles. Organizational culture is, therefore, a critical factor in numerous
organizational endeavors.

Shared Values and Beliefs/Practices of Filipinos

Different people from around the world have their own set of values or beliefs that they
share and consider significant as a group or a community. As Filipinos, we are no different from
other groups around the world. Our unique culture also influences our attitudes about work, as
well as our habits.

The following are the three primary Filipino values:

1. Social Acceptance
This value's focus is the desire of Filipinos to be accepted and treated well by others—his or her
family, relatives, friends, and the members of communities/organizations where he or she
belongs—in accordance with his or her status, for what he or she is, and for what he or she has
accomplished.
 2. Economic Security
This value emphasizes that one must have financial stability and that he or she must be able to
stand on his or her own two feet, without incurring debt in order to meet his or her basic material
needs.
3. Social Mobility
This value is concerned with his or her desire to move up the social ladder, to another higher
economic level, to a higher job position, to a position of respect in his or her family or in the
community where he or she lives or in the organizations where he or she belongs, and others.

Influence of Filipinos' Shared Values and Beliefs/ Practices on Organizational Management

The Filipino values of social acceptance, economic security, and social mobility may
have both positive and negative implications to organizational management. All these values
may motivate the Filipino worker to work hard and to be really serious in trying to help achieve
the organization's goals as these will lead to the fulfillment of his primary values.

Managers of organizations will find it easy to manage their firm when their Filipino
workers are guided by the primary values earlier mentioned. However, an exaggerated valuing of
social acceptance, economic security, and social mobility may influence the Filipino worker to
be self-centered, selfish, and unmindful of whether he or she "steps on the toes" of his or her
coworkers, just so he or she could fulfill these values quickly.

Managers of organizations may have a problem managing such obsessive and selfish
Filipino workers since these workers may also be unmindful of following the company's rules on
ethical behavior, on respect for the rights of others, and on maintaining good interpersonal
relations to avoid conflicts.

Take note of the following:

Among the examples of Filipino beliefs and practices are the mañana habit, ningas
cogon, and Filipino time.
The mañana habit pertains to the belief or practice that it is alright to postpone work or
finishing tasks to another day.
Meanwhile, ningas cogon is a Filipino practice that refers to the initial show of
enthusiasm over a project during its beginning and the waning of this interest over the project
over time.
Filipino time pertains to the common Filipino practice wherein arriving 15 to 30
minutes late to work or to both formal and informal meetings with associates and friends is
considered acceptable.

The mañana habit, ningas cogon, and Filipino time all have negative implications to
organizational management. Postponing the completion of tasks, being energetic and
enthusiastic only at the beginning of projects, and coming 15 to 30 minutes late for work or
meetings are all counterproductive and will delay the achievement of company goals.
Managers may also find it difficult to manage Filipino workers with negative beliefs/
practices as it will inevitably result in endless conflicts and scolding to correct their bad habits.

INFLUENCE OF FOREIGN CULTURE ON ORGANIZATIONAL

MANAGEMENT
 A country's culture impacts on the behavior of both administrators/superiors and
subordinates. Knowing their beliefs and values and their cultural dimensions will make it easier
for superiors to manage subordinates and for subordinates to know the management style of their
superiors; also, employees belonging to one culture will have better relations with co-employees
belonging to other cultures because of this.

The following are examples of cultural dimensions:

1. Gender Egalitarianism
This refers to the amount of effort which must be put into minimizing gender discrimination and
role inequalities.
2. Assertiveness
This refers to how confrontational and dominant individuals should be in social relationships.
3. Performance Orientation
This refers to how much individuals should be rewarded for improvement and excellence.
4. Humane Orientation
This refers to how much society should encourage and reward people for being kind, fair,
friendly, and generous

It’s a job well done! At last, we are done with the last topic of this week’s module. As
you end reading this module, always remember that the diversity in today's workplace means we
must be more sensitive to those other cultures, as much as people from other cultures must be
sensitive to yours. Business ethics is a matter of moral values and has a direct effect on how
different cultures treat one another in the workplace. Diversity training can help employers and
employees identify the values that are important in supporting cultural differences. In addition,
education initiatives that focus on how different cultures demonstrate their principles and beliefs
will help workers understand each other’s points of view better.

GENERALIZATION

Communication is a vital tool in ensuring that all members of the organization

understand their tasks and responsibilities, and that all actions and operations are done in a
structured manner. Managers at present are challenged to address concerns regarding change and
diversity in the workplace. The increasingly global nature of business requires managers to
effectively deal with cultural diversity within their organizations and as they interact with their
markets, clients, and stakeholders. Global managers must possess the ability to deal with aspects
of local cultures and adapt quickly to change. Certain aspects of Filipino culture such as mañana
habit, ningas cogon, and Filipino time have an influence on the management styles of Filipino
managers. Filipino businesses adopt a family-centered and paternalistic framework in their
organizations, and this is a trait shared with other Asian cultures and management styles.

CONTROLLING
To ensure that all operations are being conducted at optimal levels, organizations must
develop performance standards during their planning phase. The establishment and
implementation of standards is an important aspect of controlling. Controlling is a major
management function that contributes to the achievement of organizational goals by checking
errors and addressing deviations from established performance standards.
Organizations should identify standards for essential tasks and strive to maintain them.
Whenever performance falls below standards, the organization must take corrective measures to
address this problem. On the other hand, when the organization exceeds its standards in a
particular project or operation, it is advisable to reward the people responsible for such
achievement to reinforce exemplary job performance.
Standards should never be lowered. However, some companies opt to compromise on
standards in order to attain short-term goals. This course of action, however, results in negative
consequences in the long run. Companies must strive to maintain not only the quality of their
operations, services, and products, but should also take advantage of opportunities to further
improve.
DEFINITION AND NATURE OF MANAGEMENT CONTROL
Controlling is an ongoing process that involves members at all levels of the organization.
The control function is the responsibility of everyone; thus, employees are expected to address
problems even if these are not within his or her area of responsibility. The controlling function is
both anticipatory and retrospective.
It anticipates problems so that immediate corrective actions can be employed. It is also
retrospective because it looks back and reviews previous actions and operations in order to
determine which aspects conform to standards and which need improvement. In implementing
controls, managers assume that there is room for adjustments and further improvements.
Controlling is also considered an end function because this is performed after all other
functions are done. It is also a dynamic process because any deviations from standards should be
immediately corrected. Constant monitoring is a vital component of the control process.
The control process involves four main steps. These are as follows:
1. Establishment of standards
The first step is to develop criteria by which performance will be measured. Standards can be
quantitative or expressed in terms of non-measurable elements such as customer loyalty and
goodwill, or they can be quantitative or expressed in terms of measurable standards such as
output, money, or time
2. Measure of performance
Performance is measured by identifying strategic control points. These include indicators such as
income, expenses, inventory, product quality, and the number of work hours put in by
employees. Employee performance can be measured through actual observation. It can also be
measured by using devices that analyze machine operations and production processes.
3. Comparison of the actual performance with the standards
Management can gather data from performance measurement and compare it with the established
standards. The company can also conduct benchmarking by comparing their performance with
exemplary practices from other companies in the industry. Management can also determine the
degree of variation between the standard and the actual performance and check whether the
variation falls within acceptable limits.
4. Taking corrective actions and realigning processes when necessary
When the company has determined that its performance has deviated from the standard,
corrective actions should be taken and applied. Deviations from the standards may be a result of
incorrect planning, a lack of coordination in the conduct of tasks, or the misinterpretation of
instructions. Some companies allow their employees to make necessary corrective measures to
their work. Other employees get directives from management on how to implement necessary
corrections to their jobs.

Now that you have fully acquired the main ideas embedded in the definition and nature of
the controlling function, let’s proceed to the link between planning and controlling.

THE LINK BETWEEN PLANNING AND CONTROLLING

Planning and controlling are closely related management functions. Planning identifies
the goals and standards that an organization should aim for while controlling ensures that the
performance of the whole organization conforms to the outlined plans. Controlling also provides
management with vital information that can be used in the formulation of new plans for the
company.
 During the planning stage, the company sets its goals, develops its vision and mission
statements, and identifies strategies that will be implemented. Once the company implements its
plans, the controlling function becomes the mechanism that ensures that all plans are realized.
Planning provides the baseline of the company's future while controlling becomes the tool that
ensures the company's success.

The link between planning and controlling can be summarized in the diagram below.

The control process enables

managers to ensure synergy between
the planning and controlling functions.
The process ensures that the
organization is on track toward
realizing its plans and enables
management to intervene and address
any deviation from the standard. Once
problems have been addressed, the
organization may choose to make
improvements on their future plans.

CONTROL METHODS AND SYSTEM

In implementing control methods and techniques, the manager must be aware of the
timeliness by which they can apply certain control techniques. Certain control measures may be
applied before, during, and after a certain task or operation. The appropriate measure must be
applied at the correct time to ensure the smooth conduct of operations.
The control measures based on timeliness are as follows:
1. Feedforward control
This type of control anticipates the occurrence of possible problems so that preventive measures
can be implemented before the actual operation. This is commonly practiced by airline
companies. Their personnel conduct extensive check on airplanes to ensure that they are in
proper working condition and that there are no defective parts.
2. Concurrent Control
This type of control is implemented while the activity is in progress. Managers practice
concurrent control to monitor the activity as it happens and address problems as they occur. For
example, office operations are often affected by employees engaging in personal activities like
surfing the web or sending email during office hours. These result in wasted time and lower
productivity among employees. To address this issue, managers monitor the activities of their
employees by using various technologies such as email monitoring.
3. Feedback Control
This type of control is done after the activity. Feedback enables managers to gather information
and determine whether the activity is a success or a failure. Suppose, a company has a target
50/0-increase in sales within a month. At the end of the month, managers gather sales data to
find out if the targeted increase was achieved.
Apart from implementing controls during the conduct of specific tasks and business operations,
organizations also apply various control methods and systems in monitoring and controlling the
general conduct of company operations. Examples of these are as follows:
1. Administrative Control
This technique entails establishing procedures and policies that ensure efficiency in the activities
of the company. Integral to administrative control is the full and timely implementation of
management policies and plans. This technique also utilizes documentation using integrated
information systems and other systems software, and various kinds of reports which are
standardized to ensure complete and consistent information.
2. Delegation
This involves assigning an employee to take responsibility in completing a task. Delegation also
incorporates empowerment as employees are given authority over their tasks, making them
accountable for their own actions.
3. Evaluation
This type of control involves the collection and analysis of information in order to make
decisions. This involves collecting the results of marketing efforts, sales reports, and project
evaluations. Control is exercised in conducting evaluation through the selection of the sources of
information that will be the bases for analysis. Information sources may include project staff,
agencies, and other participants.
4. Financial Reports
Financial figures provide information on how money is spent and how profits are maximized by
the company. Financial reports include balance sheets, income statements, and cash flows. A
company implements control through regular financial audits that ensure that financial
management practices follow generally accepted standards.
5. Performance Appraisal
This provides a general impression of employee performance. Through appraisal, supervisors
and employees are given the opportunity to discuss how they can best meet goals by correcting
or improving subpar performance, and attaining and maintaining exemplary performance.
Appraisal also give opportunities for employees to be rewarded for good performance and for
managers to identify opportunities for training and development to address poor performance.
6. Policies and Procedures
These form part of the internal control of an organization as they guide behavior in the
workplace. Procedures and policies ensure that employees carry out tasks in an effective and
efficient fashion and that directives and instructions are consistent.
7. Quality Control
This control method relies on the quality of products and services as a basis for establishing
performance standards, monitoring results, and comparing results with the standards. Quality
control is defined by the International Organization for Standardization (ISO) as "the operational
techniques and activities that are used to satisfy quality requirements." The ISO is an
international standard-setting body comprised of representatives from national standards
organizations of around 163 countries. The organization develops common international
standards to facilitate world trade, safeguard consumers, and ensure that certified products
conform to minimum standards of quality.
As we proceed to the next subtopic, let me give you a life lesson with regards to the topic. In
life, self-control is strength. Calmness is mastery. You have to get to a point where your mood
doesn’t shift based on the significant actions of someone else. Don’t allow others to control the
direction of your life. Don’t allow your emotions to overpower your intelligence. Now, let’s
proceed to the application of management control in accounting and marketing concepts and
techniques.

APPLICATION OF MANAGEMENT CONTROL IN ACCOUNTING AND

MARKETING CONCEPTS AND TECHNIQUES

Control is applied to many functional areas in the business organization, particularly in

accounting and marketing. These two departments generate important information regarding the
overall performance of the company.
The accounting department provides financial information that can help determine the
financial stability of the organization.
The marketing department, meanwhile, provides data on the company's sales
performance.
As the word “application” implies in the title of the topic, I hope that you are applying all
the important details present in this module as we proceed to the next topic, Accounting or
Financial Controls.

ACCOUNTING OR FINANCIAL CONTROLS

 Financial controls are important tools that determine whether the company is on track
toward achieving its financial goals. Financial ratios are one of the control methods utilized in
financial control. These rely on the information gained from financial statements, which are
formal records of the financial activities of the organization.

The following are some of the main types of financial statements:

1. Balance Sheet
The balance sheet provides a summary of the company's financial position over a period of time.
The balance sheet indicates financial information as of a certain period or date. For example, a
company may issue a balance sheet dated December 31, 2020 reflecting all the transactions made
by the firm until that particular date. A balance sheet is beneficial not only for the company's
management, but also for creditors, suppliers, customers, and other stakeholders.
2. Income Statement
The income statement reports profits earned or losses incurred by the company over a given
period. The time interval is specified in its heading such as "For the Month Ended, January 31,
2020"; "For the Three Months Ended, March 31, 2020" (which means from January 1 to March
31, 2020); or "For the Year Ended December 31, 2020".
They say that control in the marketing world is an important task for it is indispensable for
effective working in the marketing department. To better understand the idea, let’s proceed to
Marketing Controls.

MARKETING CONTROLS
Control is also applicable in the marketing function since setting performance standards
is an important part of developing marketing objectives. To determine the effectivity of
marketing plans and strategies, sales performance is monitored and compared to the established
standards.
Many companies employ a marketing controller who is knowledgeable in both finance
and marketing processes.

There are five types of marketing controls:

1. Strategic control
This refers to processes implemented to control the formulation and execution of strategic plans.
The organization evaluates its activities to determine whether it is taking advantage of
opportunities in terms of target markets and marketing channels. This is the responsibility of top
management and the marketing auditor.
2. Annual plan control
This method uses annual marketing targets as performance standards to determine whether the
planned results or outcomes were achieved.
3. Customer tracking
These are methods that determine customer behavior and their reactions to marketing activities.
These include consumer panels, collecting data on returns and complaints, customer surveys, and
sales force reports. Customer tracking provides a good basis for direct consumer feedback on
satisfaction with the products and services offered.
4. Profit control
This determines the profitability of company activities and where the company is making or
losing money. Profitability is analyzed by product, segment, territory, customer, order size, and
trade channel. A company’s income statement can provide details of the company's profitability.
5. Efficiency control
This keeps track of the efficiency of marketing expenditures such as sales force, advertising,
sales promotion, and distribution. Efficiency control analyzes each of these elements to ensure
that they are being utilized efficiently for the achievement of company objectives.
 Great job! Indeed, you are done reading the whole module! As you end reading the
module, let me share an excerpt from an article “Why It's Important to Take Control of Your
Life” which you should always bear in mind.

“You've spent the better half of your life living in the same old high school mentality.
The only thing you were always focused on doing was growing up. Now that it's happened,
you're frantically moving your foot around, trying to find the brake. Life came at you fast-
almost too fast. One minute you were ready to get a head start on being independent and living
on your own, now you're standing in the middle of it and your head is spinning. Now it's time for
you to find the brakes on life and just pump them a little bit. I don't mean come to a complete
stop, that's a little excessive. You just need to tap them with your toes to slow your speed down a
little bit, enough for you to take in the world around you. There is an entire world of new people
and new experiences around you that you didn't get a chance to take in.”

GENERALIZATION

Controlling is a major management function that contributes to the achievement of

organizational goals by checking errors and addressing deviations from established performance
standards. Controlling is closely related to planning as the plans and strategies formulated by
management become the basis for identifying standards that guide the control process. Control is
implemented in the organization in various ways. Some control methods are based on timeliness
or the stages of production and include feedforward control, concurrent control, and feedback
control. Other control method and systems implemented in the organization include
administrative control, delegation, evaluation, financial reports, performance appraisal, policies
and procedures, and quality control. Finance and marketing are two aspects of a business that
implement control in its operations.

FUNCTIONAL AREAS OF MANAGEMENT

There are several functional areas of management: human resource, marketing,

operations and production, finance, materials and procurement, office management, and
information and communications technology. These are the significant areas that contribute to
the operations of the organization. Managers, therefore, focus their efforts in ensuring that these
areas function efficiently and effectively by implementing the various management functions in
their respective tasks and projects.

As a matter of fact, there are four functional areas of business management in this module
that can help business planners to concentrate on researching and thoroughly understanding the
areas of management as they relate to the individual business. Let’s start with the first functional
area, Human Resource Management.

HUMAN RESOURCE MANAGEMENT

What is Human Resource Management?
 Human Resource Management (HRM) includes tasks and activities performed by HR
managers, HR specialists, and operating managers. These operating managers include
supervisors, managers, department heads, directors, and vice presidents.
 If human resources are not managed properly, they can adversely affect the utilization of
material resources such as money, raw materials, and equipment resulting in a decline in
organizational effectiveness.
 The effective management of human resources has a significant impact on operations and
production.
How does Human Resource Management function in an organization?
 Smaller organizations may have no human resource departments and operating managers
assume many HR tasks and responsibilities. For large organizations, HR work is covered
by human resource management. Larger companies which are comprised of at least 200
to 500 employees establish human resource departments to address the various tasks
related to human resource management.
 The success of any organization depends primarily on the hiring, placement, and
development of employees. That is why HR specialists must ensure the quality of the
hiring and training processes of the organization.

As a field, HRM has undergone many changes over the last twenty years, giving it an
even more important role in today's organizations. As we continue with the areas of
management, let’s proceed to the area that focuses on the practical application of marketing
orientation, techniques and methods inside enterprises and organizations and on the management
of a firm's marketing resources and activities- Marketing Management.

MARKETING MANAGEMENT

What is Marketing Management?

 Marketing management involves overseeing the development of new products,
advertisements, promotions, and sales.
 In small companies, the owners do the actual marketing activities such as selling, advertising,
and promotions.
 Large companies, on the other hand, have their own marketing and sales department that
oversees the marketing activities of the organization. This department is composed of
employees who are assigned various tasks.
How does a Marketing Director and Manager work in an organization?
 The marketing director is tasked with managing the overall marketing operations of the
organization. Extensive knowledge in advertising, finance, and planning are crucial in this
position. The marketing director must effectively manage both the budgeting and the creative
process. Apart from having a marketing director, some companies also appoint a vice
 president for marketing management.
 Marketing managers are tasked with developing strategies for the brand by analyzing the
demand for the product or service. They monitor the activities and strategies of competitors
and formulate strategies to maintain awareness of and demand for the brand. They also
identify potential markets, distributors, and competitors. Marketing managers also deal with
customers, distributors, and government agencies in the course of their work. Marketing
managers are also called product managers of brand managers.
How essential is promotion in marketing?
 Another important aspect of marketing is promotion. This ensures that the information or
message reaches the appropriate clientele and awareness is raised regarding the product
or service being marketed. Promotion managers supervise all promotional activities of the
firm. These activities encompass all activities for dealers, distributors, and consumers.
Promotion specialists assist in the preparation of promotional materials such as coupons,
flyers, pamphlets, brochures, gifts, and discount cards. They also provide support in the
preparation of contest mechanics and events such as trade shows to promote the product
or service.

Generally speaking, the purpose of marketing management is to develop, establish and

maintain marketing strategies to meet organizational objectives. We continue the discussion to
the second area that creates the highest level of efficiency possible within an organization-
Operations Management.

OPERATIONS MANAGEMENT

What is Operations Management?

 Operations management focuses on designing and controlling production and business
operations related to production. It involves management of facilities, processes, distribution,
and resource planning. The operations department is staffed by personnel who are tasked
with ensuring the smooth flow of production and related activities.
How does Production Managers function in an organization?
 Production managers deal with the resource and service requirements of manufacturing or
production. Their managerial tasks vary from one organization to another since production
tasks branch out into several operations like production scheduling, procurement,
maintenance, and equipment and facilities repair.
 Production managers also manage quality specifications, inventory control, and coordinate
production tasks with other departments in the organization. The most crucial task of
production managers is to ensure a smooth flow of activities through production scheduling.
 The production manager has to make sure that the plant meets the production quota,
considering financial and time constraints. Production techniques are employed based on the
requirements set by top management.
 Production supervisors, on the other hand, are assigned to specific parts of the assembly line
or production area. They oversee production operators who do the actual production work.
Production supervisors regularly report to the production managers.

The next management area that you will be reading is considered to be vital activity in
any organization. It processes planning, organizing, controlling and monitoring financial
resources with a view to achieve organizational goals and objectives- Financial Management.

FINANCIAL MANAGEMENT

What is Operations Management?

 Finance is considered the "lifeblood of business" since all organizations need financing to
meet their sales requirements and sustain operations. Finance is defined as the art and science
of managing money. It can also be defined as the effective acquisition and management of
the assets of an organization. The organizational function of finance is the procurement and
effective utilization of company funds.
How does a Finance Manager work in an organization?
 All firms have a finance manager that supervises all finance operations. Finance managers
raise funds, invest in assets, and manage them effectively in an economically unstable
environment. They allocate resources efficiently to ensure that these contribute to the growth
of the organization.
 The head of the finance department in large companies is called the chief financial officer
(CFO). The CFO reports directly to the president or chief executive officer (CEO).

What comprises the finance personnel in an organization?

The finance department is composed of finance personnel that include the treasurer and
controller.
 The treasurer is mostly involved in major areas of financial management such as investment,
financing, and asset management. Treasurers are responsible for overseeing budget
requirements and assessing investment opportunities and risks. They also implement
strategies for capital investment.
 The controller is tasked with preparing financial reports such as income statements, balance
sheets, and cash flows. These reports help in assessing the financial position of the
organization. Controllers also supervise the accounting, audit, and budget departments.

Finance managers direct the activities of the finance department and are responsible for
making major financial decisions for the company. They formulate comprehensive strategies and
outline corresponding plans for the other personnel in the department.

INFORMATION AND COMMUNICATION TECHNOLOGY MANAGEMENT

What is Information and Communication Technology Management?

 Information technology refers to the application of computer and telecommunications
technology to store, manage, and transmit data in businesses and other organizations.
Implementation of technology in information management requires the creation of
information systems to handle data specific to certain organizations.
How does information systems work?
 Information systems are organized systems or networks that collect, store, and disseminate
information required to support key organizational functions. Collected data are processed by
the systems through three basic activities: input, processing, and output. From a business
standpoint, an information system provides another option for a firm in solving problems and
overcoming obstacles faced by their organization.
 Information systems are now an indispensable tool in conducting business. Managers can
utilize these in accessing and managing the crucial information that they need to perform
their management functions. Information technology is extensively used in business
operations, with many of the information regarding processes, personnel, clients, suppliers,
and market statistics now provided in electronic formats for easy access and exchange.
 Because of the growing importance of information technology, information systems have to
ensure that the organization achieves operational excellence; implements improved decision
making; gains competitive advantage; and establishes well-structured and easily managed
day-to-day operations.

Generally, the four functional areas of business management involve marketing

management, operations management, financial management, and information and
communication technology management. Therefore, all business planners should concentrate on
researching and thoroughly understanding these areas as they relate to the individual business.

SPECIAL TOPICS IN MANAGEMENT

Management and organizational behavior are affected by multiple issues within an

organization, from the type of work done, to the industry, to the rules and policies of the
company. All of these elements work together to establish a culture within an organization and to
provide direction and guidance for employees as they go about their day-to-day work.

How do issues within an organization affect its management and the organizational
behavior?

Employee Productivity
 Employee productivity is a concern for any organization, and it is a topic directly affected
by management and organizational behavior. Management sets the standards for the
organization, and managers, in turn, serve as role models for employees. Their behaviors
and actions are closely monitored, with the expectation that they “walk the talk.”
 In addition, managers must provide the tools, resources and education that employees
need to effectively perform their jobs.

Employee Safety
 Employee and customer safety are critical organizational behavior issues. Employers are
legally and morally responsible to ensure the health and safety of their employees. This is
accomplished through policy as well as through the inspection and maintenance of
equipment, the provision of safety equipment and clothing, and training to ensure that
employees know how to avoid accidents and injury on the job.

Employee Training
 Employers hire employees who have backgrounds that help them get the job. But that
background is rarely enough to ensure effective performance over time. Consequently,
organizational behavior is affected by training provided to employees internally and
through external resources.
 Training is generally focused on improving or strengthening existing skills, learning
about new technology or regulatory requirements that impact how the work is done, and
staying up-to-date on changes in the environment that can change how work is done.

So basically, management contributes a big impact in achieving organizational goals. It

sets principles relating to the functions of planning, organizing, directing and controlling, and the
application of these principles in harnessing physical, financial, human, and informational
resources efficiently and effectively to achieve organizational goals. At this point, you are now
down to another topic that refers to the process of aligning and coordinating all aspects of a small
business, whether it's managing your employees, suppliers, business finances, its roadmap or
performing your daily tasks- Small Business Management and Entrepreneurship.

SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP

What does it take to start a business?

  Running a business takes copious amounts of time and effort. Small business owners are
responsible for managing all aspects of their company. Management is commonly
defined as the alignment and coordination of multiple activities in an organization.
Business owners use management skills to accomplish the goals and objectives of their
company. Small business management requires business owners to use a mix of
education, knowledge and expertise to run their company.
 An entrepreneur is a person who owns a small business and staffs it as needed to meet
customer needs. Entrepreneurship means that a business owner will focus on creating a
market for his/her products or services based on a business plan. This focus on testing a
business idea requires an entrepreneur to decide early on if he will assume the role of
small business manager or hire another person to oversee daily operations.

 An entrepreneurship is a business or other organization started by an entrepreneur, or

businessperson. The enterprise can be for profit or be a non-profit venture. Business
management skills, marketing knowledge, an understanding of the demand of the product
or service as well as risk management analysis are all crucial considerations in an
entrepreneurship.

How does an entrepreneur use the skills to improve the businesses performance and why
are these important to the success of the business?

 Risk management is important when starting up a new business, especially as many

enterprises fail in the first year. Expenses have to be covered and the entrepreneur must have
the initiative and time available to invest in the enterprise. The risks such as start-up funds
that could be lost have to be calculated and then deemed acceptable by the prospective
entrepreneur before he or she goes ahead with the entrepreneurship.
 The demand for the product or service also has to be calculated carefully by the prospective
entrepreneur. What is the expected demand for the product or service? Will the business be
able to meet the expected demand? These are just some of the questions that need to be
answered before deciding if an entrepreneurship is a good idea.
 Marketing knowledge is also essential for the entrepreneur. He or she must understand how
to promote the product or service, what price it should be sold for, how and when the product
will be produced and how and where the product will be sold. There are many marketing
details to be figured out if the entrepreneurship is to be a success.
 Business management skills such as planning, budgeting, record-keeping and negotiating
are also important to an entrepreneurship. The entrepreneur must be able to work well alone
on many different aspects of the business, at least until employees are hired.
Entrepreneurships are considered beneficial to the economy as they usually create new jobs
as they experience growth.
 Non-profit entrepreneurships can provide needed community services, but they require the
same skills as for-profit businesses. These entrepreneurships must meet regulations about
how donations are used and often must have their finances publicly displayed. Most non-
profit entrepreneurships rely on volunteers to meet their objectives.

This time, you will learn a course about money-making enterprise where business owners
are related to one another by blood or by marriage. This may be defined as any business in
which two or more family members are involved and the majority of ownership or control lies
within a family, Family Business Enterprise.
 FAMILY BUSINESS ENTERPRISE

What is a family business enterprise?

 Family firms are those in which the family controls the business through involvement in
ownership and management positions. Family involvement in ownership (FIO) and
family involvement in management (FIM) is measured as the percentage of equity held
by family members and the percentage of a firm’s managers who are also family
members.
 The family business is a business governed and/or managed with the intention to shape
and/or pursue the vision of the business held by a dominant coalition controlled by
members of the same family or a small number of families in a manner that is potentially
sustainable across generations of the family or families.

How does a business enterprise qualify as a family business?

A firm of any size is a family business if:
 The majority of decision-making rights are in the possession of the natural person(s) who
established the firm, or in the possession of the natural person(s) who has/have acquired
the share capital of the firm, or in the possession of their spouses, parents, child, or
children’s direct heirs.
 The majority of decision-making rights are indirect or direct.
 At least one representative of the family or kin is formally involved in the governance of
the firm.
 Listed companies meet the definition of family enterprise if the person who established or
acquired the firm (share capital) or their families or descendants possess 25% of the
decision-making rights mandated by their share of capital.
Starting your business can seem overwhelming. What do you need to do? Where should
you start? To guide you through the process, read the following contents provided.

STARTING A BUSINESS: LEGAL FORMS AND REQUIREMENTS

How do you identify the legal form of a business?

 The legal form of business is determined by its ownership or proprietorship. A business
may be a single-proprietorship, a partnership, a corporation, or a cooperative.

Why and where should a business be registered?

 Businesses or entrepreneurial ventures have to be registered in compliance to Philippine
laws. Without proper registration in authorized government agencies, the business cannot
operate legally. Registering also gives credibility to businesses, hence, helping earn the
trust of customers, suppliers, partners, and other stakeholders.
 Registration documents have to be submitted to the Department of Trade and
Industry (DTI) and the Securities and Exchange Commission (SEC) for commercial
registry.
 Barangay office, for clearance and securing a community tax certificate; city mayor’s
office for mayor’s permit and license to operate; city or national government agencies for
sector-specific licenses/permits.
 Bureau of Fire Protection for fire safety clearance; Bureau of Internal Revenue for
taxation purposes; Pag-IBIG Fund (Home Development Mutual Fund) office for
 employees’ housing needs/security; and the Department of Labor and Employment for
labor statistics.

GENERALIZATION

Management functions are applied in several functional areas of the business

organization. Apart from exercising the major of planning, organizing, staffing, leading, and
controlling, managers are also expected to be familiar with specialized areas of their organization
as they will be managing specific tasks and operations to ensure the success and profitability of
the.
Human resource (HR) management is a major functional area that primarily deals with
the staffing function of management. The department in charge of this function is tasked with the
recruitment of potential asset employees for the company. HR managers also see to it that
employees their fullest potential and abilities and ensure the work satisfaction of the workforce.
Management involves the task of overseeing the development of new products, advertisement,
promotions, and sales.
Business organizations establish marketing and sales departments to handle marketing
activities for the organization. Marketing managers plan strategies to market products and
services, identify the means to implement advertising and the effective channels to engage the
market, and determine courses of action in maintaining the company’s market share and sales.
Operations management is primarily involved in manufacturing or production. The
managerial tasks in the corresponding department involve several operations like production
scheduling; procurement, maintenance and repair of equipment and facilities; management of
quality specifications; inventory control; and coordination with various departments. Managers
ensure that the work processes, systems, and conditions within the workplace contribute to
efficient and productive operations.
Financial management has the task of acquiring funds and effectively utilizing them for
the operations of the company. Finance managers oversee all financial operations of the business
which include fund-raising, asset investment, resource allocation, and overall financial
management.
Information and communication technology management ensures the optimum
performance of the information systems used in the organization. This ensures that all operations
of the business run smoothly, transactions are documented, and records are easily accessed.
Maintaining good information systems ensure effective decision making and excellent
operations, and gives the organization a competitive advantage over other companies.
An entrepreneur is an individual who establishes a business for the purpose of achieving
profit. Entrepreneurs identify business opportunities and acquire and organize the resources
needed for such business. Entrepreneurs must have initiative and should be self-reliant. They
should also be capable of coming up with big ideas and know how to achieve them.
Family businesses are prevalent worldwide. In the Philippines, many of the most
profitable and renowned businesses are owned by families. Family-owned businesses employ a
more personal approach in management which is an advantage' since the family is invested in the
business and motivated to see to its success. In addition, employees are treated as members of an
extended family and the management often sees their welfare. On the other hand, the unique
management style in family business can bring about challenges such as personal conflict
affecting business decisions and operations of the company, lack of objectivity in making
decisions and dealing with business situations, and the unreliability of management since not all
family members are competent managers.
Small businesses generally do not generate as much revenue as large corporations,
However, collectively, these businesses serve as the backbone of the local economy. Small
businesses, for instance, provide job opportunities to a lot of Filipinos in the country. In
consonance with this, they provide training and opportunity to work for higher corporate jobs to
the younger and inexperienced workforce which eventually increases the country's pool of local
professionals in the long run. Lastly, larger companies also outsource the services of smaller
businesses thus creating an avenue for the latter to penetrate into higher corporate job positions.
There are several requirements that entrepreneurs should take note of before starting their
businesses. The basic permits and certificates which entrepreneurs should secure are Barangay
Clearance, Mayor's Permit, DTI Business Name Certificate, SEC Certificate of Registration, BIR
Certificate of Registration, SSS/ PhilHealth, Pag-lBIG Employer's Registration, and DOLE
Registration. Businesses engaging in special operations or industries should procure additional
special permits.