Scope of Management Functions – Part3
Decision Making Management Function
Decision Making function, though not often mentioned, because most of the authors imply it automatically, is the basis of manager job. It is in core Scope of Management. Management is the one who decides:
- which plan and type of organization will be adopted,
Decision Making
- what types of personnel are needed,
- which management system will be used,
- which control methods to achieve results will be used
- and what corrective action will be taken to correct the discrepancies.
To make such decisions management need information from internal and external environment of company.
Here is raised importance of Business Intelligence and Decision Support Systems that provide information from internal and external resources.
Yet the information that managers receive should not be too extensive, otherwise may cause saturation of information that leads to losing the possibility of proper and timely decision-making.
Controllers and Management
For this reason, management has a need for information related to its function to be filtered by specific departments or processes in a business organization. Another reason, often the case, is that managers are not fully qualified to perform all of the above functions (for example, because they are not adequately trained to monitor economic and financial analysis or actual sales results) and are in need of support in that area.
For the mentioned reasons, seeing own limitations and common encountered problems, managers have decided to introduce their businesses function of Controlling and / or department. The reason is the need for a function that will provide adequate assistance in carrying out their tasks, provide them with timely and accurate information and make coordination and integration of functions within and between them.
When we talk about controlling coordination function then it refers to the consolidation of different actions in an enterprise in order to achieve the goals on same hierarchical level (horizontal consolidation).
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Integration is on the other side of the connection, unification, of the different parts into whole, ie the consolidation at different hierarchical levels (vertical consolidation). Integration resolve conflicts that exist between parts and whole.
Thus, through the coordination that follows actions such as purchase of machinery and training of personnel to operate the machine, goal is to raise sell of new types of products. At the same time connection of various departments and functions within a business entity is being made with aim to avoid the mismatch between them. In this way following situation can be avoided: production has a production capacity of 100,000 pieces of products, sales has the plan of sale for 200,000 pieces, produced and sold is only 25,000 because the acquisition has not acquired enough raw materials. Integrative function of controlling is the one who is responsible for ensuring that the purchase of machinery and all related activities to achieve the stated goal of a business entity (determined by the profit or market share). In doing so, controlling has the task of harmonizing the goals of higher level (top management) with goals that are set for each process function or department.
While the manager is responsible for the success of the company (which is achieved by performing their functions), controlling is responsible for transparency of that success. So when manager decides on the specific goals that will be achieved for the company (for example, profit growth of 10%) controlling cares to define steps to achieve this goal and method of monitoring of movement toward that goal. Also, controlling cares about adjustment of the goal to the global vision of the company and that all the functions of management and all departments of companies will be adapted for this purpose.
Affiliation of controlling and management can be seen in the following view where can be see that the controlling is link between the tasks of managers (responsible for the success) and the controller (which is responsible for the transparency of that success).
Source: Osmanagić Bedenik, N. Kontroling abeceda poslovnog uspjeha, Školska knjiga, Zagreb, 1994.godina, page.85. sl.42.
Read more about Scope of Management and Functions in Scope of Management – Part1 and Scope of Management – Part2 articles.
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