Class 12 OCM Chapter 2: Functions of Management

Key concepts: Functions of Management

Planning

Deciding in advance what to do, how, when and by whom. It is the basic function that sets objectives, reduces risk through forecasting and gives the standards for control.

Organising

Bringing together men, money, material, machines and methods, and grouping activities and authority so that the plans can be carried out. Organisation is the resulting structure.

Staffing

Attracting, recruiting, selecting, placing, appraising, paying, developing and retaining the best workforce. Its basic principle is the right person at the right job with the right pay.

Directing

Instructing, guiding, communicating, inspiring, motivating and supervising employees to reach goals. It is called the soul or life spark of an enterprise.

Co-ordinating

Integrating and synchronising the efforts of a group to give unity of action. It is a hidden force that binds all the other functions of management.

Controlling

Comparing actual performance with the standard, measuring deviation, finding its causes and taking corrective action. It is performed at all levels of management.

POSDCORB

Luther Gullick's keyword for the functions: Planning, Organising, Staffing, Directing, Co-ordination, Reporting and Budgeting. Reporting and Budgeting fall under controlling.

Quick revision: important points

• Order of functions: planning, organising, staffing, directing, co-ordinating, controlling; planning is first, controlling is last.
• Fayol: 'To manage is to forecast and to plan, to organise, to command and to control.'
• L. A. Allen: 'Management is what manager does.'
• Process of controlling: standards, measurement, comparison and finding deviations, analysing causes, corrective action.
• Importance points: planning 10, organising 10, staffing 10, directing 10, co-ordinating 10, controlling 10.
• Mary Parker Follett called co-ordination the 'plus-value of the group'.

Practice MCQs with answers

1. Who said, 'Management is what manager does'?

   1. Henry Fayol
   2. Luther Gullick
   3. L. A. Allen
   4. Theo Haimann
   Show answer

   Answer: C. L. A. Allen
   This definition of L. A. Allen focuses on the functions performed by the manager.

2. In Gullick's POSDCORB, the functions of Reporting and Budgeting are included in

   1. controlling
   2. planning
   3. staffing
   4. directing
   Show answer

   Answer: A. controlling
   The chapter states that reporting and budgeting are summarised in the function of controlling.

3. Deciding in advance what to do, how to do it, when to do it and who is to do it is

   1. organising
   2. staffing
   3. directing
   4. planning
   Show answer

   Answer: D. planning
   This is the definition of planning by Koontz and O'Donnell.

4. Planning reduces the risk of an uncertain future mainly with the help of

   1. forecasting
   2. recruitment
   3. motivation
   4. delegation of authority
   Show answer

   Answer: A. forecasting
   Planning is based on forecasting, which anticipates future changes so that they can be tackled in advance.

5. Planning is said to give the base for controlling because it

   1. appoints the staff
   2. groups the activities
   3. sets the standards of performance
   4. motivates the employees
   Show answer

   Answer: C. sets the standards of performance
   Actual performance is compared with the standards fixed in planning to find deviations.

All Class 12 OCM chapters

• Chapter 1: Principles of Management
• Chapter 2: Functions of Management
• Chapter 3: Entrepreneurship Development
• Chapter 4: Business Services
• Chapter 5: Emerging Modes of Business
• Chapter 6: Social Responsibilities of Business
• Chapter 7: Consumer Protection
• Chapter 8: Marketing

Class 12 OCM notes: all chapters