flowchart LR
P[Planning] --> O[Organising]
O --> S[Staffing]
S --> D[Directing]
D --> C[Controlling]
C -. Feedback .-> P
CO[Coordination —<br/>essence of management] -. runs through all .-> P
CO -. runs through all .-> O
CO -. runs through all .-> S
CO -. runs through all .-> D
CO -. runs through all .-> C
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3 Functions of Management — Planning, Organising, Staffing, Directing, Controlling
3.1 The Five Functions
If the previous topic answered what management is, this one answers what managers do. Henri Fayol’s original five — plan, organise, command, coordinate, control (1916) — were re-grouped into the modern textbook sequence used by Koontz & Weihrich and Robbins & Coulter: Planning, Organising, Staffing, Directing (Leading), Controlling. Coordination is no longer counted as a separate function — it is treated as the essence that runs through all the others. Luther Gulick and Lyndall Urwick’s expanded mnemonic POSDCORB (1937) — Planning, Organising, Staffing, Directing, Co-ordinating, Reporting, Budgeting — is still examined.
TipFunction listings — three to memorise
| Listing | Functions | Origin |
|---|---|---|
| Fayol’s five (POCCC) | Plan, Organise, Command, Coordinate, Control | Henri Fayol, Administration Industrielle et Générale (1916) |
| POSDCORB (7) | Planning, Organising, Staffing, Directing, COordinating, Reporting, Budgeting | Gulick & Urwick, “Papers on the Science of Administration” (1937) |
| Modern five (POSLC / POSDC) | Planning, Organising, Staffing, Leading/Directing, Controlling | Koontz, Robbins, Stoner — current textbook standard |
NotePYQ cue — Fayol vs Koontz
“Command” appears only in Fayol’s original list. The modern textbook substitutes “Directing” or “Leading”. If the stem cites commanding, expect Fayol; if it cites leading, expect Koontz or Robbins.
3.2 Planning
Planning is deciding in advance what to do, how to do it, when to do it and who is to do it (Koontz & Weihrich). It is the primary function — every other function works on what planning has set down. Planning bridges the gap between where the organisation is and where it wants to be.
3.2.1 Nature of Planning
TipSix features of planning
- Goal-oriented — every plan exists to achieve a stated objective.
- Forward-looking — concerned with the future, never the past.
- Pervasive — applied at all levels and in every department.
- Intellectual — requires thinking, judgement and foresight.
- Continuous — once a plan ends, the next one begins.
- Integrated — strategic, tactical and operational plans must align vertically.
3.2.2 Steps in Planning — Koontz & Weihrich (8 steps)
TipEight Steps in the Planning Process
| # | Step | What happens |
|---|---|---|
| 1 | Being aware of opportunities | Scanning the environment — external (PESTEL) and internal (SWOT) |
| 2 | Establishing objectives | Setting targets — what, where, by when, how much |
| 3 | Developing premises | Forecast assumptions about the planning environment |
| 4 | Identifying alternatives | Listing possible courses of action |
| 5 | Comparing alternatives | Evaluating against objectives and premises |
| 6 | Choosing an alternative | The point of decision |
| 7 | Formulating derivative plans | Sub-plans to support the master plan |
| 8 | Numberising plans by budgeting | Converting plans into measurable resource allocations |
NotePlanning Premises
Premises are the forecast assumptions against which plans are made. They are classified by:
- Origin — internal vs external.
- Nature — tangible vs intangible.
- Controllability — controllable (advertising spend), semi-controllable (employee productivity), uncontrollable (inflation, war).
- A common PYQ stem: “Forecast assumptions about the environment in which a plan is to be implemented are called _____ .” → Planning premises.
3.2.3 Types of Plans — The Hierarchy
TipA Hierarchy of Plans (Koontz)
| Plan type | Time horizon | Used for | Example |
|---|---|---|---|
| Mission / Purpose | Indefinite | Why the organisation exists | “To organise the world’s information” (Google) |
| Objectives / Goals | Long to short | Targets | Achieve 15 % ROI |
| Strategies | Long-term (3–5 years +) | Direction in face of competition | Cost-leadership, differentiation |
| Policies | Continuing | Boundaries for repeated decisions | “Promotion is from within” |
| Procedures | Continuing | Required sequence of steps | Steps to process a refund |
| Rules | Continuing | Specific dos and don’ts | “No smoking on shop floor” |
| Programmes | Project-bound | Coordinated bundle of activities | New-product launch programme |
| Budgets | Typically one year | Plans expressed in numbers | Annual revenue and capex budget |
NoteStanding plans vs Single-use plans
- Standing plans are used repeatedly: policies, procedures, rules. They guide recurring decisions.
- Single-use plans are made for one specific situation: programmes, projects, budgets. They retire after the situation passes.
By scope and level:
TipStrategic vs Tactical vs Operational
| Plan level | Made by | Time | Concern |
|---|---|---|---|
| Strategic | Top management | 3–5 years + | Direction, competitive position |
| Tactical | Middle management | 1–3 years | Translation of strategy into department targets |
| Operational | Lower management | Days–months | Day-to-day execution |
3.2.4 MBO — Management by Objectives
Peter Drucker introduced Management by Objectives in The Practice of Management (1954) and George Odiorne extended it in Management by Objectives (1965). MBO is a planning + performance system in which superior and subordinate jointly set specific, measurable objectives, periodically review progress, and reward on the basis of objective achievement.
TipMBO process
| Step | Activity |
|---|---|
| 1 | Set organisational objectives (top) |
| 2 | Cascade them down — department and individual |
| 3 | Joint goal-setting between superior and subordinate |
| 4 | Implement with autonomy |
| 5 | Periodic progress review |
| 6 | Appraisal and reward |
| 7 | Recycle — feed lessons into the next round |
SMART — Specific, Measurable, Achievable, Relevant, Time-bound — is the modern test of a usable objective (George Doran, Management Review, 1981).
NoteDrucker’s eight key result areas
Drucker listed eight areas where objectives must be set: market standing · innovation · productivity · physical and financial resources · profitability · manager performance and development · worker performance and attitude · public responsibility.
3.3 Organising
Organising arranges resources and activities into a structure that lets the plan be executed. Koontz defines it as “the process of identifying and grouping the work, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work together effectively”.
3.3.1 Steps in Organising
TipFive steps in organising
- Identify activities required to reach the objectives.
- Group activities into manageable units (departments).
- Assign authority and responsibility to each position.
- Establish reporting relationships and communication channels.
- Provide for coordination across departments.
3.3.2 Building Blocks of Organising
TipKey concepts in organising
| Concept | Meaning | Why it matters |
|---|---|---|
| Authority | Right to act and command | Flows down the scalar chain |
| Responsibility | Obligation to perform | Flows up; cannot be delegated |
| Accountability | Liability for results | Flows up; cannot be passed on |
| Power | Ability to influence (formal + informal) | Wider than authority — see French & Raven’s five bases |
| Delegation | Transfer of authority for specific tasks | Frees the manager, develops the subordinate |
| Span of management / control | Number of subordinates one manager can supervise | Narrow span → tall structure; wide span → flat structure |
| Centralisation / Decentralisation | Where decisions are taken | Trades control vs responsiveness |
| Departmentation | Basis for grouping activities | Function, product, region, customer, process, matrix |
NoteTagline
The principle “authority can be delegated, responsibility cannot” recurs in NTA stems. It is often paraphrased: “a manager is accountable to the superior for whatever the subordinate does”.
3.3.3 Span of Control — Graicunas’s Formula
V.A. Graicunas (1933) proposed a mathematical formula for the relationships a manager must monitor as the span grows. If a manager has n subordinates, the total relationships are:
\[R = n \left( \frac{2^n}{2} + n - 1 \right)\]
TipGraicunas table — relationships grow combinatorially
| n (subordinates) | Relationships R |
|---|---|
| 2 | 6 |
| 3 | 18 |
| 4 | 44 |
| 5 | 100 |
| 6 | 222 |
| 7 | 490 |
The lesson: span of control should be kept narrow because the relationships a manager must monitor explode with each additional subordinate. Modern textbook ranges: narrow span 4–8 subordinates; wide span 10–20+ in flat, knowledge-work organisations.
3.3.5 Departmentation — Six Bases
TipBases of departmentation
| Basis | Example |
|---|---|
| Functional | Production, marketing, HR, finance |
| Product / Division | Lighting, healthcare, transportation (GE-style) |
| Geographic / Territory | North, South, East, West zones |
| Customer | Retail, corporate, government clients |
| Process / Equipment | Forging, machining, painting, assembly |
| Matrix | Functional × Product (two-boss system) |
The detailed treatment of organisation structure — Mintzberg’s five parts, mechanistic vs organic, contingency factors — appears in Topic 5 of this chapter.
3.4 Staffing
Staffing fills and keeps filled the positions in the organisation structure. Koontz lists eight elements — manpower planning, recruitment, selection, placement, training and development, performance appraisal, compensation, and separation.
TipThe Staffing Cycle
| Stage | Activity | Output |
|---|---|---|
| Manpower planning | Forecast people needs | Number and kind of people required |
| Recruitment | Attract a pool of candidates | Application list |
| Selection | Choose from the pool | Offer letter |
| Placement & induction | Put on the job, orient | Employee at workstation |
| Training & development | Improve skills and knowledge | Capable employee |
| Performance appraisal | Measure on the job | Feedback, ratings |
| Compensation | Reward for performance | Pay, benefits |
| Separation | Retirement, resignation, dismissal | Position to be re-filled |
NoteIndependent function or sub-function?
Staffing is treated as an independent function in modern texts (Koontz, Robbins, Stoner). Older Indian texts and Fayol’s listing fold it into organising or directing. The HR-specific aspects are taken up in detail in Chapters 2 and 3 of this book.
3.5 Directing (Leading)
Directing is the executory function — it sets people in motion. Its four sub-functions are supervision, motivation, leadership and communication.
TipFour pillars of directing
| Pillar | What it does | Theory anchor |
|---|---|---|
| Supervision | Overseeing the work of subordinates | Span of control; Likert’s four systems |
| Motivation | Inspiring willingness to work | Maslow, Herzberg, McClelland, Vroom, Adams |
| Leadership | Influencing people toward goals | Trait, behavioural, contingency, transformational |
| Communication | Exchanging meaning | Shannon-Weaver, Berlo SMCR (Topic 3) |
3.5.1 Motivation theories — quick anchors
TipMotivation theories — at a glance
| Theory | Author | Year | Core idea |
|---|---|---|---|
| Hierarchy of needs | Abraham Maslow | 1943 | Five levels — physiological → safety → social → esteem → self-actualisation |
| Two-factor theory | Frederick Herzberg | 1959 | Hygiene factors prevent dissatisfaction; motivators produce satisfaction |
| Theory X / Theory Y | Douglas McGregor | 1960 | Two opposing assumptions about workers |
| ERG theory | Clayton Alderfer | 1969 | Existence, Relatedness, Growth — collapses Maslow |
| Three needs theory | David McClelland | 1961 | Need for Achievement, Affiliation, Power |
| Expectancy theory | Victor Vroom | 1964 | Motivation = Expectancy × Instrumentality × Valence |
| Equity theory | J. Stacy Adams | 1963 | People compare input/output ratios with referents |
| Goal-setting theory | Locke & Latham | 1968 onward | Specific, difficult goals lift performance |
3.5.2 Leadership styles — quick anchors
TipLeadership styles — at a glance
| Style / model | Author | Key idea |
|---|---|---|
| Autocratic / Democratic / Laissez-faire | Kurt Lewin (1939) | Three styles based on decision authority |
| Managerial Grid | Blake & Mouton (1964) | Concern for People (1–9) × Concern for Production (1–9); 9,9 is “team management” |
| Contingency model | Fred Fiedler (1967) | Leader–member relations + task structure + position power determine fit |
| Path-Goal | Robert House (1971) | Leader clears the path to subordinate goals |
| Situational | Hersey & Blanchard (1969) | Style varies with follower readiness — telling, selling, participating, delegating |
| Transactional vs Transformational | Bass (1985), Burns (1978) | Exchange-based vs vision-and-charisma-based |
Detailed treatment of motivation and leadership belongs to the OB chapter (Topics 15–18).
3.6 Controlling
Controlling is the function that closes the loop: it measures actual performance against planned standards, identifies deviations, and triggers corrective action. Koontz defines it as “the measurement and correction of performance to make sure that enterprise objectives and the plans devised to attain them are accomplished”.
3.6.1 The Control Process
flowchart LR
S[1. Establish<br/>standards] --> M[2. Measure<br/>actual performance]
M --> C[3. Compare with<br/>standards]
C --> A{4. Deviation?}
A -- Yes --> CR[5. Take<br/>corrective action]
A -- No --> OK[Continue]
CR -. feedback .-> S
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The four standard steps are Standards → Measurement → Comparison → Corrective action. The feedback loop makes management a closed-loop activity — the output of control feeds the next round of planning.
3.6.2 Types of Control
TipThree control types by timing
| Type | Timing | Example |
|---|---|---|
| Feedforward (preventive) | Before the activity | Inspecting raw material before production |
| Concurrent (real-time) | During the activity | Supervisor on the shop floor; SCADA dashboard |
| Feedback (post-action) | After the activity | Variance analysis at month-end |
By focus — strategic / tactical / operational (mirroring planning levels); by what is being controlled — financial, quality, inventory, behavioural.
3.6.3 Techniques of Control
TipCommon control techniques
| Technique | What it controls | Where it lives |
|---|---|---|
| Budgetary control | Costs, revenues, capex | Finance |
| Standard costing & variance analysis | Cost performance | Finance / production |
| Statistical Quality Control (SQC) | Process quality | Production |
| Break-even analysis | Sales–cost–profit relationship | Finance / marketing |
| Ratio analysis | Financial performance | Finance |
| Internal audit | Compliance and process integrity | Audit |
| Management Information System (MIS) | Information for decisions | IT / management |
| Balanced Scorecard (Kaplan & Norton, 1992) | Multi-dimensional performance | Strategy |
| PERT / CPM | Project schedules | Operations |
| Six Sigma — DMAIC | Process variation | Quality |
NoteManagement by Exception (MBE)
A control discipline credited to F.W. Taylor and codified by Lester R. Bittel (1964): managers should focus only on significant deviations from standard and let routine variances be handled by subordinates. The principle prevents managerial overload.
Robert N. Anthony’s distinction between strategic planning, management control and operational control (1965) is a useful frame at the postgraduate level.
3.7 Coordination — the Essence
Mary Parker Follett described coordination as “the orderly arrangement of group effort to provide unity of action in the pursuit of a common purpose” (Dynamic Administration, 1941). Coordination is not a sixth function — it is the thread that runs through all five.
TipFollett’s four principles of coordination
| Principle | Meaning |
|---|---|
| Direct contact | People at all levels meet face-to-face, not only through paper |
| Early stage | Coordination must begin during planning, not after execution |
| Reciprocal relationship | Every part affects and is affected by every other part |
| Continuity | Coordination is a continuous, never-ending process |
NoteCoordination vs Cooperation
- Coordination is a managerial function — it is deliberate, orderly, and aimed at unity of action. It can be enforced.
- Cooperation is voluntary — willing collaboration among individuals. It cannot be enforced.
- Coordination is broader; cooperation is one of its inputs.
3.8 Practice Questions
Q 01
Five Functions
Easy
Which of the following is not a managerial function in the Koontz–Weihrich classification?
View solution
Correct Option: C
Koontz–Weihrich's five functions are Planning, Organising, Staffing, Directing/Leading, Controlling. Marketing is a business function, not a management function.
Q 02
POSDCORB
Medium
The "B" in POSDCORB stands for:
View solution
Correct Option: B
POSDCORB = Planning, Organising, Staffing, Directing, CO-ordinating, Reporting, Budgeting (Gulick & Urwick, 1937).
Q 03
Function Matching
Medium
Match the function with its description:
| (i) | Planning | (a) | Filling positions in the organisation |
| (ii) | Organising | (b) | Measuring and correcting performance |
| (iii) | Staffing | (c) | Deciding in advance what to do |
| (iv) | Controlling | (d) | Grouping activities and assigning authority |
View solution
Correct Option: A
Planning → deciding in advance; Organising → grouping activities; Staffing → filling positions; Controlling → measuring and correcting.
Q 04
Primary function
Easy
Which is rightly called the "primary function" of management — the one on which the others depend?
View solution
Correct Option: B
Planning sets the objectives and the course; every subsequent function works on what planning has set down.
Q 05
Planning Premises
Medium
Forecast assumptions about the environment in which a plan is to be implemented are called:
View solution
Correct Option: C
Planning premises are the assumptions under which plans operate — economic, political, technological, social. Koontz lists them as Step 3 of the planning process.
Q 06
Types of Plans
Medium
"Promotion is from within" is best classified as a:
View solution
Correct Option: B
A policy is a continuing guide to repeated decisions — it leaves room for managerial discretion. A rule is rigid (no discretion); a procedure is a sequence of steps.
Q 07
Standing vs Single-use
Medium
Which of the following is a "single-use" plan?
View solution
Correct Option: D
Single-use plans (programmes, projects, budgets) retire after the situation passes. Standing plans (policies, procedures, rules) guide recurring decisions.
Q 08
MBO
Easy
Management by Objectives (MBO) was popularised by:
View solution
Correct Option: C
Peter Drucker introduced MBO in The Practice of Management (1954). The standard test of objectives is SMART.
Q 09
SMART
Easy
In the SMART criterion for objectives, "A" stands for:
View solution
Correct Option: B
SMART = Specific, Measurable, Achievable, Relevant, Time-bound (George Doran, 1981).
Q 10
Delegation
Easy
"Authority can be delegated, but ____ cannot." Fill in the blank.
View solution
Correct Option: B
A bedrock principle of organising: responsibility cannot be delegated. A manager remains accountable to the superior for whatever the subordinate does.
Q 11
Span of Control
Easy
A "wide span of management" tends to produce a structure that is:
View solution
Correct Option: B
Wide span → fewer levels → flat. Narrow span → more levels → tall.
Q 12
Graicunas
Hard
V.A. Graicunas's formula for the relationships a manager must monitor predicts that with 5 subordinates there are:
View solution
Correct Option: C
Graicunas (1933): R = n(2^n/2 + n − 1). For n=5: 5(16 + 4) = 100. For n=6 it jumps to 222 — the lesson is to keep span narrow.
Q 13
Authority Types
Medium
A legal counsel who advises but does not command line departments exercises which type of authority?
View solution
Correct Option: B
Staff authority is advisory. Line authority commands the chain; functional authority is a limited grant of command in a specialist area.
Q 14
Coordination
Easy
Coordination is best described as:
View solution
Correct Option: C
Coordination is the essence, not a separate function. Mary Parker Follett described it as the orderly arrangement of group effort for unity of action.
Q 15
Coordination vs Cooperation
Medium
Which of the following statements is correct?
View solution
Correct Option: B
Coordination is a *managerial function* — it can be enforced. Cooperation is *voluntary* willingness to work together and cannot be enforced.
Q 16
Control Timing
Easy
A control system that operates before the activity begins is called:
View solution
Correct Option: C
Feedforward = before; concurrent = during; feedback = after. Inspecting raw material before production is a feedforward control.
Q 17
Control Process
Medium
Which of the following is not a step in the standard control process?
View solution
Correct Option: C
Standard control steps are Standards → Measure → Compare → Corrective action. Forecasting belongs to planning.
Q 18
MBE
Medium
"Management by Exception" requires that managers focus only on:
View solution
Correct Option: B
Management by Exception (Taylor; codified by Bittel 1964) directs managerial attention to significant deviations; routine ones are handled by subordinates.
Q 19
Balanced Scorecard
Medium
The Balanced Scorecard (1992) was developed by:
View solution
Correct Option: B
Robert Kaplan and David Norton introduced the Balanced Scorecard in their 1992 HBR article — four perspectives: financial, customer, internal process, learning & growth.
Q 20
Follett
Hard
Mary Parker Follett's principle that *coordination must begin during planning, not after execution* is called the principle of:
View solution
Correct Option: B
Follett's four principles: Direct contact, Early stage, Reciprocal relationship, Continuity (*Dynamic Administration*, 1941).
3.8.1 Advanced Format Questions
AR 1Assertion-ReasonHard
A: Planning is the primary function of management.
R: All other functions depend on plans laid down.
View solution
Correct Option: A
Planning is primary because all functions follow from it.
AR 2Assertion-ReasonMedium
A: MBO emphasises participation in goal setting.
R: Drucker proposed MBO in 1954.
View solution
Correct Option: B
Both true; R is historical context, does not explain participation.
S 1Statement-basedMedium
Which are correct? (i) Strategic plans are long-term. (ii) Operational plans are short-term. (iii) Single-use plans include programmes. (iv) Standing plans include budgets.
View solution
Correct Option: A
Standing plans = policies, procedures, rules; not budgets (single-use).
S 2Statement-basedHard
Correct: (i) Span of control narrows as we move up. (ii) Authority can be delegated. (iii) Responsibility can be delegated. (iv) Accountability cannot be delegated.
View solution
Correct Option: A
Responsibility cannot be delegated; only authority can.
3.9 Quick Recall
ImportantQuick recall
- Five functions (Koontz, Robbins): Planning · Organising · Staffing · Directing · Controlling. POSDCORB adds CO-ordinating · Reporting · Budgeting (Gulick & Urwick 1937).
- Fayol’s original five (1916): Plan, Organise, Command, Coordinate, Control — note “command” not “lead”.
- Planning steps (Koontz, 8): opportunity → objectives → premises → alternatives → comparison → choice → derivative plans → budgeting.
- Plan hierarchy: Mission → Objectives → Strategies → Policies → Procedures → Rules → Programmes → Budgets. Standing (policy/procedure/rule) vs Single-use (programme/project/budget).
- MBO (Drucker 1954; Odiorne 1965) — joint goal-setting; SMART = Specific, Measurable, Achievable, Relevant, Time-bound (Doran 1981).
- Organising tagline: authority delegated, responsibility never. Authority flows down, responsibility flows up.
- Graicunas (1933): R = n(2ⁿ/2 + n − 1). n=4 → 44, n=5 → 100, n=6 → 222.
- Authority types: Line (command), Staff (advisory), Functional (limited specialist command).
- Departmentation bases: Functional, Product, Geographic, Customer, Process, Matrix.
- Directing’s 4 pillars: Supervision · Motivation · Leadership · Communication.
- Control process (4 steps): Standards → Measure → Compare → Corrective action. Three timings: Feedforward / Concurrent / Feedback.
- Control techniques: Budgetary, Standard costing, SQC, BEP, Ratio, Audit, MIS, Balanced Scorecard (Kaplan & Norton 1992), PERT/CPM, Six Sigma.
- MBE (Taylor; Bittel 1964) — focus only on significant deviations.
- Coordination ≠ sixth function → it is the essence. Follett’s 4 principles: Direct contact · Early stage · Reciprocal relationship · Continuity. Coordination is enforceable; cooperation is voluntary.