This section provided by: Exclusive Dreams Marketing will give you the opportunity to gain knowledge and understanding of the principles and practices behind key business management subjects.
Specific management functions - The specific management functions a manager will perform are determined by the structure of the organization and by the area of expertise that the manager specializes in within the organization.
Marketing and public relations - Managers must ensure that the right products and services are produced in the right style, at the right time for the right consumers, and to satisfy all consumer complaints if the organization is to be successful.
Banking and Finance - Managers must ensure that the organization has the necessary financial resources to achieve its objectives and then they must control these organizational finances.
General Administration - Managers must ensure that all the necessary paperwork, data entry and analysis are completed in the most efficient manner.
Company Distribution - Managers must ensure that the products are delivered on time to customers and that delivery charges are kept to a minimum.
Operations managers meet customer demands and organizational objectives
Human Resource Managers are responsible for motivating employees to achieve their organizational objectives.
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​There are numerous ways organizations collect data
An evaluation or assessment of an organization’s performance needs to be undertaken in order to ensure that the objectives of that organization are being met. It does not matter whether the objectives are long, mid or short-term, there is no point in setting objectives if you do not intend to measure whether they have been successfully met. Such as assessment of performance will measure the effectiveness of the organization. In addition, the way that the organization employs and uses its resources to achieve these goals and objectives must be evaluated to see whether these resources are being used to their optimum capacity. Such an assessment of the organization’s performance will measure the efficiency of the organization’s operations. In addition to measuring the performance of the organization as a whole, the performance of individual employees or teams of employees may be measured, as well as the performance of sections or departments of the organization. Such evaluations will be carried out for different purposes.
​There are three stages to the evaluation of organizational performance. Firstly, we need to know WHAT it is we intend to measure the performance of, i.e. the indicators or the criteria. Secondly, we need to know HOW we intend to measure these indicators or criteria. Thirdly, we need to establish what we intend to do with the outcomes of the evaluation process.
Organizations will look at their principal objectives, their core functions, and the key elements of their policies, then prioritize the key indicators or key result areas that they want to measure. Next, a specific criterion, measure or indicator will need to be established. These indicators will either be quantitative or qualitative in nature. Quantitative indicators are 'objective', as they measure aspects of performance that are quantifiable and are not subject to variation once they have been defined, e.g. the number of employees, the level of profit, the number of industrial accidents, the number of customer complaints. Qualitative indicators are, on the other hand, subjective in nature and vary according to who is providing the information, e.g. the level of customer satisfaction, the level of employee satisfaction, or the level of customer service. Organizations will select a number of key performance indicators (KPIs) to measure the key objectives or elements of organizational policy. Next, the organization must decide how the data will be collected, i.e. the method that will be used. A number of options exist - statistical research, survey, observation, questionnaire, and benchmarking. An organization may use a variety of methods to collect the necessary data that needs to be analyzed.
Data analysis is the basis of future planning for organizations
Finally, once the data has been collected and analyzed, it must be interpreted. The interpreted data may then form a basis for future action. The organization may decide to do nothing as it is performing to the benchmark. The organization may take corrective action as the organizational objectives were not met, it may change the direction in which the organization is heading, or it may set new and revised organizational goals to improve the performance of the organization to a higher level.
Examples of KPIs that large-scale organizations commonly use to measure their performance include:
*The level of profit*The return on investment*The return on assets*The level of staff turnover
*The level of customer satisfaction*The number of customer complaints*The number of industrial disputes
Evaluating organizational performance
There are three stages to the evaluation of organizational performance. Firstly, we need to know WHAT it is we intend to measure the performance of, i.e. the indicators or the criteria. Secondly, we need to know HOW we intend to measure these indicators or criteria. Thirdly, we need to establish what we intend to do with the outcomes of the evaluation process.
​Organizations will look at their principal objectives, their core functions, and the key elements of their policies, then prioritize the key indicators or key result areas that they want to measure. Next, a specific criterion, measure or indicator will need to be established. These indicators will either be quantitative or qualitative in nature. Quantitative indicators are 'objective', as they measure aspects of performance that are quantifiable and are not subject to variation once they have been defined, e.g. the number of employees, the level of profit, the number of industrial accidents, the number of customer complaints. Qualitative indicators are, on the other hand, subjective in nature and vary according to who is providing the information, e.g. the level of customer satisfaction, the level of employee satisfaction, or the level of customer service. Organizations will select a number of key performance indicators
 
(KPIs) to measure the key objectives or elements of organizational policy. Next, the organization must decide how the data will be collected, i.e. the method that will be used. A number of options exist - statistical research, survey, observation, questionnaire, and benchmarking. An organization may use a variety of methods to collect the necessary data that needs to be analyzed.
Data analysis is the basis of future planning for organizations. KPI’s
Finally, once the data has been collected and analyzed, it must be interpreted. The interpreted data may then form a basis for future action. The organization may decide to do nothing as it is performing to the benchmark. The organization may take corrective action as the organizational objectives were not met, it may change the direction in which the organization is heading, or it may set new and revised organizational goals to improve the performance of the organization to a higher level.
Examples of KPIs that large-scale organizations commonly use to measure their performance include:
*The level of profit*The return on investment*The return on assets*The level of staff turnover*The level of customer satisfaction
*The number of customer complaints*The number of industrial disputes
Management structures and objectives
In order to attain the objectives of the organization, an organizational chart which sets out in diagrammatic fashion the roles and responsibilities of managers and, hence, their main work areas and tasks within the organization, should be established. The primary purpose of establishing this chart is to assist in the efficient and effective operation of the organization. The chart will enable stakeholders to gain a clear picture of what should happen within the organization.
The structure established through this chart will highlight for the individual organization:
1. The primary or core areas of responsibility and the degree of specialization adopted
2. The distribution of power and authority
3. The level of delegation and accountability
4. The communication channels within the organization and the methods of communication used for reporting purposes
5. The key result areas that will be evaluated
6. The control mechanisms adopted e.g. degree of centralization and the span of control used
7. The co-ordination processes used
8. The decision-making processes adopted
other arrangements associated with the good order and functioning of the organization.
This organizational chart is the formal structure of the organization which will be determined after considering the following factors:
1. The strategic, tactical and operational objectives
2. The size in terms of the number of employees, locations, financial and physical assets
3. The age & the environment within which the organization operates
4. The level of specialization and independence that exists and its various sections
5. The current distribution of power and authority between managers other characteristics (as discussed in section Characteristics of large-scale organizations)
However, in reality, the actual structure of the organization may vary greatly from this formal structure due to the dynamic nature of large-scale organizations and the environments within which they operate.

Management structures and objectives
Horizontal management structure
This resource covers management structures and objectives. It looks at the corporate culture and management roles within that culture as well as organizational charts and policy development. This unit of work begins by looking at organizational charts.

Organizational charts - There are many different forms that these organizational charts may take. The specific form drawn up by the organization may be based on one of the following types:

Hierarchical structure - Specialization within the organization which relies on a vertical or a pyramid style of power, authority and decision-making.
Functional, divisional and matrix structures - Specialization within the organization which relies on a horizontal style of power, authority and decision-making. The functional structure or chart separates out the main areas of responsibility for various functions within the organization. These areas may include:
*Human Resources*Operations*Marketing and Public Relations*Banking and Finance* General Administration

The functional structure or chart separates out the main areas of responsibility based on the various departments sections of the organization. These departments may be based, in turn, on the types of products manufactured or sold by the organization; the various locations from which the organization operates; or the types of customers that the organization services or supplies.
The functional structure or chart separates out the main areas of responsibility based on projects that the organization is currently working on.

Goals and objectives - Vision Statements
​The mission or vision statement is normally determined by the Chief Executive Officer of the organization in consultation with the board of directors and senior management of the organization. Every organization, when it is established, has a specific purpose or objective that it wants to achieve. In fact, many organizations have multiple objectives that they want to achieve. It does not matter whether the organization is part of the public sector or the private sector, both will have their specific objectives that they want to achieve.

These guiding goals and objectives are normally formulated in the form of a mission or vision statement. This statement attempts to summaries in a concise and precise manner the essential or core objective(s) of the organization. It is a broad statement relating to what the business intends to do or to achieve both now and in the future. It is developed from the history of the organization, its past performance, the environment within which it operates, the personnel associated with the organization and their vision of the organization. It is the overriding objective to which all other objectives are directed and is therefore strategic in nature. The mission or vision statement is established as a long-term objective.

Once the mission or vision has been formulated, the next level of management within the organization will establish their own objectives. The senior management team will formulate the core drivers for their section of the organization. These core drivers should mirror the mission/vision statement. These objectives will be mid-term in nature and will in turn be used by the next level of management when formulating their objectives.Finally, the last level of management within an organization - the front-line managers will draw up their objectives based upon the core drivers and the mission/vision. These targets will be typically short-term and operational in nature.
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The corporate culture of an organization may be defined as 'the system of shared values' that exists within the corporate structure of an organization. The existence of a corporate culture implies that there is a common set of values and norms that form the basis for all work practices and procedures that are carried out within the organization. It also implies that there are clearly established ideals and beliefs that all employees, managers and owners of the organization believe are the keys to the successful operation of the organization. These values represent:

​1. How employees believe they will be treated by management.
2. How managers treat each other.
3. How customers will be treated and how customers expect to be treated.
4. How the organization interacts with other organizations and government agencies.
5. How the organization views the wider environment and the level of corporate ethics and social responsibility that is evident in the actions of the organization.
Management roles
Managers perform certain generic roles in any organization. The extent of these roles will be determined by the type of managerial position they hold within the organization - CEO, senior manager or front-line manager. However, the principal aim of any manager's role is to achieve the objectives of the organization.
The generic management functions which all managers perform may be described as the 'POLC CCM' functions or roles as discussed earlier.
Business Management Planning
Managers must perform the role of planning, at their designated level (the strategic, tactical or operational level), everything that the organization must do to achieve its objectives. Managers must develop the long-term, the mid-term and the short-term plans for the organization to achieve these objectives. Managers will need to implement a problem-solving and decision-making model to assist them in determining their strategic, tactical or operational plans.

The steps that managers will need to consider include:
1. Establishing and understanding the objectives that is to be achieved in either the long, mid or short-term.
2. Gathering the necessary data to determine a reasoned and logical solution to the most effective way to achieve these objectives. This includes understanding all variables in the internal and external environment and forecasting likely events or impacts on the organization during the designated time period.
3. Analyzing the data by performing a SWOT analysis. A SWOT analysis involves the manager analyzing the relative strengths and weaknesses of the organization together with the opportunities and threats offered or imposed from outside the organization.
4. Determining a number of alternative plans of action and ranking these alternatives according to some predetermined scale or priority listing.
5. Selecting the preferred plan or course of action

6. Implementing the plan through the use of an action plan, which will take the following into account:
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O - Objectives - what is to be achieved through the plan - the goals and objectives
P - Personnel - the personnel who will be responsible for implementing the plan
S - Strategies - the strategies or methods to be adopted by the personnel
T - Tasks - the tasks that will need to be performed by the personnel and the delegation of tasks to specific personnel
T - Timeline - the timeline over which the plan is to be implemented
E - Evaluation - the evaluation process which will be adopted to assess whether the plan has been effectively implemented
E - Evaluating - the extent to which the plan has been effectively implemented. Managers will need to determine the KPIs to be used in the evaluation process and what method will be adopted to collect the required data.
Business Management Organizing
Managers must ensure that all of the necessary resources (i.e. the natural resources, the human resources, the capital resources and the entrepreneurial or ' street smart' resources) are available and able to be used or to perform the required tasks or purposes. Managers must organize their employees so that the 'right' resources are used in the 'right' way to achieve the 'right' objectives. The organization of the business enterprise will involve establishing a workable organizational structure, an appropriate distribution of power and authority across the organization and effective communication processes, delegating tasks to the most appropriate personnel, setting into place accountability and responsibility control mechanisms, and arranging an effective operations model. 
Business Management Leading - Managers must lead the way for employees, customers and competitors. They must be at the forefront of trends and fashions and lead by example in the workplace through a display of their technical skills and competencies. Managers must be able to act as role models for employees and, thus, indirectly and directly lead them in their work tasks. Managers are often described as people who ensure that 'things are done in the right way', whereas leaders are described as people who ensure that 'the right things are done'. The two are thus not mutually inclusive. The leading role of a manager requires them to provide the necessary vision for the organization to foresee opportunities and to implement action to take advantage of these opportunities. A good leader will also communicate effectively with the employees and provide feedback on their performance.
Business Management Controlling - Managers must perform a supervisory and control function to ensure that work is performed to the optimal level and that the quality of service provision of product manufacture is at world's best practice level. Managers must assess and monitor the performance of departments, teams of employees and individual employees to ensure that the objectives of the organization are being achieved. There are a number of different techniques that the manager may adopt. The control mechanism may be implemented at the end of a predetermined period or a continuous method of assessment may be adopted. The standards of performance required by managers must be clearly communicated to employees or teams of employees. Once the performance has been measured, compared and analyzed, then corrective action may be taken by the managers when appropriate. The level of control employed by the manager will, in many respects, be determined by the management style adopted by the manager and by the culture of the organization.
Business Management Communicating - Managers must keep everyone in the organization informed of what is occurring within the organization and also ensuring that members of the wider community are kept informed of what the organization is doing. The communication role is important as it enables managers to coordinate the outcomes of the other managerial roles. Managers must set communication policies to ensure that the correct communication channels are used by employees of the organization.
Business Management Creating - Managers must be able to create innovative ways to perform tasks and to market the organization’s products or services in order to enhance the organization’s effectiveness and efficiency. Managers should be thinking laterally and suggesting alternative processes and procedures to improve the efficiency and effectiveness of the operations of the organization. The level of creativity evident from a manager will be determined by both the culture of the organization and the management style adopted by the manager.
Business Management Motivating - Managers must be able to motivate staff to maintain them in their employment with the organization, in the first instance, and then to ensure that the performance of the employees is optimized both for their own benefit and also for the benefit of the organization. The level of empowerment of employees will vary from organization to organization and is, once again, dependent on the culture of the organization and the management style adopted by the manager. The form of motivation used by the manager will, likewise, vary between material to non-material methods dependent upon the culture of the organization and the management style adopted. Managers will motivate employees to ensure that the organizational plans are implemented effectively, that the organization is organized effectively, and that the control mechanisms implemented by managers are accepted as legitimate by the employees.
​Policy Development
Following the development of a business strategy by management, all organizations should prepare policies and establish procedures that are to be followed by both employees and management of that organization. By establishing such policies and procedures, the objectives of the organization can be more readily attained. As well, all stakeholders within the organization can be made aware of the expectations of the organization and what must be done to achieve these objectives.
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Organizational policies will set out, in a formal manner, the practices and procedures that are to be followed within the organization with respect to a significant issue or an area of business operations. The formulation of a business policy will provide a uniform way of handling matters by personnel within the organization especially, where that organization operates from more than one workplace.
Policies may need to be developed because the environment within which the organization operates has changed and therefore the organization needs to alter or modify how they carry out certain activities and tasks, e.g. the legislation and government regulations may be changed and may impact on how organizations do things or prevent them from doing something. Organizations may also pre-empt likely changes in the environment and be proactive rather than reactive in regard to policy changes. In some cases, the objectives of the organization may have been changed to give the organization a new direction or purpose and, as a result, the policies of the organization will need to be re-written or amended. As well, the competitive nature of the commercial marketplace may see a need for the organization to modify or to change business strategies to maintain or to improve their market share. This could be through price differentiation, image differentiation, design differentiation, quality differentiation, support differentiation, market differentiation, market expansion, product development, corporate expansion or business contraction. Finally, there may be a need to change or modify certain policies to overcome problems encountered with their implementation.  
​The development of a specific policy will normally follow a number of stages.
Establishing the precise need for a written statement concerning a specific area of organizational operations because certain problems have arisen within the organization or are impacting upon the organization from the external environment
researching the specific issue area which includes obtaining as much information as possible from within and from outside the organization and, consulting all stakeholders of the organization (in some cases, external consultants are outsourced to carry out this research and even prepare a draft policy) as to their opinions about the issue area drafting a policy by a committee, an external consultant or a management team, with or without employee representatives, delegated to perform the task and then distributing the draft policy for comment reviewing comments and altering the draft policy where appropriate passing the policy on to senior management for approval and for setting a date for implementation of the policy distributing the policy to all interested parties and holding information sessions where appropriate to educate employees and other interested stakeholders about the policy to be implemented.

A policy will normally contain detail related to:
1. The objective(s) of the policy.
2. The expected outcome(s) and the level or standard of achievement desired.
3. The timeframe within which the policy is to be implemented and assessed.
4. The method(s) of evaluation to be employed by the organization.
The activities that must be carried out, by both management and employees, to implement the policy
In addition, procedures relating to how a specific policy is to be carried out or implemented will also need to be written down. Procedures involve a written or an unwritten statement or understanding of what must be done in any particular situation, that is, the essential mechanics of the task. It involves a step-by-step account of what is to be done by employees and/or management when a specific task has to be completed or a specific decision has to be made.

Management is largely responsible for establishing the policies and procedures of the organization and of communicating these to all employees and other interested stakeholders of the organization. Consultation between management and employees should take place before implementing these policies and procedures to ensure that they can be both effectively and efficiently carried out. In many organizations today, however, where employee empowerment is in place, employees or groups of employees may provide much of the impetus for policy development and implementation.
The various policies of the organization may be grouped together in a policy manual. This will become a ready reference for all managers to be referred to when the need arises in regard to how to handle certain procedures or tasks. 
Business Environments
Large-scale organizations do not operate within a vacuum; they operate within constantly changing commercial and non-commercial environments. These organizations are not static; they are dynamic organizations operating within an open (as opposed to a closed) system. It is important for managers within these organizations to understand the environment within which they operate so that they can be proactive about any likely impacts that the environment may have on the organization. In this way managers can make any necessary changes to ensure the continued success of the organization and the attainment of its goals and objectives.

Large-scale organizations operate within essentially two broad environments – the internal environment and the external environment. The external environment may be further divided into the task environment and the general environment.
There are three major sectors or contributors to the internal environment which may impact on the organization – management, employees and the culture of the organizations.

Management obviously has a significant impact on the way that the organization operates and functions, through the management functions already discussed. The employees may impact on the organization through the tasks that they perform and the way that they execute those tasks. The culture of the organization is a significant impactor as it incorporates ‘the way that things are done within the organization’. The culture of the organization includes the ‘system of shared values’ inherent within the organization, i.e. what people both within and outside the organization believe the organization stands for and how it operates, e.g. the quality of its service and the level of the organization’s employee relations. If the culture was to alter then the operations of the organization would change as well. It is worth noting that the organization has a fair degree of control over these sectors and the impact that they have on the organization.

 Characteristics of management styles - Each manager develops their own particular management style of operating.
Whilst the functions and roles that managers have to perform follows a fairly uniform path, the manner in which they implement and exercise these various functions and roles varies from manager to manager. Each manager develops their own particular management style of operating. However, it is possible to see certain common characteristics in management styles exhibited by managers and, as a result, it is possible to group or to classify management styles into specific categories based on these common characteristics.
The characteristics that may be used to distinguish between management styles include:
C - Centralization - Degree of centralization. This characteristic relates to the distribution of power and authority within the organization, whether it is highly centralized and administered by a single or a small number of managers or if it is highly decentralized and administered by a large number of managers. The span of control (the number of employees and tasks that the manager has responsibility for) is linked to this characteristic. The more centralized the power base, then the greater the span of control. The extent of the span of control can be seen in the organizational chart and the number of managerial levels and the number of managers at each of those levels.

O – Orientation - This characteristic relates to the extent to which the manager is task-oriented as opposed to employee-oriented, that is, what the manager sees as their core priority or responsibility. This characteristic is used to categorize managers according to the priority they place on getting the job done at any cost as opposed to taking into account the impact that the tasks may have on the employees.

M – Motivation - This characteristic relates to the extent to which the managers use purely material incentives, as opposed to non-material incentives, when attempting to motivate employees to enhance or to increase their performance levels or, simply, to remain with the organization. This characteristic also looks at the extent to which the manager rewards individual employees, as opposed to groups or teams of employees, and also rewards not only the output of employees but also their input into the processes.

D - Decision-making - This characteristic relates to the extent to which the manager makes all decisions personally or allows the employees to have some degree of input into the decision-making process. Some managers will make all decisions themselves without any input from employees and, at the other extreme, some managers will allow employees to make all the decisions and will only make decisions in regard to timelines and resource levels and allocations.

A – Attitude - This characteristic relates to the extent to which the manager is concerned with the professional and the personal development of the employees as opposed to simply treating the employee like a number to be used accordingly. This characteristic looks at the degree to which the manager adopts a holistic approach to the individual employee, adopts a caring attitude and is concerned with both professional and personal development.

C – Communication - This characteristic relates to the extent to which the manager adopts open communication channels which are used for communicating with other managers and employees as opposed to closed information giving channels directed downwards from managers to employees. It also relates to the specific mediums used within these communication channels, e.g. memos as opposed to forums and discussions.
These characteristics may be used to distinguish between and to contrast the various management styles that may be adopted by managers. Elements often used to distinguish between management styles include centralisation, orientation, motivation, decision-making, attitude and communication. There are four broad management styles that can be identified when applying these characteristics to how certain managers go about their job. These styles include: Autocratic, authoritarian, dictatorial, directive, persuasive, consultative, participative, democratic, laissez-faire, free-rein.

A manager will adopt a specific style and use that style to carry out the tasks and functions associated with their specific job. In some cases, the manager may adopt what is referred to as the 'contingency or situational' approach to their management style. This means that the manager will assess the current situation and then, dependent upon what that situation is, they will adopt a management style that is appropriate to that situation. In most cases, however, the manager will display the characteristics of one of the management styles identified above. Which management style a manager adopts will be determined by one or a combination of the following factors:
P - Personality - The personality of the individual manager along with the type and level of education they were exposed to, what the manager has learned from previous managerial role models, and the extent of both the manager's personal and professional development.
E - Employees -  The number of employees for whom that manager has responsibility and the skill level and motivational level of these employees, together with the capacity of these employees to make decisions about their work practices and procedures
T - Tasks - The type of tasks that have to be performed by the manager and the employees, the level of risk associated with the tasks, and the timeline within which the tasks must be completed satisfactorily.
C - Constraints - The environmental factors which might impact on the way that the manager might operate, both the internal and external factors along with the normal daily constraints of time, cost and resources associated with the specific tasks and procedures to be carried out by the manager.
C - Culture - The culture of the organization will determine to a large extent the management style that will be exhibited by an individual manager. Organizations tend, in the main, to employ 'like' people and, therefore, managers will tend to exhibit similar management style except where the organization is based on a diversity of its personnel and managers. The management style adopted will need to enable the organization to achieve its long-term objectives as set out in the vision or mission statement.
We can now look at each management style in turn and discuss the characteristics exhibited by each and then assess the relative strengths and weaknesses of each management style. The management styles may be thought of as being on a continuous line with the Autocratic on the extreme right and the Democratic on the extreme left. Democratic - Participative - Consultative – Autocratic 
Autocratic management style - Autocratic, authoritarian, dictatorial, directive, persuasive - the characteristics exhibited by this management style include:
C - This management style is highly centralized with all power and authority invested in one or a small number of managers. There is little or no delegation of tasks to employees and all responsibility remains with the manager. The span of control is broad with the manager in charge of a significant number of employees.
O - The manager exhibiting this management style is totally task-oriented and no concessions or considerations are given to employees during the time when the task needs to be performed.
M - The wage is used by management as the only incentive or reward to employees to perform their tasks. The manager believes that the wage should be the only necessary incentive and that if the employee is not performing to benchmark then the employee's employment status should be terminated.
D - The manager makes all decision for the employees and the employees have no input into the decision-making process. The manager either believes that the employees do not have the time to assist with the decision-making process as it would distract them from their primary and core tasks or that they do not have the necessary skills to act in that capacity.
A - Managers are not concerned about the welfare of the employees as they are task-oriented and any feedback to the employees tends to be negative and reactive. The managers are concerned with ensuring that the employees perform the tasks at hand and not what their career path may be and how to assist them to achieve it.
C - The communication exhibited by the manager using the autocratic style is usually very formal in style, top down and one way information giving. There is little or no encouragement of input or feedback from employees to managers and any initiation of communication comes from the managers only. Communication tends to be in memo style in the main.

Consultative management style
Consultative - the characteristics exhibited by this management style include:
C - This management style is still highly centralized but there are committees formed which are delegated the task of putting their comments and thoughts to management before any decision-making by management takes place
O - There is still a heavy emphasis on task orientation
M - Material incentives and the wage remain the overriding motivating factor for this management style
D - Decision-making remains the function of management but others in the organization are asked for their opinions and thoughts even though they may be ignored by management
A - Attitude towards employees is still highly impersonal but some emphasis on professional development occurs
C - Formal, one-way lines of communication where individuals tend to rely on the formal authority associated with their positions to accomplish their goals and objectives.
Participative management styles
Participative - the characteristics exhibited by this management style include:
C - Decentralization of power and authority with high levels of delegation of tasks and decision-making; the span of control is not as broad as in the autocratic style and teams are formed and made accountable to management and given responsibility for specific tasks.
O - There is a priority towards employee orientation in this style; what and how the employees go about the tasks and the impact that the tasks have on employees is considered
M - Non-material incentives and motivators are used by management to increase employee performance and to improve productivity levels
D - Decision-making is in the hands of teams of employees with representation from management on these teams
A - A holistic approach and attitude towards employees is adopted by management; both personal and professional development training is provided by management; faith and trust are evident in the relationships that develop between management and employees; a greater sense of ownership is apparent and employees are prepared to contribute more to the performance of the organization rather than simply pursing their own self-interest.
C - Communication executed by this management style is fairly informal, two way with constant feedback form both management and from employees; a greater emphasis on verbal communication mediums adopted.
Democratic management style
Democratic, laissez-faire, free-rein - the characteristics exhibited by this management style include:
C - Highly decentralized organizational structure with narrow spans of control; total delegation of tasks and decision-making to teams of employees except with respect to budget and resource allocation and levels to the teams, and the timelines for completion of tasks
O - Total emphasis on employees and their role and place in the organisation; tasks must still be completed but the emphasis is on employees; management has faith that the employees will successfully complete the tasks within the designated timeline
M - Employees provide their own motivation and do not really need any external motivator in order to perform the tasks set; if anything, non-material incentives are more important under this management style to motivate employees to improve performance levels
D - Decision are left entirely in the hands of employees except for resource and timeline decisions; teams are held accountable for their actions and assume responsibility for all tasks and procedures undertaken
A - Management has total trust and faith in the employees and does little to interfere in what and how they go about their tasks and procedures; supervision and monitoring are at a minimum when this management style is adopted
C - Communication channels used in this management style are mainly bottom-up, informal with feedback from both management and employees
Managers in today's organizations are expected to demonstrate specific skills and competency levels in order to exercise their respective managerial functions both effectively and efficiently. The skills they need to exhibit are extremely diverse as managers need not only to be able to work by themselves and as a member of a team, but they will also need to supervise and to coach employees in various processes and procedures.

A skill is defined as 'practical knowledge in combination with ability, cleverness and expertness'. Skills are therefore those abilities which result from knowledge, information, practice and aptitude. A competency is defined as 'sufficiency in amount, quality or degree'. Competency levels are therefore those levels set by the organization, or by an external organization, which managers will be expected to reach and execute with respect to the exercise of a specific skill.

Key competencies expected to be shown by employees within organizations (and therefore, by managers of those organizations) include the following seven key competencies:
  • collecting, analyzing and organizing information
  • communicating ideas and information
  • planning and organizing activities
  • working with others in teams
  • using mathematical ideas and techniques
  • solving problems
  • using technology
Skills and competency levels can be achieved or enhanced by training, practice, coaching, mentoring, observation and benchmarking.
  • T - Technical skills. Those skills specific to the functions, tasks or processes that the manager is carrying out as part of their managerial job description, e.g. accounting, marketing, public relations, machinery use, computer skills. These skills require the manager to apply specialized knowledge and expertise to a specific task area
  • IPC - Inter-personal and communication skills. Those skills which managers need to exercise in order to communicate effectively with other managers, employees, and all other stakeholders of the organization, and to develop effective relationships between themselves and stakeholders both within and outside the organization, e.g. verbal and non-verbal communication skills, coaching skills, negotiations
  • DMC - Decision-making and those skills associated with being able to see the 'big' picture, and to recognize and understand the many complex issues that need to be dealt with by organizations, together with the ability to make decisions that will lead the organization down the right path to achieve their stated objectives, e.g. visionary skills, strategic planning skills, analyzing skills, interpreting skills, organizational skills and forecasting skills.
Organizational change
Employees may see the need for change if they want to retain their jobs or if management has provided them with an opportunity to become involved in the decision-making processes of the organization.
Change is a factor that confronts all organizations. The interaction of the organization with both the internal and the external environments means that organizations must be seen as dynamic in nature and they must, as a result, modify their operations accordingly. If managers of these organizations do not modify their operations and do not manage the change process effectively then the organizations could possibly lose their competitive advantage and suffer some set back in their market share. The speed with which management responds to the pressures for change is critical to the continuing success of the organization.

The culture of the organization must allow the managers to achieve the stated goals and objectives of the organization. Managers must ensure that conditions surrounding and within the organization are monitored so that they limit any performance gap (the difference between levels of performance that the organization said that it wanted to achieve and what it is currently achieving) and ensure that they do not impact on the culture of the organization.

Managers must ensure that they adopt a proactive and planned process to the change process otherwise an ad hoc and reactive approach will be evident. The end result of the latter approach to the management of change is not usually a successful outcome for the organization and usually involves high levels of performance gap. However, there will be occasions when the organization and managers are not able to predict or foresee what will happen and therefore they must have specific strategies in place that can be implemented when these occasions arise.

As we have seen, pressures for change arise from both the internal and the external environments. The main sources for change internally are from managers, employees and the business policies and strategies which form part of the culture of the organization. Managers may see the need for a change in direction and policy. This may be a need to return to basics, to diversify or to expand in order to survive or to extend market share. It may simply be the result of a change in managerial personnel at the senior management level and a change in attitudes and approaches coming from these managers. The CEO and the directors of the organization may see the need to change the culture of the organization if the organization is to survive in the changing commercial marketplace.
External pressures for change
Externally, pressures for change arise from competitors in the marketplace, the technological environment, the government, the international sector, the society as a whole and the general economic environment. Competitors may have introduced new products or services, or undertaken extensive advertising campaigns and therefore the organization must respond or risk losing market share and customer loyalty. Technological advances are occurring at an exponential rate and a significant cause for concern to organizations because of their associated costs. However, organizations cannot afford to ignore the changes as their competitors or new players may enter the marketplace and take some of their market share. Technology also changes the way tasks and processes are carried out in organizations and therefore impact on the employees. This in turn, forces management to make further changes to job practices and designs, and specifically to job descriptions and job specifications. This is equally true for service enterprises as it is for manufacturing enterprises.
 
The government pressures organizations to modify or change their operations by introducing legislation, changing their foreign policies and altering their political platform and agendas. A change in government may cause considerable change for businesses with significant changes taking place, e.g. changes to taxation laws. The government may also influence the state of employee or industrial relations, e.g. the introduction of enterprise bargaining and force organizations to change the relationship that exists between management, employees and unions. The international or overseas sector may also force organizations to change. The rapid rate of globalization of business coupled with associated technological changes cannot be ignored by organizations. The society as a whole may also result in changes being made to the way organizations operate. The questions of social responsibility, environment and quality of life are areas that can be overlooked by organizations as their operations directly and indirectly impact on our communities. Changes to the workforce in terms of composition, age and qualifications may also force changes to the way organizations employ staff and the type of staff that are able to employ. Finally, organizations need to change depending upon the state of the general economic environment as evidenced by interest rates, the value of the dollar and other currencies and the stage in the economic cycle that the country is in at that time. Changes may also be necessary if the organization is moving to the next level in its internal growth and development cycle.

These pressures may be seen as driving forces pushing the organization to change or restraining forces holding the organization back and resisting the change. Usually there are numerous forces acting on the organization at any one time and the management of the organization must assess each in turn and carry out some sort of analysis of the continuing impact of these forces on the organization. An example of a process or strategy that could be used is a SWOT analysis in which the relative Strengths, Weaknesses, Opportunities and Threats of each pressure are evaluated and balanced against each other.
Effects of change on large-scale organizations
The effects of change on organizations are usually evidenced in one or more of the following areas:
1. People - the employees and management of the organization
2. Organizational structures
3. Technology employed within the organization
4. Planning and policies developed and implemented by management

Change may bring about a change in the attitude or behavior of people within the organization, that is, the employees and/or management. This change in attitude or behavior may be necessary because of what competitors are doing or what the clients of the organization are now demanding, e.g. the desire for greater levels of customer service and for better quality products or service provision. Whilst it is not easy to change people's attitudes and behavior, unless the organization does so there is the potential danger that the organization will not survive. Organizational development may be the strategy used to effect these changes in attitudes and behavior. This process will affect the way that the organization operates as it involves changing the culture of the organization. These changes in organizational culture will alter the forms and mediums of communication carried out within the organization; the level of networking carried out between employees; the team building activities undertaken; and the problem solving techniques and conflict resolution strategies adopted by the organization.

This process of organizational development normally involves the following stages:
The testing and then analysis of the current culture evident within the organization
The education and training of employees to enhance their work relationships and personal development within the 'new' culture
Developing team building activities to improve performance designing career planning activities for employees.

Changes to the operations of an organization usually also sees changes to the structures created and developed within the organization. These changes may come about because the organization may takeover or merge with another organization; expand or reduce its current scale of operations, e.g. diversification or downsizing of operations; change its core activities, e.g. a return to basics or total change in product; and a change in location or an alteration to its managerial levels, e.g. organizational restructuring. Changes to the way that managers actually manage the organization and its employees will also see changes to structures, e.g. in the decision-making processes adopted as a result of changing management styles.
 
Technological changes may occur and these changes will inevitably impact on every aspect of the organization’s operations. The changes may alter the way that employees perform a task, the number of tasks that have to be carried out by employees, and the terms and conditions under which the employees work. The changes may also alter in a significant way how the organization actually does its business with clients, e.g. the introduction of ecommerce.
 
Changes in planning and policy development and implementation may also be effected. A turnaround in the performance of the organization may require a change in strategy and business policy together with changes to the strategic planning that was previously carried out, e.g. through the adoption of globalization strategies. Changes to the human resource policies may also be required because of changes to legislation (e.g. Equal Employment Opportunity legislation), changes brought about because of the introduction of technology (e.g. the introduction of robotics) and of changes to employment terms and conditions (e.g. the introduction of enterprise bargaining).
Processes for effective change management
Management must set into place a designated plan and approach towards the effective management of the change process. The first step in this process to solve a particular problem confronting the organization is to decide what it is that the organization actually intends to do to overcome the pressures or forces for change confronting it.

This decision-making and problem-solving process involves the following stages:
1. Identifying what the problem actually is that the organization wants to overcome
2. Gathering all of the information relevant to the specific problem; this involves obtaining all of the relevant information from all internal and external sources and from all stakeholders; gathering all possible information will enable the management of the organization to make an informed decision about what strategy or direction the organization will need to adopt or take to overcome the problem.
3.  Management will then need to come up with a list of possible alternative courses of action, options or strategies that the organization could adopt to overcome the problem.
R/S - Management will need to establish a way of evaluating these possible options and of ranking each of them against certain predetermined criteria; once this process has been done then the preferred option may be selected by management.

The preferred option can then be implemented by use of an action plan to ensure that it is implemented successfully; the action plan will require management to follow the following steps if the change in policy is to be implemented successfully:
1.  State the objectives of the revised or changed policy.
2.  Determine which personnel within the organization will be responsible for implementing the policy.
3.  Establish which management strategy will be used to implement the policy.
4.  Allocate and delegate specific tasks to the personnel involved in the implementation stage. 

​* Set the timeframe within which the policy is to be implemented, e.g. implemented in stages or implemented as a complete policy at a specific point in time.
* Determine the criteria or performance indicators that will be used to evaluate whether the policy has been implemented efficiently and effectively.
* Management will then need to carry out an evaluation process to see if the policy has been successfully implemented and to establish the next stage in the change process. Analysis and interpretation of the data collected in relation to the performance indicators will tell management whether they are on track, whether they need to alter the change process or whether they need to take a completely different approach to solve the problem.
Forms of resistance
When implementing any form of change, management will need to appreciate that employees and even some managers and other stakeholders may well resist the change being implemented. This resistance must be understood so that a solution to overcoming the resistance, or to limiting its impact on the organization, may be found.

The forms that this resistance may take include:
SQ - employees, management and stakeholders like what they are currently doing and the processes involved in these tasks; they may feel that there is no need to change and they would like to remain with the 'status quo' and, therefore, within their comfort zones; they are not able to see the 'big picture' and the long-term impacts of the pressures for change.

* Employees and management may feel that they do not have the necessary resources to undertake the change process effectively; they do not have the time, the financial resources or the personnel to complete all of the necessary changes within the specified time without their normal workload suffering as a result.

* Employees and management may resist the changed arrangements within the organization as the new approach and processes will alter their current arrangements with respect to the distribution of power and authority within the organization; some employees and management may perceive that they stand to 'lose' if the changes are implemented.

* A lack of effective communication concerning the proposed changes may be the cause of resistance within the organization; employees and management may simply not fully understand or comprehend the changes being proposed or implemented and will, as a result, not see the benefits of the change or even the rationale behind the change.

*The culture of the organization may in itself be a limiting factor; the history of change and the degree of acceptance of change within the organisation may act against specific forms of change or degrees of change being implemented.

*The employees and management may not be motivated to accept and subsequently implement the change process; they are not able to see any net benefit or 'value-added' for them personally or for the organisation as a whole as the change agent(s) may not have incorporated any intrinsic or extrinsic motivator(s) into the change process.

*The employees and management may resist the change process as they believe that they do not have the necessary knowledge or skills to implement the change; a fear of insecurity and failure may set in and lead to determined resistance of the change process.
Strategies to overcome resistors
Educating employees is a vital component of effective change management
Once the 'resistors' have been recognized and understood, then management may proceed to find solutions and to put into place strategies to overcome these 'resistors' or to limit their negative impact(s) on the organization.

These strategies may include one or more of the following:
E/C - education of and communication to employees and management concerning the changes will establish the rationale for the changes and as a result ensure that the intended benefits and value added of the changes are understood and accepted by both employees and management; training of employees and management will ensure that they have the necessary knowledge and skills to successfully implement the changes.

*Participation and involvement of employees and management in the actual change process will ensure a greater sense of 'ownership' and therefore acceptance of the change process; any perceived loss of power and authority may be overcome by this strategy.

*Facilitation and support must be provided for employees and management resisting the change; they must be assisted to firstly accept and then to implement the change; counseling, coaching, mentoring and additional training may be required to get employees and management to proceed along the predetermined change path.
I/R - incentives and rewards should be incorporated into the change process in order to motivate employees and management to accept the change; if employees see that there is something in it for them then they will be more likely to assist with the implementation process.

*Manipulation may be adopted as a strategy to get employees and management on side; this is seen as a 'negative' strategy and really should only be used if the others explained above are not successfully implemented; employees and management may be told that they are the 'odd ones out' and that everyone else or that every other organization has adopted the change and that the end result of continued resistance will be their job!

*Coercion and threat - employees and management will be told that unless they accept and implement the change that they will have their employment status terminated; this is definitely the last resort if employees and management are not prepared to accept the change.
Implementation
Now management is able to proceed in its attempt to successfully implement the proposed changes in policies and procedures. Management will need to follow a number of steps if the process is to be successful:

Firstly, management will need to unlock the current position of the organization; the culture of the organization must be that employees and management are prepared to commit themselves to the proposed changes and that they are in a frame of mind which will see the implementation phase readily accepted by them.
Secondly, management will need to implement their preferred strategy by use of their action plan; this stage may need to take place at the same time as current work practices are being carried out - a 'dual' system may need to be operated by employees and management for a specified period of time. Finally, the revised or altered policy will need to be locked again; the change process will continue along its designated path and support for the changes will be provided to employees and management along the way; management will need to recognize that change in today's organizations is never static and that the 'locked' stage never really exists - the key must always be ready to be turned and the door of change and opportunity opened. It can be seen that the management of the change process is a very complex and crucial part of the day-to-day operations of any organization and the daily routines and tasks of any manager. Leadership within this process is critical if the organization is to survive and to achieve its long and short-term objectives. Equally as important is the stewardship and management of the resources, work practices and structures of the organization during any change process.
Application of effective change management to significant issues
Management must deal with each of these issue areas to ensure that the objectives of the organization may continue to be achieved; that the performance levels of the organization reach optimum levels and that there are no significant performance gaps apparent; and that the resources within the organization (and especially the human resources) are both efficiently and effectively employed.

Management must, as we have seen, assess the environment within which it operates, recognize the pressures that are impacting on it, assess the relative strengths, weaknesses, threats and opportunities of each of the forces for change, and then implement strategies and policies that will enable the organization to grow and to develop.
Social responsibility
Many organizations are now recognizing that they need to do more than what is required of them by law with respect to how their operations impact on the wider community. Not only must they look closely at the impact of their operations on the community as a whole but they must also take an active interest in other areas of community and social concern. This may necessitate the organization establishing a specific department responsible for the public relations aspects of its operations. Today, these concerns of an organization have taken on an added dimension with the globalization of business and the increasing internationalism of governments; their corporate citizenship must also take onboard this international dimension.

The policies and procedures implemented by the management of organizations must consider the impact of the following aspects of its operations on the community:
corporate objectives can no longer afford to be profit-oriented alone; the 'bottom-line' must be tempered with the impact that this has on how they are viewed by people within the community and the extent to which they return part of the profit back into the community the products and services provided must not be seen as harmful to people in the community nor must their sale be seen to be exploiting certain sectors of the community or discriminating against other sectors of the community employment of staff brings with it a responsibility for the security of their employment and not to carry out indiscriminate sackings, dismissals or closure of the organization which will have an adverse impact on a community which may rely totally on the organization for its continued existence resource use must also be considered; the undeniable fact of un-renewable natural resources must be taken into account with respect to the rights of future generations the use of technology and its resultant displacement of some forms of human labor together with environmental emissions also need to be considered.

The organization must look beyond it own boundaries and consider what it can contribute to the welfare of the wider community. Education and training of its employees in developing a wider social conscience may need to be a starting point. Management will then need to look at other projects with a 'social conscience' platform. They may need to support or fund these projects to show to the wider community that they are concerned about the community generally and that they are good corporate citizens, e.g. anti-cancer campaigns, water conservation plans, recycling schemes, campaigns concerning drug use in the community, greenhouse effect programs.
Business ethics
Business ethics is another issue area that management in organizations today must take into account when developing and implementing its policies and procedures. Business ethics relate to the moral standards and principles that underpin the organization’s policies and procedures; it's about the judgments that the organization makes in terms of what it considers to be 'right or wrong'. Organizations and their affiliated bodies and associations must develop a code of ethics which acts as a guide to the development and implementation of their policies and procedures. An example of such a code is the development and publication of 'corporate governance' statements that need to be drawn up by all public companies.
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The statements provide detail relating to:
The composition, role and responsibilities of the board of directors
administrative structures of the board descriptions of committee responsibilities and the responsibilities of individual members with respect to these specific committees other details relating to subsidiary companies governed by the board appointments to audit the accounts and operations of the organization risk management procedures.
These statements are seen to be significant in terms of protecting the interests of shareholders with respect to how organization are operated and controlled by the board of directors.

Business ethics also impacts on other aspects of the operations of an organization. For example, advertising undertaken by the organization must conform to certain legal requirements, but it should, in fact, go even beyond that by conforming not only to the letter of the law but also the spirit of the law. Government rules and regulations cover just about every aspect of the organization’s operations and management must make sure that they not only conform to these rules and regulations but that they also do not attempt to breach their provisions by any unethical practices or procedures, e.g. short cutting safety procedures in an effort to improve profit margins.
Globalization
Many organizations are finding that they need to move their competitive boundaries beyond local and national markets and into the international and global marketplace in order to survive in the competitive marketplace and to become internationally competitive. 'Going global' may provide an opportunity for an organization to take advantage of economies of scale and to improve its competitive edge or advantage over other organizations.

Management will need to examine carefully the impact of 'going global' as there are significant differences between the cultures of the countries in which the organization wants to operate and the Australian culture and also that of the organization itself.

​Organizations, in their attempts to 'go global', have a wide range of options and strategies that they can adopt to achieve that objective. These include:
An export program involving local production
Licensing organizations in other countries to manufacture its product or to provide its service
Establishing franchises in other countries
Establishing subsidiary enterprises in other countries
Importing goods or resources from other countries for local manufacture
Altering current practices and procedures to achieve internationally competitive standards against imported products or services.
Technological development 
The rapid rate of change in the area of technological developments has had a dramatic and significant impact on organizations. Technology refers to 'that body of knowledge of information and of skills and experience which is developed for the production of goods and services. It includes scientific and technical knowledge related to products, processes and methods of production; engineering knowledge required to design, develop, implement, produce, operate, install, service, maintain, and adapt machinery; and, also, managerial knowledge required to marshal a labor force, operate plant and equipment, obtain and administer funds, and identify, establish and satisfy markets.

Management will be forced to alter their policies and procedures to take advantage of the direct and the indirect benefits of this development and to counter any disadvantages that may arise. Benefits may include:
*An increase in productivity
*A reduction in high risk tasks and unpleasant tasks for employees
*Alterations in current work arrangements allowing greater flexibility and adaptability of the organization’s workforce
*Improvements in quality of process and output
*Increases in competitive edge or advantage from decreased costs and improved quality
*Decreases in time taken to complete tasks
*A reduction in waste and material costs

The use of technology impacts on all aspects of an organization’s operations.
The impacts may be seen in terms of:
*The type and level of equipment used within the organizational processes
*What the employees and management have to actually do in terms of tasks and procedures
*The composition and skill requirements of the organization’s workforce
*Managerial style and skills employed
*Training and education programs implemented
*Remuneration policies for employees

How the various sections of the organization and the technology used within those sections are coordinated
The environment within which the organization operates.
Examples of technology that organizations may have to take into account includes computerization, automation, robotics, CAD/CAM/CIM processes, information technology including, email, ecommerce, managerial information systems, telecommuting, and teleconferencing.
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The use of technology provides organizations with the opportunity to standardize their operations and work practices and, in the process, establish benchmarks against which to measure organizational performance. This will enable management to more effectively coordinate and control the operations of the organization and to achieve organizational objectives.
External pressures for change
Technology changes the way tasks and processes are carried out in organizations and therefore impact on the employees.
Externally, pressures for change arise from competitors in the marketplace, the technological environment, the government, the international sector, the society as a whole and the general economic environment. Competitors may have introduced new products or services, or undertaken extensive advertising campaigns and therefore the organization must respond or risk losing market share and customer loyalty. Technological advances are occurring at an exponential rate and a significant cause for concern to organizations because of their associated costs. However, organizations cannot afford to ignore the changes as their competitors or new players may enter the marketplace and take some of their market share. Technology also changes the way tasks and processes are carried out in organizations and therefore impact on the employees. This in turn, forces management to make further changes to job practices and designs, and specifically to job descriptions and job specifications. This is equally true for service enterprises as it is for manufacturing enterprises.

Governments may influence organizations by changes to legislation
The government pressures organizations to modify or change their operations by introducing legislation, changing their foreign policies and altering their political platform and agendas. A change in government may cause considerable change for businesses with significant changes taking place, e.g. changes to taxation laws. The government may also influence the state of employee or industrial relations, e.g. the introduction of enterprise bargaining and force organizations to change the relationship that exists between management, employees and unions. The international or overseas sector may also force organizations to change. The rapid rate of globalization of business coupled with associated technological changes cannot be ignored by organizations. The society as a whole may also result in changes being made to the way organizations operate. The questions of social responsibility, environment and quality of life are areas that can be overlooked by organizations as their operations directly and indirectly impact on our communities.

Changes to the workforce in terms of composition, age and qualifications may also force changes to the way organizations employ staff and the type of staff that are able to employ. Finally, organizations need to change depending upon the state of the general economic environment as evidenced by interest rates, the value of the dollar and other currencies and the stage in the economic cycle that the country is in at that time. Changes may also be necessary if the organization is moving to the next level in its internal growth and development cycle.

These pressures may be seen as driving forces pushing the organization to change or restraining forces holding the organization back and resisting the change. Usually there are numerous forces acting on the organization at any one time and the management of the organization must assess each in turn and carry out some sort of analysis of the continuing impact of these forces on the organization. An example of a process or strategy that could be used is a SWOT analysis in which the relative Strengths, Weaknesses, Opportunities and Threats of each pressure are evaluated and balanced against each other.

Managers who are responsible for implementing the change process are called change agents or facilitators.
Many organizations also outsource this function to external specialists. The change agents are seen as the catalysts of the change process and depending upon the management style adopted by the manager, the task may also be delegated to an employee or team of employees on the shop floor.
Human Resources Management
Introduction and factors involved in managing human resources
Just about every organization today claims that their human resources are their most important and valuable assets. So what is it about the staff, employees, workers, and operatives that make them so important to the management of any organization?
Human Resource Management involves the process of managing people to perform various tasks within the organization so as to achieve organizational goals. Human resource managers are responsible for creating 'win-win' relationships for both the individual employee and the organization as a whole.

​Employees are seen as the key to organizational success as they are the ones who implement management's policies and practices and they are usually the ones at the coalface dealing with customers or physically making the products. If employee performance is not up to the benchmark, then the organization will not be working in synergy and will not be able to meet the standard set by the industry leader. Organizations have often tried to obtain a competitive advantage by various means - by use of specialized natural resources, by use of technology and other capital resources, or by entrepreneurial resources or 'street smarts'. Today, the human resource factor is really the only viable choice to achieve that competitive edge or advantage over corporate competitors.
What are the responsibilities of human resource departments and managers?
  1. Human resource management deals with issues such as staff selection and motivation training and remuneration.
  2. Human resource managers initiate policies that enhance employee performance.
  3. Human resource departments help business to achieve a competitive edge.
  4. Human resource managers create win-win situations for employees and business.
​The role of the human resources manager
Areas of responsibility for human resource managers
Employee productivity (as measured by output per employee per time period) is important to every organization. Managers of organizations look to enhance employee performance in order to increase employee productivity. Enhancing employee performance means that management must look at every aspect of the employment cycle of that employee. Management must ensure that employees are suitably selected, correctly trained and also appropriately remunerated and motivated to stay on the job. By developing policies that cover every aspect of the employment life cycle of an individual employee, management hopes to retain and maintain an employee within the organization and lift their performance level to the optimum level.

Management must also take into account various legislative enactments which impact on the way that employees are actually employed. Laws dictate the minimum (or 'safety net') terms of employment and the conditions of employment; they dictate what employers can and cannot do in the workplace; whom they can and cannot employ; the nature of the environment within which employees work and what happens when employees want to leave the workplace voluntarily or are forced to leave the workplace by management. Organizations must ensure that they comply with these laws and regulations otherwise they face a fine, imprisonment or closure of the organization.
 
In most organizations, the role of planning, organizing, leading, controlling, creating, communicating, and motivating employees has become the sole responsibility of the Human Resource Manager. The role of the formerly titled Personnel Manager has been extended and has moved beyond basic data collection relating to such things as payroll, sick day entitlements and holidays taken. The role of the HR Manager involves every aspect of the employment cycle of each individual employee and it involves the implementation of policies and practices designed to enhance the performance of these employees. 

HR Managers are mainly responsible for implementing change in workplace procedures and for ensuring that employees are fully informed of the changes and are willing and able to accept the changes being implemented. In many organizations, this role is outsourced to external change agents or facilitators.
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Management of organizations can see that their relationship with employees is capable of giving them a competitive edge over their competitors and, hence, an increase in their market share, if the relationship is managed effectively.
Job specifications for human resource managers
The role of the Human Resource Manager is often seen indirectly in the job advertisements in the daily newspapers. These advertisements usually contain a summary of both the job description (an outline of the tasks that the HR Manager is expected to perform on the job) and the job specification (an outline of the qualifications, personal attributes and skills expected of a successful applicant for the job) of a Human Resource Manager.
Factors influencing the workforce
Human Resource Managers of large-scale organizations need to be aware of the factors that influence both the size and the quality of the workforce available to supply their services for employment.
Factors that influence the size and quality of the available workforce:
  1. The diversity of the workforce
  2. The skill level of workforce
  3. The education level of workforce
  4. The training available to workers
  5. The motivation of workforce to work full time
  6. The provision of child care facilities
  7. The working conditions
  8. The security associated with the employment contract
  9. The role of technology in the workplace
  10. The demographics of the local population
  11. General employment trends Ex: Job, Sharing, Tele commuting Etc.
Organizational objectives
There is a direct correlation between the management of the human resources of an organization and the achievement of organizational objectives. The attainment of organizational objectives will require the co-operation of employees and a concerted effort on their part to achieve the objectives. The Human Resource Manager must be sure that the policies and practices put into place are consistent with the strategic long-term objectives of the organization.
What are some of the expectations that employees have regarding the terms of their employment?
Employees expect that when they are employed that management will ensure that certain factors are acknowledged and taken into account when setting terms and conditions of employment.

Security of employment is just one of the factors that must be taken into account. Although the notion of 'a job for life' is no longer adhered to, most employees expect that there is some degree of security associated with their employment and that they will not have their position terminated unlawfully, unfairly and without suitable notice.
Employee motivation
Motivation of employees is a very significant role of the Human Resource Manager. The aim of the manager will be to initially maintain the employee in the employment of the organization and then to enhance the performance of that employee by keeping the employee 'on board'. To successfully motivate employees, management will need to clearly establish the essential needs of the employees and understand how best to meet and to satisfy those needs. The motivators used by management may be positive motivators or negative motivators, that is, they may use opportunities or threats as the basis of their motivation.
Employee motivation:
Before we determine how best to motivate employees, we need to establish why people work. Use the animation to explore some of the many reasons why people work.

Why do people work?
Money - Travel - Power - Interest in work area - To associate with other people - Opportunity - Authority - Security - Status
There is a direct correlation between the management of the human resources of an organization and the achievement of organizational objectives. The attainment of organizational objectives will require the co-operation of employees and a concerted effort on their part to achieve the objectives. The Human Resource Manager must be sure that the policies and practices put into place are consistent with the strategic long-term objectives of the organization.

The organizational theory used the approach that if employees were correctly managed then motivational levels would improve as shown by Henri Fayol setting out his 14 principles of sound management.
The behavioral approach adopted the approach that the employees will be motivated if management meets their psychological needs. There were numerous strategies adopted by theorists that adopt this approach. These include:
Mayo stated that motivating employees was associated with giving adequate attention to the employees and improving the social environment of the workplace.

McGregor adopted a theory that stated that employees were motivated according to what type of person they were - type X or type Y. Type Y people are best motivated by encouraging them to achieve their goals and treating them as individuals. Type X people are best motivated within a controlled environment where they are told what to do and how to do it.
Maslow established a hierarchy of needs that must be met if employees are to be motivated. The lower levels of need should be met first and management should work their way up the hierarchy in order to fully motivate employees.
Strategies for motivating employees
In order to motivate employees, management adopt a wide range of strategies.
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Some techniques that are used by management to motivate employees include:
Wage and salary considerations
Improved terms of employment; greater job satisfaction levels
Changes in work environment, e.g. office location
Non-monetary rewards and benefits, e.g. education allowances, car allowances
Negative motivators, e.g. termination of employment
Recognition and publicity - Power and authority; position of responsibility
Mentoring - Goal setting - Performance appraisal programmers
Training and succession planning - Creating work team environments
The employment cycle
The management of the employment cycle of each individual employee is the responsibility of the Human Resource Manager and the staff in the HR Department. The employment cycle refers to the stages that an employee's career passes through as they progress in terms of their employment within an organization. It encompasses the stages frequently referred to as - recruitment, selection, induction, training and development, maintenance and motivation and, finally, termination or separation. It is important that the HR Manager has systems in place that not only monitor these various stages and assist the employee to reach optimal performance levels, but that controls are put into place for the benefit of the individual employee's own career as well as for the benefit of the organization as a whole.

In developing various policies and procedures associated with the employment cycle, the HR Manager must take into account previous organizational practices and procedures, the legal rules and regulations already in force and the legal rules and regulations that the organization must comply with together with the awards or enterprise agreements that already apply to the specific job or organizational workplace. The HR Manager must also take into account known and established principles of business ethics and social responsibility. Specific obligations and responsibilities arise out of the relationship between employees and the employer and must be included in the policies and procedures relating to the employment cycle.
Human resource planning
The HR Manager needs to plan in advance for the needs of the organization. The manager needs to know how many employees are needed, when they will be needed, for how long they will be needed, what skills they will need to have, what rates of pay will be offered and the terms and conditions of their employment. The level of employment will depend on the level of economic activity and the level of production at that particular point in time and what is likely in the next period and how this impacts on the organization. In addition, the relative costs of outsourcing jobs as opposed to employing staff must also be weighed-up and considered.
Job analysis
The HR Manager will need to assess each job within the organization to ensure that it is actually needed. The HR Manager must ensure that it is quite clear what the job entails in terms of the tasks to be completed, the skills that the employee needs in order to perform these tasks, which are:
The type of equipment required to perform the tasks
The level of interaction between this job and others within the organization
The level of performance required of the employee performing the tasks
The end result will be a clear job design with a designated job specification (a statement of the personal characteristics, skills, education and qualifications, and experience required to perform the job) and a job description (a statement of the tasks and activities, and areas of responsibility associated with performing the job).
The process associated with a job analysis should commence with an assessment and skills audit of the current position within the organization, followed by research relating to similar jobs carried out within similar organizations. This process may be carried out by interview, survey, questionnaires and/or observations.
Recruitment and selection
Once the Human Resources Manager has determined the demands of future employment, the actual process of recruiting these staff members must commence. The HR Manager must now determine from where the prospective staff member(s) will be sourced. These sources of employment may be in-house or outsourced.
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The medium of this source may be one or more of the following:
Advertising - newspapers, journals, radio, television, billboards, noticeboards, brochures, and leaflets. 
Internet and on-line resumes
Interviews at educational institutions
Word of mouth; networking
Referrals
Lodged applications on file; waiting lists
Government agencies
Employment agencies
Professional associations
Competitors

The HR Manager must weigh up the relative advantages and disadvantages of employing a person using internal as opposed to external sources. The prospective applicants will post, e-mail or deliver their letters of applications and resumes and the Human Resource Manager will need to select those applications that are to proceed to the next stage in the recruitment process. The screening process will eliminate those applications that do not highlight the necessary skills or qualifications required for the specific job advertised. A short list of prospective employees will then be drawn up. All applicants should be contacted and told of the outcome of the screening process. Some of the prospective employees may be suitable employees at a later date and it is important to keep these people on-side. The prospective employees may be required to complete an interview form before the actual interview process in order to obtain additional information.
Stages in the selection process
The successful applicant should then be informed of the next meeting, which will be arranged to discuss remuneration and terms and conditions of employment. Once this discussion has taken place and an amicable arrangement agreed upon, the prospective employee should sign the appropriate documentation and be provided with a starting date with the organization.
Selection Criteria – Testing – Selection of interview area – The interview – Discussion – Selection – Reference check – Letters…
Employment packages, agreements and contracts
The employer and the prospective employee must then meet to discuss remuneration and the terms and conditions of employment. An award or an enterprise agreement may already have set the actual remuneration levels and the terms and conditions of employment. The 'safety net' of employment terms and conditions would have already been prescribed by legislation, either State, Commonwealth, or Country legislation. However, there may also be an individual contract that may be drawn up between the employee and the employer.

The actual terms and conditions of employment may vary greatly between employees. The actual level of remuneration included in the individual's employment package may be a combination of material and non-material types. The individual employee and the employer will need to consider all relevant legislation, when negotiating the employment package. There are many different types of benefits that may be included in an employment package for employees. They include motor vehicles, education expenses, share issues, profit sharing arrangements, vacations, provision of technological equipment, e.g. mobile computers and mobile phones, office location, and other benefits such as medical expenses, retirement funds, and superannuation contributions. The majority of employees will, however, simply be offered a flat wage and 'safety net' terms and conditions of employment.

There are a number of workplace agreements that a prospective employee may be asked to agree to and sign before accepting employment. These agreements may be in the form of a Workplace Agreement, a Certified Agreement, an Enterprise Flexibility Agreement, or a similar Agreement by another name, depending in which part of the world you reside or are working in. These agreements will set out rates of pay, conditions of work including hours of work, leave provisions, employee relations and dispute resolution procedures, termination or severance processes and career and promotion paths. Management will have decided which of these agreements will be used within the organization.

On the other hand, an individual employee contract may be used to set out all of the above conditions. This contract will be between the individual employee and the employer and be for a stated period of time and negotiated directly between the individual employee and the employer.
Induction, training and development
Immediately prior to the employee starting the job, a period of familiarization and induction should take place. Management should have in place an induction policy and procedures that are to be followed. Management may appoint a mentor and the mentor will be responsible for the orientation process.

Training and development follows induction. This training and development will involve basic and induction training followed by advanced skill training and cross and multi-skill training. In addition, personal development training may take place designed to enhance personal performance. The type of training undertaken may be self-paced learning or competency based training with or without recognition of previous competency (competency based training requires that the employee reaches a prescribed standard before they are permitted to advance to the nest stage in the training).

This training may be in-house or outsourced, and it may be on-the-job or off-the-job training. This training will enable the individual employee to enhance their performance (and in turn that of the organization) and to improve their job promotion prospects. The training will also, hopefully, improve employee motivation and job satisfaction and decrease costs of production by reducing the level of waste, reducing the number of lost time incidents and the level of absenteeism.

A training needs analysis of the organization will need to be undertaken and a program of training put into place in order to achieve organizational objectives. The aim of any training program should be to minimize any performance gap and to lift the performance of the organization to the next level in an attempt to reach the benchmark. In addition, the program should be designed to enable individual employees to achieve career path goals. An evaluation of the outcomes of the training program should be made to ensure that the goals and objectives of the organization are being achieved.
Recognition and reward
Recognition, reward and remuneration - the desired outcomes of the employment process for any employee. Employers must find a way to appropriately recognize, reward and remunerate their employees so that the employees continue their employment with the organization and so that their performance is at the benchmark. Recognition and rewards may take many forms as provided by an employer.  They include: Wages and salary - award and over-award payments
Fringe benefits - expense accounts, low cost loans, mortgage repayments
Non-monetary rewards e.g. office location, canteen facilities, motor vehicles, medical benefits
Commissions and performance based remuneration - stock issues, bonuses - social based benefits
Performance appraisal
The level of employee performance is the key to business success. Managers are responsible for the performance of employees and should therefore establish a system whereby the performance of each employee is evaluated on a regular basis. Such an assessment will help the organization to achieve its objectives and help it to run both efficiently and effectively.
There are many methods that may be used to assess the performance levels of employees. These methods include:
Management by objectives
Performance appraisal systems, and
Personal interaction and feedback
Performance appraisal methods include the process of establishing the performance levels of the employees, developing the criteria to be used to evaluate the performance of the employee and actually carrying out the appraisal and providing feedback to the employee. The end result will be an assessment of the performance of the employee based on the current period and a projection of expected performance over the next period.
 
The performance appraisal process may be carried out by an outsourced organization, superiors or peers of the employee being appraised, or the appraise themselves.
There are many steps to a successful appraisal process. These include:
  • The preparation of a written self-appraisal
  • An evaluation of the employee's work performance
  • A discussion between appraiser and appraise
  • A written statement of the intended outcomes of the process - personal objectives, benchmark to be achieved, assessment process to be followed
  • A signing of the agreement
  • A future evaluation of the outcomes of the agreed document
Management by Objectives is another method of employee performance appraisal. This method relies on the creation of a set of objectives that an employee hopes to achieve within a specified time-period. A timeline is established and an assessment of the employee's performances is based on the extent to which the employee achieves these objectives within the specified time period. New goals are established when the original goals have been attained.
Human resource management: termination/separation
The final stage of the employment cycle is termination or separation.
An employee may leave an organization voluntarily or by some action or inaction on behalf of management be forced to leave the organization. It is important that management follows the legislative procedures when terminating an employee's employment or when the employee is leaving the organization voluntarily.

Termination or separation of employment may arise for the following reasons
The HR Manager must offer counseling support and advice for employees and ensure that all legal requirements are satisfied. If the HR Manager does not follow the legislative guidelines, the organization may find itself faced with litigation for unfair dismissal. It is important for the HR Manager to ensure that the termination of employment is in the best interests of the organization and the employee, as it will cost the organization a considerable sum of money to recruit another suitable employee. In addition, the HR Manager or a member of the HR staff should conduct an exit interview to establish the reasons why the employee is leaving the organization, if the termination of employment is voluntary.
Employee relations
Employee relations refer to the working relationship that exists and develops between employees (both individually and collectively) and the management of an organization. It determines how these two parties interact with each other when determining terms and conditions of employment, during dispute negotiation and resolution, and throughout day-to-day operations.

Management is responsible for developing and implementing policies designed to ensure that this relationship is appropriate for achieving organizational objectives. Essentially, the objectives of employees and employers are diametrically opposed. Employers are attempting to obtain the highest profit margin possible whilst employees are trying to achieve the highest wage level possible. A conflict of interests is bound to occur!
The role of human resource managers in employee relations
The role of the Human Resources Manager is to ensure that a harmonious relationship develops between the management and the employees of an organization. The HR Manager must ensure that the organizational objectives are achieved and that the employees are fully aware of these goals and objectives and the role that they play in achieving them. The HR Manager is responsible for ensuring that all aspects of the employment cycle for each individual employee is administered effectively and efficiently.
Conflict between management and employees
Naturally, conflict between management and employees is bound to occur. The HR Manager must work to prevent such disputes and conflict from occurring so that there is minimal disruption to workplace activities and so that there is minimal performance gap. A proactive stance to dispute and conflict resolution must be taken by the HR Manager.
The forms that this conflict may take include:
Strikes by employees - Bans on commencement of work sites and boycotts on continued work
Stop work meetings - 'Go slow' and 'work to rules' conditions imposed by employees
Demarcation disputes between unions - Lock-outs by management - Picketing of workplaces
Disciplinary action taken by management, e.g. demotion, transfers, dismissals, sackings and retrenchments, and, stop work meetings by employees.
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The HR Manager can avoid such disputes if the following action is taken. Management should:
Educate employees about the goals and objectives of the organization
Communicate to all employees the changes taking place in the workplace
Motivate and maintain enthusiasm amongst employees
Understand employee needs and listen to what they are saying
Develop a collaborative atmosphere and culture between employees and management
Establish committees with representatives of management and employees to discuss local issues
Promote a change culture amongst employees
Develop more team strategies within the workplace
Key Performance Indicators
The HR Manager must ensure that the state of employee relations is also measured regularly and any remedial action taken as soon as possible to prevent, in the first instance, or, to limit the length of any industrial disputes. The evaluation of the current state of employee relations may be made by use of specific Key Performance Indicators (KPIs) or by the conduct of an employee relation's audit.
The state of employee relations can be measured by:
The level of absenteeism
The level of employee morale
The level of employee participation in the decision-making process
The level of productivity
The number and length of industrial disputes
The level of staff turnover
The application of management styles and skills to employee relations
A HR Manager should adopt a participative management style if the talents, skills and diversity of the organization’s workforce are to be fully utilized. This management style is conducive to higher levels of employee satisfaction and empowerment. Such a level of employee involvement will ensure greater ownership of the decisions by employees and develop a harmonious relationship between employees and management.
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There are many skills that the manager should exhibit if the state of employee relations is to be improved within an organization. These skills include:
Verbal communication skill
Non-verbal communication skills - written communication skills, body language skills, visual or graphic skills
Listening skills - Other interpersonal or 'soft' people skills
Goal setting skills - Networking skills
Problem solving skills - Decision-making skills
Evaluating and appraising skills - Planning skills
Organizing skills - Mediating skills - Negotiating skills - Counseling skills
Meeting skills - Training skills - Team building skills
Dispute/conflict resolution skills - Delegating skills - Supervising skills
Changes in attitudes of workplace stakeholders
There are many organizational stakeholders, and a change in attitude may occur from any one or a number of these stakeholders. Stakeholders being any individual or organization that has a 'vested interest' in the successful operation of the organization and that stands to lose something if the organization is not successful. The management of large-scale organizations must react to these changes in attitude and implement organizational change to reflect these attitudinal changes that impact on the performance of the organization. These changes in attitude may occur as a result of social, political, legal, cultural, economic, technological, demographic and like changes. In addition, changes may occur in how organizations are managed and the type of employees employed within these organizations e.g. their gender, their skill level and their experience.

There are many changes in attitude that are reflected in the way that workplaces operate today. These changes include changes in attitudes related to union membership and representation, industrial democracy, enterprise bargaining, use of outsourcing as a means of employment, re-engineering of work practices and altering organizational size in terms of employee numbers.
Changes in Human Resource Management resulting from changes in attitudes, technology and legislation.
This resource looks at how changes in attitudes, legislation and technology affect Human Resource Management. Human Resource Management is never static. It is always fluid and affected by changes from within and also outside of the organization. Let's begin by outlining the ways in which changes in the attitudes of workplace stakeholders can affect Human Resource Management.
Management must follow social trends and demands and provide for flexibility and adaptability with respect to how their employees actually work and are treated by management. Employees must be able to respond to training needs and to become multi-skilled and cross-skilled. They must be able to work in teams and management must be able to accommodate employees in revised work schedules. Management must also accommodate the changing nature of employees' desires especially with respect to how long and how often they work. Work schedules must take into account the growing number of employees who want to work part-time, work fewer days in a full 35-40 hour working week, share jobs, and work under flexible hour arrangements including shift work and telecommuting. Management must also assess the costs and benefits to the organization of outsourcing certain work tasks.

Changes in organisational policies and practices may occur as a result of changes in the attitude of workplace stakeholders, changes in the technology that the organisation uses in its operations and changes in legislation that have a direct impact on the way that organisations operate and function.
Workplace diversity
Management must also take into account the changes that are occurring in terms of the workforce - its composition and the participation rate of employees. The diversity of the workforce must also be utilized for the benefit of the organization. Organizations need to implement policies that are 'family-friendly' and take into account the changing role and needs of women, in particular, in the workplace. The provision of childcare facilities is a prime example of a change occurring from a change in attitude in this area. Organizations also need to ensure that they tap into the many skills and talents that their employees possess and utilize this diversity of talent for the benefit of the individual employee and the organization. Organizations need to ensure that they have in place equal employment opportunities for all employees and that there are no acts of unlawful discrimination committed by the management of the organization.

The influence of the international market place and the globalization of markets also affects organizations and the way they operate. Changes in the attitudes of consumers arising from this globalization of business must be taken into account by management if they are to maintain their market share, both domestically and internationally.
Management should attempt to achieve the benefits of organizational efficiencies and effectiveness by taking these changes in attitude into account when they are developing and implementing their organizational practices and policies.
Changes in technology
Organizations must ensure that they use the latest technology to maintain their competitive advantage or edge and so that they can keep costs down as low as possible by taking advantage of cost efficiencies and economies of scale. There are many forms that this technology can take, from machine technology to information technology, and management must research all trends and developments in these areas and assess their relative significance to the organization.
Advantages and costs of technology
The introduction of new technology usually brings with it a need to undertake an assessment of workplace job designs and job specifications. Some jobs no longer need to be performed whilst new jobs evolve from the introduction of the technology into the workplace. Organizations need to alter training requirements to meet the needs that must be addressed if the new technology is to be used effectively and in order to retrain their employees for alternate jobs in the workplace. Assistance must be provided to those employees who find themselves de-skilled and those who need to be multi-skilled or cross-skilled.
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Management of organizations must alter their employment policies accordingly and take into account the many impacts that technology has on all aspects of the employment cycle from recruitment and selection through to termination of employment.
Management of organizations may introduce a computerized database on employees and workforce trends generally. Such a human resource information system would take into account changes related to all aspects of the employment cycle and assist management with their planning and record-keeping
Changes in legislation
Organizations must comply with State and Federal legislation with respect to how they operate and run their businesses. In particular, organizations must follow the law with respect to how employees are to be treated and looked after in the workplace so that they are not discriminated against and so that their rights are not infringed.
There are various legislative enactments that cover areas related to employee relations, diversity in the workplace and equal employment opportunities, affirmative action and occupational health and safety. These enactments must be understood and then management must implement policies and procedures, which ensures that the organization complies with the law.
Legislation and discrimination
Diversity and Equal Employment Opportunities legislation is designed to protect the rights of employees and to ensure that they are not discriminated against by management or by fellow employees.
 
The discrimination may take the form of:
Sexual harassment
Employment preference
Promotions
Denial of training and transfer
Dismissal
Lower benefits than similar employees

In relation to occupational health and safety, management must ensure that the policies and procedures that the organisation implements focus on:
Securing the health, safety and welfare of the employees
Protecting the employees against risks to health and safety
Assisting to secure a safe and healthy environment
Eliminating risks to employees in the workplace
providing for the involvement of employees and employers in the development and implementation of OH and S standards for the workplace. Management of organizations must develop and implement policies and procedures to ensure that the diversity within the workforce generally and the specific employee base of the organization is recognized and treated justly and fairly.
 
Affirmative action policies and practices may also need to be altered by management. The policies in this area are aimed at providing proactive means to ensure that women are not discriminated against in that workplace and that they are provided with equal opportunities in relation to recruitment, selection, training, promotion, remuneration and terms of dismissal or termination of employment.
Operations management Introduction
What strategies can I employ to obtain a competitive edge?
Every organization attempts to be successful in the market place by obtaining an acceptable market share through competitive strategies. In order to obtain and then to hold a competitive edge or advantage over competitors, organizations must produce goods or services that are competitive in their respective markets.
 
The competitive advantage adopted by the management of an organization will be determined by the organization’s overall strategic plan and by its strategic objectives. First, the marketing and sales department must draw up their specific strategies, then the operations management strategy can be drawn up to support both the organization’s overall strategic direction and that of the marketing/sales strategy.
The success of an organization is dependent then on the organization adopting efficient and effective operations with respect to the manufacturing of their products or the provision of their services. The planning and control of the operations management function of organizations is, therefore, crucial to the success of any organization. Operations Management is seen, in fact, as one of the core activities of any organization.
Definition - Operations management
Operations Management controls the production of a good or the provision of a service.

Operations Management (OM) involves the designing, planning, organizing, leading and controlling functions involved in the production of a good or the provision of a service. Essentially, OM concerns itself with the processes involved in converting and transforming inputs (material resources, human resources, capital resources, and information resources together with entrepreneurial resources) into outputs in the form of goods or services that add value to the organization. Therefore, OM involves the development and implementation of an effective operating system. The development and implementation of this effective operating system is applicable to each and every part of the organization.

Such an operating system consists of three basic components:
Inputs or resources (natural or material resources, human resources, technological resources and entrepreneurial resources) which are purchased by the organization.

Processes which involve the conversion or transformation of these resources into products or services (e.g. using project, batch or continuous processes) output and then feedback to the organization from its customers.

Such a conversion or transforming process involves managers in making many critical decisions. These decisions concern the initial design of the product or service, the equipment and assets required for the production process, the skills needed by employees during the transformation process, employee remuneration details, the location of organizational operations, organizational capacity, and internal facility layout. All of these decisions must be made to support the strategic direction of the organization.
Distinction between manufacturing and service organizations
1. Manufacturing organizations produce tangible physical products or goods
2. Service organizations produce a non-physical output and involve the customer in the production process

Operations Management is a crucial function of both manufacturing and service organizations.
A manufacturing organization is defined as one that produces an easily identifiable, tangible physical product or good. Whereas, a service organization is one which provides or produces a non-physical output that cannot be kept as inventory and involves the customer in the actual production process.

The essential differences between manufacturing and service organizations (which must be considered by management when designing their operations management system) include the facts that:

*The customer of a service organization is directly involved in the production process of the service being purchased
*The end products of a manufacturing organization may be stored or held as inventory.

However, both types of organizations face similar operational problems:
*Both must obtain suitable and sufficient materials to be used in the production process.
*Both must determine suitable scheduling tasks.
*Both should be concerned with both the quality of their end products and with their productivity levels.
​Characteristics of operations managers
Operations Managers - The role of the operations manager involves, amongst other roles, decision-making with long, mid and short-term consequences. These decisions will concern the initial design of the product or service, the equipment and assets required for the production process, the skills needed by employees during the transformation process, employee remuneration details, the location of organizational operations, organizational capacity, and internal facility layout. All of these decisions must be made to support the strategic direction of the organization and will not be made in isolation to the decisions made by other senior managers.
In order to understand the role of Operations Managers you might like to obtain a number of advertisements for the position of Operations Manager in Australian large-scale organizations. What do these advertisements say about the job specification and job description of the Operations Managers?
 Relationship between operations, productivity and competitiveness
Every organization attempts to improve its productivity i.e. its rate of production output per unit of input in a given time period. Increasing productivity produces a more competitive cost structure for the organization and enables the organization to offer more competitive prices to its customers.

There are three types of productivity - technological productivity, employee productivity and managerial productivity.
Increased technological productivity refers to the use of more efficient equipment, robots, computers and other technologies to increase output. Organizations in their attempt to achieve and then maintain competitive edge must remain at the forefront of technological advances.

These advances include employing flexible manufacturing systems - manufacturing systems that use computers to control machines and the production process automatically so that different types of parts or product configurations can be handled on the same production line. With a flexible manufacturing system, a single line can be readily readapted to small batches of different products based on computer instructions.

Examples of other technological advancements that organizations can adopt to enhance their competitiveness include:

*CIM - Computer-integrated manufacturing is the computerized integration of all major functions associated with the production of a product. CAD/CAM forms the basis of CIM systems i.e. Computer-aided design (CAD) and Computer-aided manufacturing (CAM).

*CAD enables engineers to develop new product designs in about half the time required using traditional methods. Engineers can use the CAD system to design the pattern layouts and then determine the manufacturing changes needed to produce new sizes and styles, expected labor standards and bills of materials.

*CAM is where the computer is harnessed to help guide and control the manufacturing process.

Increased employee productivity means having employees produce more output in the same time period. This may be achieved by better training of employees. Improved training could involve cross and multi-skilling, the re-engineering of work practices, the introduction of participative management styles, or the altering of remuneration levels or types.

Increased managerial productivity simply means that managers do a better job of running the business. Management productivity improves when managers emphasize quality over quantity, break down communication barriers and empower employees using a participative decision-making management style. Managers must learn to use reward systems, to use management by objectives, to increase employee involvement, to better utilize teamwork and to adopt other management techniques in order to increase productivity.
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Increases in productivity are, therefore, dependent upon both people and operations variables and are a significant contributor to improved business competitiveness.
Operations management strategies
The operations management strategy adopted by an organization must be one that supports the successful implementation of the organization’s overall strategic plan. This resource looks at how operations management strategies are implemented to achieve both organizational efficiency and effectiveness.
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Introduction - The development of efficient and effective operating systems for any organisation is based on management drawing up suitable solutions for:

1) Strategic Planning Decisions
organizational capacity (How many products can be produced?)
Location (Where are the products to be produced?)
Process (Which production methods should be used?)
Layout (How should the work stations and equipment be arranged?)

2) Tactical Planning Decisions
Aggregate planning (What is the annual production plan for all products or services to be produced?)
Master scheduling (How many of each product will be produced in a specific time period eg. monthly?)
Materials requirement planning (What resources are needed to meet the master schedule?)
The operations management strategies outlined in this resource outline specific tools organizations use to reach their set objectives. Let's begin with aggregate planning.
Capacity Planning
Capacity planning is concerned with determining the level of human and other resources that will be necessary to meet the production targets of the organization. (Capacity planning is contingent upon the organization having forecast the future demand for the goods or services produced by that organization.) It is concerned with establishing the maximum output capability of an organization in a given time period.

There are several ways that organizations can increase capacity. These include:
Creating additional shifts and hiring more employees, or outsourcing to contractors
Getting current staff to work overtime
Outsourcing to other organizations
Increasing plant and machinery
Building up inventory and taking back orders from customers
​Facilities location planning
Facilities encompass the land, buildings, plant and equipment, and other major physical inputs that substantially determine productive capacity and involve significant capital investment. Facilities issues confronting managers focus mainly on expansion and contraction decisions, facilities location (single facility, multiple factories and warehouses, competitive retail outlets or emergency services) and facilities layout. The preferred location of the facility will be determined by the availability of employees with specific skills, government zoning regulations, employee costs, environmental regulations, utility costs and proximity to suppliers and markets.
Process planning
Process planning is determined by the nature of the service to be provided and the available space.
Once a product or service has been designed, the organization must plan for its actual production. This involves assessing the production methods currently available (e.g. project, batch or continuous) and determining which of these is appropriate for the organization. This decision will be based on the nature and number of goods or services to be produced, the space available and the activities that need to be carried out by employees in the actual production process. This will also involve determining the layout of the organization’s facilities and how they will be used in the production process.
Facilities layout planning
Facilities layout planning is based on finding a physical layout or arrangement that will enable efficiency of production and be accepted by employees of the organization.
Facilities layout may be based on a process, product, and cellular or fixed position production process.

Process Layout
A process layout is one in which all of the equipment that performs a similar process, function or task is grouped together. The advantage of the process layout is that it has the potential for economies of scale and reduced costs. The drawback to the process layout is that the actual path or track that a product or service takes may become too long and complicated. A product may need different processes performed on it and thus must travel through many different areas before production is complete.

Product Layout
A product layout is one in which equipment and tasks are arranged according to the progressive steps involved in producing a single product. Many fast food restaurants use the product layout with activities associated with producing the goods arranged in sequence. The product layout is regarded as efficient when the organization produces large volumes of identical items. This duplication of functions can be economical only if the volume of products produced is high enough to keep each area working on the specialized products.

Cell-unit Layout
This is layout is based on group-technology principles in which equipment dedicated to sequences of operations is grouped into small unit areas. These units provide efficiencies in material and equipment handling and in inventory management. One advantage of the cell-unit layout is that the employees work in units that facilitate teamwork and joint problem solving. Staff flexibility is enhanced because one employee can operate all equipment in the unit and travelling time between equipment is kept to a minimum.

Fixed-position Layout
The fixed-position layout is one in which the product remains in one location and tasks and equipment are brought to it. It is used to produce a product or service that is either very large or one of a kind. The product cannot be moved from function to function or from process to process along an assembly line. This layout is not good for high volume but is necessary for large, bulky items and custom orders.
Aggregate planning
This involves the overall planning of production activities and the resources required for the production process for a specific time period e.g. a year. The plan will set out total stock levels, production targets and employee requirements for that time period.
​Scheduling
The aggregate plan leads to the establishing of a master production schedule (MPS). This schedule establishes a production plan concerned with producing specific products to meet the needs of customers and takes into account the specific capacity requirements of the organisation over a designated time period. It is concerned with establishing and implementing appropriate lead times required to obtain the necessary materials and human resources to be used in the production process and with delivery times to customers. It is concerned with specifying both the type and quantity of each item that needs to be produced in a given time frame; the production specifications to be implemented to produce these products; and the employee and inventory requirements for this level of production.
Materials requirement planning
This is the planning involved in obtaining the required resources to meet the master production schedule for each specific product to be produced. A computerized system may be used to identify these specific requirements.
Materials requirement planning
This is the planning involved in obtaining the required resources to meet the master production schedule for each specific product to be produced. A computerized system may be used to identify these specific requirements.
Evaluation of performance
Management must determine the KPI's (Key performance indicators) that will be used to assess the performance of the operations management system implemented by the organization. These will include:
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1. The level of cost
2. The level of waste
3. The inventory turnover
4. The inventory of wages
5. The number of machine down-times
6. The number of absenteeism
7. The level of customer satisfaction
8. The level of profit and profitability
9. The Number of industrial disputes
10. The number of government regulation breaches
11. The number of production targets met.
Application of operations management systems
An effective operations management system will not only involve planning the operations but also controlling the costs associated with these operations. These costs may be classified as either direct or indirect costs. Direct costs are those costs directly related to output and in direct proportion to that output level e.g. supplies and employee costs. Indirect costs are those costs that are incurred irrespective of output levels e.g. rent and other related occupancy costs. Management of organizations must pay particular attention to the costs associated with the availability, purchase price and quality of its resources.

A large portion of the operations manager's job thus consists of inventory management. Inventory is defined as the goods that an organization keeps on hand for use in the production process - finished goods prior to delivery, work in progress and raw materials. These forms of inventory may be defined as follows:

Finished goods inventory includes items that have passed through the entire production process but have not yet been sold. This form of inventory is expensive because the organization has invested labor costs and other related costs to make the finished product but as yet it has not been sold.

Work-in-progress inventory includes the materials moving through the stages of the production process that are not yet completed products.

Raw materials inventory includes the basic inputs to the organization’s production process. This form of inventory is the cheapest because the organization has not yet invested labor in its conversion or transformation.

Inventory management is vitally important to organizations because inventory sitting idly on the factory floor or in the warehouse is, in fact, costing the organization money in terms of insurance, deterioration, space, stocktaking costs, handling costs and tied-up capital. Current inventory management information systems allow for close inventory control but with the capacity to meet customer needs on demand. No excess inventory is needed by an organization if an efficient control system is adopted.
Inventory management techniques
There are four important techniques of inventory management. These techniques include: - economic order quantity, materials requirement planning, manufacturing resource planning, and just-in-time inventory planning.
Two basic decisions that can help minimize inventory are how much raw material to order and when to order it from suppliers. The economic order quantity is designed to minimize the sum of both ordering costs and of holding costs. Ordering costs are the costs associated with actually placing the order such as administrative paperwork, delivery, receiving, and inspection. Holding costs are those costs associated with keeping the items on hand such as storage, finance charges, and materials handling costs.
The EOQ calculation indicates the order quantity size that will minimize holding and ordering costs based on the organization’s use of inventory. The EOQ formula includes ordering costs, holding costs and annual demand.
Materials requirement planning
A more complicated inventory problem occurs with dependent demand inventory, The most common inventory control system used for handling dependent inventory is materials requirement planning (MRP). MRP is dependent demand inventory planning and involves the implementation of a control system that schedules the exact amount of all materials required to support the desired end product. MRP is computer based and requires sophisticated calculations to coordinate information on inventory location, bills of materials (a listing of all components including partially assembled pieces and basic parts that make up an end product), purchasing, production planning, invoicing, and order entry specified in the master schedule. Inventory levels are based on past consumption and are aimed at reducing inventory costs and keeping the production line supplied with the materials necessary to keep it running smoothly.

Manufacturing planning and control
Manufacturing planning and control (MPC) systems enable the firm to move materials through the operation and schedule so that the company satisfies customer needs at a minimal cost eg MRP II and JIT.
MRP II - a technique for managing inventory; it is a computer-based information system that integrates the production planning and control activities of basic MRP systems with related financial, accounting, personnel, engineering and marketing information.

Just-in-time
JIT is called a demand-pull system because each workstation produces its product only when the next workstation says it is ready to receive more input. This is in contrast to the traditional batch-push system, in which parts are made in large, supposedly efficient batches and pushed to the next operation on a fixed schedule, where they sit until used.
Quality management
Operations Managers are concerned with the quality of the output of their Operations system. This quality may be associated with the reliability of the product or service, the conformity to regulations, the level of waste, the level of after sales service provided, the design of the product, and the consistency of delivery of the product or service.
Quality Benchmarking
*Quality benchmarks may be achieved by using one or more of the following strategies:
*Quality control (where the quality is monitored during the production or the service provision process)
*Quality assurance (where the organization achieves certification that is dependent upon them achieving specified levels of quality in the actual production of the good or service)
*Total quality management (where the organization applies both quality control and quality assurance to their production or provision processes)
Total Quality Management (TQM)
TQM aims to improve quality and productivity by striving to perfect the entire production process. TQM stresses coordination between departments, especially product design, purchasing, sales and service so that all groups are working together. It is based on promoting continuous improvement in the quality of all the processes involved.
Statistical process control (SPC)
One operations management technique for improving quality and productivity is statistical process control (SPC).
SPC is the application of statistical techniques to control work processes in order to detect production of defective items.
The steps involved in SPC include:
*Define the characteristics of a high quality output
*Break down the various work activities into individual activities required to produce a high quality output
*Have a standard for each work activity
*Discuss specific performance expectations for each task with employees
*Make check sheets and collect data for each task activity
*Evaluate employee progress against standards at frequent intervals
This process relies upon the 'PLAN-DO-ACT-CHECK' approach to production. This involves planning to achieve set standards of performance and identifying areas to be improved, implementing these strategies, measuring performance and carrying out corrective action.
Project Management
Project management overview and definition
Projects are singular, but non-routine, events with precise objectives which must be achieved within a set timeframe. Projects are broken into a set of activities designed to fulfill the stated objectives. Examples of projects include the building of a house, the holding of an event like a party or even something as simple as completing a school assignment.
Project Management requires the organization of people, equipment and procedures in an appropriate way to get a project completed within a set timeframe and budget. A Project Manager is responsible for the coordination of all these resources in order to achieve the project objectives.

The following needs to be considered when planning a project:
Purpose and aim of the project
Resources available both human and material
Costing, human and time constraints
The tasks, procedures or activities required to complete the project
Project management techniques are used by organizations because they ensure that organizational objectives and system objectives are being met in a timely, accurate, relevant and complete manner. They provide a way of controlling people, resources and procedures, and clearly identify the tasks that must be completed and the desired completion time.
Project Management History
Project Management is not a new concept. Even in the time of the Ancient Egyptians a form of project management was needed to coordinate the construction of the great pyramids. Modern project management tools were, however, not developed until the early 1900s with the creation of the GANTT chart method. Further refinement in project management tools came about in the 1950s with the development of the Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). These three tools form the basis for documenting and managing the progress of projects. All of these tools produce graphical representations of projects, and all current project management software includes these components.
Project management methodology
Phase 1 - Investigation
Once a project is defined, further research is needed in order to determine whether or not it is worthwhile pursuing.
This phase:
Involves the initial commissioning of the project
Involves the identification of the initial aim and goals
Involves investigation into the possible ways the project could be completed
Is undertaken by top level management or strategic planners
This phase would provide a project brief to the project team or project manager.
 Phase 2: Planning and Design
This phase is important as it provides the foundation for the following phases. The aim of this step is to ensure that the objectives can and will be met within the set time and budgetary constraints.

This phase involves:
1. Defining the exact purpose of the project and clearly defining the objectives to be achieved
2. Breaking the project into tasks or activities and defining the purpose of each
3. Estimating the shortest and longest possible time required for each activity
4. Identifying milestones and key time markers in the project that keep the project on schedule
5. Determining the sequence of activities and any constraints affecting the sequence. For example, some tasks must be completed before other ones can start, or particular resources might be required for the activity. This also includes:
6. Deciding which activities should be completed before others can commence
7. Identifying activities that can be done simultaneously or must be done at the same time
8. Assigning resources, people, materials and equipment to activities
9. Estimating the cost of resources
10. Drawing up a calendar of events

The deliverables or final output of this phase could include:
A project plan for management review
A GANTT chart
A PERT diagram, including a critical path, or a network diagram
Phase 3: Production
During this phase the plan is put into operation. It ought to provide a completed project, ready to be 'handed over to' clients. Alternatively, it may end in a full implementation, i.e. at the end of an internal organizational project.
This phase involves:
Providing the resources
Completing the activities
Monitoring, controlling and recording the progress of the project on the GANTT chart
Comparing the current progress to the planned schedule
Updating and refining the schedule as required
Monitoring resource use to ensure no budgetary blowout
Ensuring milestones and overall goals are met
Phase 4: Evaluation and Monitoring
The initial part of this phase is the transferal or hand over of the project. Of course this project may not always have a single product as the final result. Either way, the objectives of the project at this point should be met.
Once the project is transferred to the client the project team is 'decommissioned', reassigned new tasks or placed into new project teams. Some members of the group may be utilized in observing the full implementation of the project or in supporting or monitoring its implementation.
It is also at this point the management will assess the success of the project. This assessment is based on the elements of efficiency and effectiveness:
  • Quality: How well it has met the objectives? What is the final quality of the product?
  • Cost: Did the project stay within the budget specified and proposed use of resources?
  • Time: Did the project finish on or before the specified date? Was it the shortest possible time for the project?
  • Timeliness: Was the project completed in time for the information to be of use?
  • Accuracy: Are there any errors in the product?
  • Relevance: Does the project/product include only those elements required by the client?
  • Completeness: Does the client have everything they need in order to do their work and make their decisions?
Estimating Activity Time
When estimating the duration of the project, consider each task separately, the people doing the task, normal working times and, above all, be realistic.
Project Managers may be able to use historical data or experience to estimate duration.
Scheduling and Expediting
Projects rarely follow the plan laid out. During the project the Project Manager should assess each step. If there are delays they should identify alternate actions to bring the project back within the time constraints. Often this is done by putting more resources, time or money into a particular activity. This course of action should be thought through carefully. Time and costs need to be traded off in order to get the project completed.
After the critical path and the slack time in other activities have been identified, it may be possible to expedite (hasten) or crash the schedule. This involves identifying tasks that could possibly be reduced in time if enough money or resources were available. Again it is a matter of assessing whether the extra cost or effort is worth the saving in time.
Critical Path Method
The critical path is a series of activities which are vital to the event being completed on time. For example, a delay in one event will delay the completion of the project.
Project management documentation
Types of Documentation
Documentation comes in a variety of styles to meet the needs of different types of users. For example, documentation produced for a technician may be different to that of a data entry operator because their roles require different levels and types of knowledge specific to their jobs. Documentation is produced throughout the development of any solution. It records all details to help current developers and users as well as any future ones.
Program Documentation
When developing a software solution the developer or programmer will document all steps of the process. The software product should be fully supported with technical documentation so that any programmer in the future can understand the process and the code that was developed.
System and Technical Documentation
System documentation involves developing and documenting all the processes of system development. This includes such items as data dictionaries, data flow diagrams, network diagrams and all other design documentation that occurred throughout development. All equipment will be logged and all the technical parts of the system must be documented for future reference.
Paper Based Documentation
Paper based documentation is the traditional form of user documentation. It consists of manuals and reference guides that would be available in the computer section of your local bookstore or library. It also includes documents produced in-house that are specifically designed for the system. User manuals are the most common form of paper-based documentation. They cover, in a tutorial format, the steps required to complete the sort of tasks that an end user would perform on a routine basis.
Electronic Documentation
Over the last few years electronic documentation has become a popular way to give employees and/or end users the assistance they require to complete tasks. Most software packages now come with the help manual in printed as well as electronic form. Electronic documentation takes advantage of hypertext and other multimedia elements. Some packages also come with a CD-ROM to take the user through a series of tasks to familiarize them with the software or hardware operations. Because these forms of documentation are available at any time from the computer they are often referred to as being 'online'.
The System Development Life Cycle Overview
Information systems and products do not just 'happen' - they are usually the result of a process that identifies problems and creates solutions to them. The most successful information technology systems are those that are able to properly solve problems within an organization. The development of information products and systems will usually follow a process that involves a number of distinct phases.

There are a number of names that this process is given, including: system life cycle, system development life cycle and system development methodology. We will use the term system development life cycle (SDLC) however, any of the other terms could be used interchangeably. In this job advertisement you will see that 'SDLC' has been used as a standard industry term.
Each of the phases has a series of events or steps that are completed in order to arrive at the final product.

There are five phases of the SDLC. 
1. The planning phase
2. The analysis phase
3. The designe phase
4. The implementation phase
5. The use/evaluation phase
The Planning Phase
There are many factors which may prompt change within organizations. Some examples include:
  • A change in government policy
  • The introduction of new, or amendment to existing, legislation
  • Market trends
  • Community attitudes and values
  • Availability and cost of equipment
  • Desire for increased competitiveness
  • Employment agreements
  • Health and safety.
Regardless of the reason, the development of any computer based information system should receive careful planning. Proper planning is important as it allows:
  • The scope of the project to be defined
  • Potential problem areas to be identified
  • The sequence of the tasks to be identified
  • For the provision of a basis for control.
The planning phase will normally follow a sequence of steps including:
  • Recognizing the problem
  • Defining the problem
  • Setting project objectives
  • Identifying constraints
  • Conducting feasibility studies
  • Creating project proposals
  • Establishing control mechanisms.
A GANTT chart may be used to assist in the planning of a new system.
Note - the planning that takes places in this process is not the planning of the program or system, rather, it is the initial steps that take place to define the project and set the objectives that will be used to evaluate the overall success of the final solution.
The Analysis Phase
The analysis phase of the SDLC is where existing system(s) are studied with the aims of designing a new or improved system. In this phase, a number of important decisions are made - including who will work on the system, and the setting of specific performance goals for the system to achieve.
Data must be gathered on the strengths and weaknesses of the existing system by using methods such as:
  • Observation
  • Research
  • Interviewing
  • Sampling to trace procedural paths and information flows
The analysis phase has the following steps:
  • Announcing the project
  • Creating the project team
  • Defining information needs
  • Defining system performance criteria
  • Creating a design proposal
At the conclusion of the analysis phase a decision on whether or not to proceed with the project must be made. This decision will be made based upon the information that is contained within the design proposal - hence it is important that the design proposal clearly identifies what resources will be required to complete the project and sets the major goals and the time frame for the completion of the project.
The Design Phase
The design phase, as the name suggests, is where the new system will be designed. In this phase the processes and data required by the new system are defined. In most projects, there will be a number of different ways in which the problem can be solved - and consequently, in this phase, it is important that a number of different alternatives are investigated to ensure that the most efficient and effective solution is adopted.
In this phase, the steps that are followed include:
  • Preparing a detailed system design
  • Identifying and evaluating alternative system configurations
  • Selecting the best configuration
  • Preparing an implementation proposal.
The implementation phase
The implementation phase is where physical and conceptual resources that are required for the project are obtained and integrated into the existing system to produce the final working system.
There are a number of steps that are followed in this phase, including:
  • Planning and announcing the implementation
  • Acquiring the hardware resources
  • Acquiring the software resources
  • Preparing the physical facilities
  • Educating the participants and users
  • Preparing an implementation schedule (or changeover)
  • Changing over to the new system.
The Use/Evaluation Phase
Once the system has been implemented, the final phase in the project will be the use and evaluation phase. In this phase, the system should be in full use to meet the objectives that were initially identified in the planning phase.

The use/evaluation phase has a number of steps:
  • Using the system
  • Auditing the system (including a post implementation review)
  • Maintaining the system
  • Re-engineering proposals.
Some methods by which data can be gathered for this phase include:
  • Recording equipment breakdowns
  • Monitoring staff absentee rates
  • Logging help desk enquiries
  • Surveying customers
For each of these methods, some or all of the following criteria may be applied:
  • Efficiency (time, cost, effort)
  • Effectiveness (timeliness, accuracy, relevance, completeness)
  • Maintainability
Accouting Introduction - Business Management
Accounting Introduction
There are three basic reports that you should be familiar with:
  • the cash flow statement
  • the Profit and Loss statement
  • the balance sheet
​The Profit and Loss statement
The format of the Profit and Loss statement will be influenced by the nature of the firm's activities. It should also respond to the needs of those who use it.
It will be assumed that the business is a trading firm using the perpetual inventory approach.
The Profit and Loss statement for a trading firm falls into two sections:
  • calculation of gross profit (revenue less cost of sales)
  • calculation of net profit (gross profit less other expenses)
Five basic components of the balance sheet
1. Current status
2. Non current status
3. Current liabilities
4. Non current liabilities
5. Proprietorship
Classification of terms for the balance sheet
Classification of items into current and non-current sections helps assess liquidity. 
There are three criteria for separating current from non-current assets:
  • Time - How long before the asset is expected to be converted into cash?
  • Intention - Is it intended to convert the asset into cash in the near future?
  • Economic benefit - For how long will the asset continue to earn revenue for the business?
Time is also a criterion for separating current and non-current liabilities. When classifying liabilities it is important to check the date when a liability falls due. What may be a non-current liability in this period may become a current liability in the next period. Liabilities such as loans and mortgages may be in the form of installment payments. This means that they have a current and non-current component. For instance, if you borrowed $20,000 over five years then initially you would have $4,000 of loan as a current liability and $16,000 as non-current liability. At the end of the year with $4,000 repaid you would show in the balance sheet $4000 as a current liability and $12,000 as non current, both under the title of 'loan'.
Balance sheet tasks
Some of the tasks involving balance sheets you may be required to undertake include:
  • Presenting fully classified balance sheets
  • Determining current assets and current liabilities
  • Using a previous balance sheet and additional information to prepare a current balance sheet
  • Considering the effect on the balance sheet of a series of transactions
  • Identifying the different accounting concepts and principles and the manner in which they relate to the balance sheet
  • Analysis and interpretation of a series of balance sheets
Accounting terminology, A - C
Analyze
  • Accounting information in assessing the performance of a business operated as a sole trader in such matters as profitability and liquidity;
  • Debtors using an ageing analysis;
  • The information presented in accounting reports and budgets for a business.
Balance
  • Ledger accounts at the end of an accounting period;
  • The 'disposal of asset' account to determine the profit or loss on disposal of assets.
Calculate
  • Owners equity (capital) from a given list of assets and liabilities at a particular date;
  • The amount of profit earned from a given set of information relating to a specific period of time.
Check
  • The accuracy of ledger recordings;
  • A bank statement against the cash records of a business.
Classify
  • Items into categories of assets, liabilities and owners equity, with revenue and expenses as elements of owners equity;
  • Items in Profit and Loss statements to provide information for assessing the performance of different functions or responsibilities.
Compare
  • A 'T' ledger with a three column ledger;
  • The cash method of recognizing  a transaction with the accrual method of recognizing  a transaction.
Construct
  • A control account from data provided, e.g., a debtors control account, to determine credit sales;
  • A table showing the impact of different methods of depreciation on the Profit and Loss statement and balance sheet.
Criticize
  • The preparation of annual accounting reports in terms of their value to the management of a business.
Accounting terminology, D - L
Debate
  • The view that a perpetual inventory system of recording for stock is a better system than a physical inventory system for recording stock.
Define
  • Accounting terms.
Demonstrate
  • That 'equalling' totals at the foot of the trial balance does not ensure that accuracy has been achieved in ledger recording;
  • That profit is an estimated measure.
Describe
  • The accounting process in terms of its recording, reporting, interpreting and budgeting functions;
  • What is involved in recording subsidiary ledger stock records using identified cost, and in using assumed FIFO cost flows.
Design
  • Columnar special journals to record transactions of a like nature;
  • Suitable headings for reports which specifically state the name of the firm, the type of report, and the exact length and/or exact date of the report.
Discuss
  • Alternative methods of revenue recognition and expense recognition;
  • each accounting principle in terms of the effect on each of the recording and reporting procedures.
Distinguish
  • Between the asset approach to recording a payment in advance and the expense approach to prepaid expenses;
  • Between a current asset, and a non-current asset and a current liability and a non-current liability.
Enumerate
  • With explanations, the reasons for a business adopting a perpetual system of recording for stock.
Explain
  • The consequences for both the Profit and Loss statement, and the balance sheet of alternative values for stock;
  • Why the historical cost balance sheet does not show the current worth of the firm.
Evaluate
  • Alternative methods of determining the cost of stock;
  • Alternative procedures in the recording and reporting of inventory.
Graph
  • The effect of alternative methods of depreciation on the balance sheet value of a particular non-current asset;
  • A firm's rate of return on investment over a number of equal-length accounting periods.
Group
  • Ledger accounts in drawing up a chart of accounts;
  • Transactions according to their effect on the accounting equation.
Identify
  • The accounting principles involved in accounting for non-current assets and depreciation;
  • The significance of a stocktake held at the end of the accounting period.
Illustrate
  • How the entity principle effects the recording of transactions;
  • How a firm may experience an increase in cash but have operated at a loss.
Interpret
  • Information provided on the profitability and liquidity of a firm.
  • Accounting data in assessing the performance (including profitability and liquidity) of a business from an internal management point of view.
Justify
  • The treatment of depreciation as an allocation of cost;
  • The application of the 'lower of cost and net realisable value' to individual items and groups of items but not to aggregate stock valuations.
List
  • Sources of finance available to a sole trader for normal trading and for expansion;
  • Advantages resulting from the use of a subsidiary ledger.
Accounting terminology, M - Z
Outline
  • Advantages and disadvantages resulting from the use of 'double entry' recording compared with 'single entry' recording;
  • The differences between the recording and reporting for stock under a perpetual inventory system, and the recording and reporting for stock under a physical recording system.
Prepare
  • Appropriately classified reports, such as a Profit and Loss statement and balance sheet for a sole trader;
  • Budgeted reports, such as anticipated revenue, anticipated expenses, budgeted Profit and Loss, budgeted balance sheet, and cash budget.
Prove
  • That assets will always equal liabilities plus owners equity;
  • That 'single entry' and 'double entry' recording procedures are able to produce the same accounting information.
Rank
  • Documents in the order in which they are used for the sale of goods;
  • Current assets in the order of liquidity.
Recall
  • The rules of posting involved in 'double entry' recording;
  • The accounting equation.
Recognise
  • A transaction involving credit;
  • Financial transactions amongst a set of business activities.
Reconcile
  • The balances in subsidiary ledger accounts with the balance in the related control account;
  • The bank balance shown in the firm's ledger account with that shown on the bank statement.
Record

  • Accounting transactions using both single and double entry recording procedures.
  • Transactions for firms selling services, firms selling goods, and firms selling goods and services.
Report
  • The performance of a sole trader-operated business in a fully classified Profit and Loss statement;
  • The financial position of a business in reports showing such information as anticipated revenue, anticipated expenses, budgeted profit, budgeted and historical cash flows, and budgeted wealth.
Rule
  • Appropriate journals or cash books to record information from original documents;
  • Ledger accounts to receive information being posted from journals.
State
  • When each of the following methods of revenue recognition would be appropriate: point of sale, point of delivery, collection of cash, and stages in completing a contract;
  • Why it is inappropriate to arbitrarily allocate expenses that do not bear a direct relationship to a particular department or product.
Suggest
  • Advantages in a recording system using control accounts;
  • Ways in which a cash budget is able to benefit a business.
Summarise
  • The many reasons why a firm must continually review its policies on selling prices, controlling costs, regulating terms of sale, limiting the level of stock on hand, controlling cash, and close revenue and expense accounts necessary to calculate profit in the ledger at the end of the accounting period and transfer that profit to the owner's capital account.
Tabulate
  • Examples of adjusting and closing journal entries;
  • Examples of balance day adjustments under both 'single entry' and 'double entry' recording procedures.
Use
  • A set of cash books to record a series of transactions evidenced by original documents;
  • Ledger accounts based on 'double entry' to record a series of transactions evidenced by original documents.
Write
  • About the role of accounting in business;
  • About the problems of defining costs, and the effect of alternative values of stock in the Profit and Loss statement and the balance sheet.
Accounting section will be continued within 72 hours!
8404 Coral Way West
Tampa Florida 33615
​Phone 347-264-7540
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Derrick Taylor Business Services
Exclusive Dreams Marketing - Copyright © 2010 
Tampa Florida -  NYC New York 
​Phone 347-264-7540