MANAGEMENT

It is conventional among scholars of administration to distinguish between formal and informal organization.

Formal Organization: a formal organization is an organization that is specifically established for the purpose of achieving certain goals. It possesses rules and regulations for the achievement of those goals. It is deliberately planned, designed and duly sanctioned by established competent authorities.

In essence, a formal organization has an officially well defined structure that may describe its authority, power accountability and responsibility relations. An example of formal organizations include government agencies, parastatals, corporations, universities and tertiary institutions.

In a formal organization, there is centrally organized co-ordination of activities which makes it possible for the effective and efficient attainment of set goals.

A crucial feature of a formal organization is the organizational chart which is a visual device that shows the various departments in an organization and how they relate to one another. The organizational chart helps the employees, the management and other stakeholders to see at a glance, the division of responsibility and the lines of authority in an organization.

Informal Organization: an informal organization with special reference to public organization refers to voluntary groups of people within an organization without a formal assignment or procedure. It is a network of persons and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.

Unlike formal organizations, an informal organization does not have well defined rules and procedures guiding its activities. Examples of informal organizations are students unions in institution of higher learning, academic and non-academic unions in tertiary institutions. Both informal and formal organizations have goals and objectives.

Outlined difference between Formal and informal Organization

• A formal organization is legally recognized while informal organization is not.
• A formal organization has a separate existence from its owners while informal organization is an appendage of formal organization.
• A formal organization can and do have the right to dissolve informal organization.
• A formal organization has long term objectives while informal organization can dissolve after the short-term objectives for which it was formed must have been achieved.
• A formal organization employs staff but informal organization draw their membership from the staff of formal organization.

Problems of Informal Organization

It is true that informal organizations render some services to their members and to the formal organization; they also create problems in the formal organization in which they exist. Such problems are:

• Informal groups may resist change in formal organizations, which are not to the comfort of the informal group.
• The communication system in the informal group may generate rumour, which may be disorganizing. The grape vine which is usually the informal means of passing news or rumours from person to person is not reliable mean for correct, authentic and authoritative information. Generally, the influence of the informal groups in an organization is a force to be reckoned with because they can constitute a threat to the smooth running of the organization if ignored by the management.

Suggested Posts:

• Principles of Management
• Public Financial management
• Decision Making & Decision Making Models
• Authority & Types of Authority in Formal Organization
• Decision Making & Decision Making Models
• Organizational Structure
• Motivation in Management

Henri Fayol identified the fourteen principles of management. He believes that these principles need to be applied in organization if maximum efficiency is to be achieved. According to him, these principles are capable of adaptation to every need. It is a matter of knowing how to make use of them. In 1978 Henri Fayol developed the principles of management. Those principles are:

Division of Works: the first principles of management is division of works, this means that works or tasks necessary for accomplishment of organizational goals are divided into highly specialized jobs with each employee performing a particular job. Division of labour results in specialization, separation of powers and greater productivity, efficiency and effectiveness.

Authority and responsibility: authority is the right to give orders and the power to exact obedience. The right to give orders should be balanced by the responsibility for performing necessary duties.

Discipline: discipline is essential for the success of any organization. Discipline in essence, is obedience and respect for the organizational agreements between the firm and its employees. It is an outward mark of respect. The state of discipline in any organization depends largely on the strength of its leaders. The best means of establishing and maintaining discipline are good superior at all levels, clear and fair agreement and application of sanctions judiciously and impartially.

Unity of Command: this implies that an employee should receive orders from one superior only. Dual command creates disorder, uneasiness and role conflict within an organization.

Subordination of individual interest to general interest: this principle states that the interest of an organization should supersede that of one employee or group of employees. Selfishness, corruption, inordinate ambition and some human passion tend to cause the general interest to be overlooked in favour of personal interest. To ensure that general interest supersedes individual interest, there must be fairness and good example on the part of the superior at all level of the organization hierarchy.

Centralization: this principle advocates that control should be retained centrally for maximum efficiency. Any organization which allows for greater role by subordinates in activities is decentralized while any other which does not is centralized.

Remuneration of personnel:  this principle advocates that the salaries of the workers should not only be fair but also should meet the satisfaction of the employees. Remuneration should be fair to encourage keenness to work by rewarding well deserved effort and shall as well not lead to over payment.

Chain of command: this principle implies that there should be clear line of authority from the top to the bottom of the organization. The line of authority is the channel of communication, which starts from the ultimate authority.

Stability of tenure of personnel: this principle requires that employees should experience stability of position and long term appointments. In this case, organization should provide career structure that enables workers to stay and grow.

Initiatives: initiatives mean the power of thinking out, freedom to propose and to execute plans. It is the responsibility of management and heads of various units within an organization to inspire a sense of initiative among employees within the limit imposed by respect for authority and discipline. The opportunity to exercise initiative is a powerful motivator.

Order: there are two aspect of this principle. One is the material order which entails that there must be a place for everything and everything must be in its place. The second is the social order which entails that there must be a place for everyone and everyone must be in his place. In essence, the principle states that equipment and people must be well chosen, well placed and well organized for the smooth running of the organization.

Unity of direction: this principle implies one head and one plan for a group of activities having the same objectives. It is an essential condition for unity of action, co-ordination of strength and focusing of efforts.

Esprit de Corp: this principle requires that a spirit of harmony and cooperation should exist within the organization. The principle in essence stresses the need for interpersonal relationship, team work and communication in achieving organizational goals and that there is a strength in unity.

Equity: This principle requires that employees must be treated fairly and equitably in every organization. For personnel to be motivated in doing his duties with devotion and loyalty, he must be treated with kindness and equity. Kindness on the part of the management produces loyalty on the part of the workers.

Suggested Posts:

• POSDCORB: Functions of the Chief Executive
• Human relation Approach to management by Elton Mayo
• Difference between Formal and Informal Organization
• Decision Making & Decision Making Models
• Organizational Structure
• Motivation in Management

The chief executive in the public service is the administrative head of a government established, be it a ministry, department of parastatals, for examples, the Permanent Secretary, Director General, Accountant General, Auditor General, General Manager, Vice Chancellor, Rector, Provost, Government Printer etc.

Luther Guilick, an American scholar condensed the duties of the Chief Executive into acronyms – POSDCORB. Each letter stands for one of the critical functions performed by the Chief Executive, planning, organizing, staffing, directing, coordinating, reporting and budgeting.

PLANNING: planning is an essential element in every social activity. Every rational being makes plans. Today when the scope of large scale organization is impossible for one, or few persons to plan complicated enterprises without expert assistance, planning has come to be accepted as an essential preliminary, not merely to the implementation, but also to the shaping of policy.

Planning helps organization to explore the situation in relation to the objects in view to determining what resources are available and to suggest how they can best be marshaled. Planning includes an element of forecasting, leaving to the leader the choice between alternative ways and means.

Chief Executive is concerned with the long term plan; each executive below him must devise his own short term plan to control the day to day working within his own smaller sphere of responsibility.

ORGANIZING: the managerial function of organizing is concerned with the designing and maintaining a network of roles and relationship that enables a group of people operating in a formal work setting to function effectively.

For an organized role to be meaningful to people, it must incorporate or embody, (a) verifiable objectives, (b) a list or  description of the major duties involved and (c) a clearly defined and understood area of discretion or authority, so that the person filling the role knows what he or she can do to accomplish results.

In addition, to make a role operational, provision should be made for needed information and other tools required for performing the assigned duties or activities. It is the form of structure of roles that a formal organization is conceived.

It is in this sense that we think of organizing as the grouping of activities necessary to attain objectives, the assigning of each grouping to a manager with authority necessary to supervise it, and provision for coordinating the activities. An organizing structure should be assigned to clarify the environment so that everyone knows what is expected of him.

STAFFING: it covers the whole process of recruitment, training and the provision of suitable conditions of service for the employees. Within the conditions laid down by higher authorities, the Chief Executive main task is to ensure that his subordinates carry out their duties in a way calculated to achieve the objectives of the organization with the available resources. This requires a good system of staff welfare.

DIRECTING: directing is the continuing task of making appropriate decisions and seeing that such decisions are embodied in orders and instructions in such away as to ensure the effective and efficient running of the enterprise and the achievement of the end in view.

For the direction to have the desired effect, the plan the organization and the staff must already be in place. Through judicious delegation of responsibilities, direction may be made to operate at as many policy making power and the Chief Administrator within the organization.

It is concerned with the formal instructional system whereby commands are passed downwards from the head to the lowest level.

CO-ORDINATING: in a small group the leader coordinates through personal contact direct with each member of the group and the proximity of these members means that each member has direct contact with the fellows.

The group is maintained as a team through the personal relationship of the members. In a large scale organization such direct simple coordinating is no longer possible, formal methods coordinating have to be devised.

The development of the hierarchical pattern in which the leader has direct contact with a limited number of deputies and so on all down the line; is an instance of natural coordination. Formal method of coordination is built up by the judicious operation of all the other functions of the POSDCORB.

REPORTING: reporting is intended to cover those activities that have to do with the provision of records; that is with the normal office work. It is concerned with the supply of information.

Reporting is particularly important to the Chief Administrator when supplying information to the political chiefs and exchanging information with subordinates. Many of the other functions are involved in reporting.

BUDGETING: budgeting is concerned with accounting, costing and fiscal management generally. It is important that the chief administrator should have the considerations of expense in minds at all stages.

In planning, to carry out the policy that has been laid down, he must work within the limits of the financial resources available to his organization.

In the discharge of his budgeting and accounting function, the chief administrator is assisted by specialist. It should be noted that budgeting is an aspect of control and both are related to the directing function.

Recent changes in functional responsibilities

In the most recent times there have been two major changes by different Military Heads of States in Nigeria, namely, General Ibrahim Babangida and General Ibrahim Abacha respectively in the public service.

The first was in 1985 when General Babangida changed the post of Permanent Secretary to Director General. This brought an end to career civil servants occupying the position. That meant that any person could be appointed to that position and it, hence, became political seat.

Then the Minister or the Commissioner became the Accounting Officer. The Director General stays there as long as the political overload stays on, but goes out immediately the regime’s tenure elapse.

The second change was during the regime of General Ibrahim Abacha. He brought back the Permanent Secretary-ship and stimulated the spirit and hope of career civil servants. Now the permanent secretary became the accounting officer.

In conclusion, while the era of Director General dislocated career-ship of civil servants and left the bureaucratic hierarchy in amorphous situation, the permanent secretary-ship rejuvenated the hierarchy because the hope of hardworking civil servant is to get the highly exulted position of permanent secretary.

Suggested Posts:

• Decision Making & Decision Making Models
• Organizational Structure
• Difference between Maslow Hierarchy of Needs theory & ERG theory
• Human Relations Approach to Management by Elton Mayo
• Difference Between Formal and Informal Organization
• Principles of Management
• Approaches to the study of organizational behaviors
• Motivation in Management

Budget Monitoring and price intelligence unit in the presidency, otherwise known as Due Process office is rooted in the financial practices of inflated costs of government expenditure and other unscrupulous practices, which characterized public programme implementations.

The corrupt scenario was properly captured by the genuine and patriotic observation of Dr Oby Ezekwesili, the former senior special assistant to the president on Budget and due process. she said “Undoubtedly, the perception of Nigeria as a nation that has compromised its developemental potentials because of poor state stewardship of resources is more factual than anyone of you can imagine. That in over three decade of her status as oil producing nation, indicators of the country have shown more declining trend than a progressive course, which represents proof of the monumental abuse of resources” that we have witnessed in our country.

Due process means the application of the principles of openness or transparency, competency or qualification and competition or equal opportunity to all in the conduct and award of federal government contracts to ensure that the winner, the cost and the quality are right for every kobo of the Nigerian public treasury that is spent in the purchase of goods, services or works.

Some apostles of due process note that since that overriding principle of the administration is that “Bad behaviour must be closely checkmated and good behaviour must be rewarded” (a basic principle upon which all great economies are built) it is no surprise that those who choose to remain stuck with the old bad ways of the past will find the due process difficult to bear.

The initial strategy of the Unit was to quietly implement the due process, without any wave of publicity as it’s widely acknowledged; implementing the due process within our historical political milieu is a very difficult aspect of the government reform agenda.

However, now that mostly, because of the President undaunted vision, the principle has become etched and stamped in the mind of operators and participants in federal government contracting, the need for wider public and other stakeholders involvement is made more critical.

BENEFITS OF DUE PROCESS

Specifically, the due process results in the following benefits to the government:

• Good governance of public money and assets resulting in the reduction of corruption.
• Improved system planning and project preparation work leading to accuracy of costing, cost/benefit analysis and prioritization in deciding the spending pattern and plan of any given year.
• Improved fiscal management through more effective expenditure, institutions, processes and control mechanism.
• More optional resources allocation decision to achieve clearly articulated public policy objectives through enhanced identification of the cost and benefit of alternative expenditure decisions.
• Improved liquidity management of public funds.
• Improved technical efficiency in managing and utilizing resources through improved information flow.
• Enhanced transparency and accountability of government, providing better historic information as a guide to the future.

Due Process Compliance Certificate

This due process compliance certification (DPCC) is three leveled certification process that comprises:

• Budget Preparation work certification
• Contract Award Process Certification
• Completion Work Certification

Budget Preparation Certification:

At the budget preparation certification, the goal is to ensure that planning is linked to budgeting and accounting especially through the process of selecting and monitoring of projects. Both of these aspects are fully integrated within the system to ensure consistent prioritization and the use of the accounting system to provide financial information on project put-turns.

It can be stated too strongly that the determination of the feasibility of each project is an essential and the basic step in the process of project preparation and development. Technical, financial and economic feasibility studies must be carried out and should address at least the following types of issues:

• Availability of suitable site
• Availability of appropriate building materials and labor
• Availability of necessary external services such as water supply, power supply, highway and pedestrian access, foul and service water drainage and solid waste disposal
• Have the mechanism for further operation and maintenance of the project been carefully studied and clearly articulated?
• Has the demand for the project been determined by carrying out detailed surveys of potential users?
• Will the project generate positive financial returns coverage?
• What over time is it capital cost?
• On an annual basis, what is it recurring operational and maintenance cost?

In summary, certification of a project for budget preparation entails a decision that such a project has fully satisfied all due process requirements for start of implementation. Specifically, that it has met the following conditions:

• It is well aligned with federal government of Nigeria strategic and sectoral priorities
• Project has been adequately prepared technically and financially
• Project cost is consistent with estimate and comparable with international practice.

Contract Award Certification:

Upon the appropriation by the National Assembly, the expenditure management stream of the DPC commences. Specifically, the BMPI (Budget Monitoring and Price Intelligence Unit) specialist working closely with all relevant spending units must certify that each appropriated project has met the following conditions before contract can be awarded for its execution;

• Tender document have been prepared in line with the federal government guidelines.
• The tender process has been carried out in compliance with federal government guidelines.
• Pre-qualification criteria were appropriate clearly stated and fully complied with.
• Selection process has been carried out in line with government requirements.
• The lowest/best evaluated bidder determined as qualified to perform the contract satisfactorily was recommended for contract award.
• Management has approved selection of good reasons for changes in recommendation have been provided.
• Contract price is comparable with international experience.
• It has been verified that successful bidder continue to meet prequalification requirements.
• Appropriate performance security has been indicated.

A certificate of compliance with contract award process issued by the BMPI (Budget Monitoring and Price Intelligence Unit) means that an appropriate project has fully satisfied all due process requirements for contract award, thereby permitting the spending unit to proceed with signing of contract and advising the Treasury through the Minister of Finance to make payment of mobilization costs.

Completion of Work Certification:

This is a certification that a project has fully satisfied all due process requirements for release of additional funds. Specifically, that it has met the following conditions:

• Funds released earlier have been fully utilized
• Site visit has been carried out to assess progress of work on contract
• Contract work is being carried out as agreed in contract.
• Percentage of work completed is commensurate with funds spends.
• Anticipated project results are being achieved or if not appropriate measures have been taken to ensure that results and goals identified under the contract are fully achieved.

Hence, no further release are made on an awarded contract until the BMPI (Budget Monitoring and Price Intelligence Unit) sector specialist working jointly with relevant officials of each spending unit issues a certification that a project has met all the conditions listed above.

The unique features of the BMPI (Budget Monitoring and Price Intelligence Unit) is its use of external sector specialist to both validate and track budget and expenditure effectively, efficiently and effortlessly without having to depend on a huge internal technical staff.

A major challenge in the use of sector experts is identifying more Nigerians who are not ethically challenged and who possess the requisite technical competencies needed in the various sectors of capital spending.

In the late 1920s and early 1930s the Harvard Business School under the leadership of Elton Mayo and his associates conducted research at the Hawthorne plant of the Western Electric Company. This research was to “mark the beginning of an ideological revolution in organization theory”.

Described in details in the land mark volume management and the workers these experiments led to the first systematic conception of organizations as social system and destroyed some of the basic assumptions of the machine model.

In one experiment the activities of a small group of men engaged in making parts of telephones switches were observed. Following Taylors assumption of a mutuality of interest, the management developed a piece rte system that it was sure would enable the workers to increase their earnings without subjecting them to undue physical strain.

This stimulus was supposed to produce a logical response: worker recognition of individual best interest and acceptance of the plan. Instead, the men reacted illogically, not at all like “economic me”. They refused to increase their output, agreeing among themselves, was entirely adequate.

They did not trust the management, fearing that if production went up, some jobs might be eliminated or wage rate cut. Although, the management assured them this would not happen and there was no evidence from past company practice that it would if the workers remained unconvinced.

Investigating further, the researchers discovered that the workers were members of a small closely knit group, governed by a code that rejected the “rate buster” (who does too much work), the “chiseler” (who does too little), and the “Squealer” (who communicates detrimental information about others to the supervisors).

In another experiment a group of girls engaged in assembling telephone relays were placed in a special test room, apart from all other worker for a period of two years.

Changes were deliberately made in the physical conditions under which they worked, in order to note the effect on their production. Sometimes the lighting was improved, sometimes made worse; rest pause were introduced and the eliminated.

It seems as though the company could make almost any kind of change in the conditions under which the girls worked without them reacting negatively. This was just the opposite of the experience with the men working on the telephone switches. The men seemed to react negatively to any new ideas of the management.

Importance of the Informal Organizations

It was only when the role of the informal organization in each group had been accurately diagnosed that the situation became clear. Because the girls had been selected for an important experiment and had been given special status by being placed in the rest room, they felt much more important and they were glad to cooperate with a management that treated them with such consideration.

Unlike the situation with the men, the informal organization in this case had functioned in harmony with the formal organization. it was clear that, in the future, management would have to weigh proposed changes in terms not only of their technological soundness but also of their impact on the informal organization, characterized by intricate patterns of interrelationship between the workers, they did not respond as isolated individuals.

The Social Ethics

The human relation approach responded to certain changes in the environment. With the disappearance of the frontier, the continued expansion of large-scale economic enterprise and the urbanization of the population, society have become increasingly characterized by interdependence.

The new resultant social ethics that “affairs the value of human collaboration and social solidarity”. Taylorism emerged during the heyday of the n individualist ethics”, according to which the “atomistic” person acting intelligently in pursuit of his own self interest will eventually contributes the most to the good of the group”.

This “individualistic ethic” has never been completely rejected but it coexists with the social ethic that recognizes the need for tempering individual actions, including that of employers. As William G. Scott observes, “The conditions existing in pre-20^th century, America caused an ethic of individualism to make sense of management. Equally, the changed conditions in 20^th century America created a climate in which the social ethic has progressively enlarged its role in management philosophy”.

Basic Principles of Human Relation

The following principles of Human Relations have been derived from the Hawthorne Experiments:

• Social Norms: the level of organizational effectiveness is determined by social norms, the early experiments on illumination and fatigue demonstrated that the physiological capability of the workers was not theoretical factor in productivity. Neither was the principle of administration, such as the division of work. Neither was as important as social norms.
• The group standard strongly influenced the behavior of individual in organizations. The bank weaving room experiment demonstrated how the group could enforce a standard level of productivity upon all members. The group also provided a shield against executive reprisals. The group also acted as restraint on executive power.
• Rewards and sanctions: social rewards and sanctions are the strongest motivators on the job. The workers in the Hawthorne plant responded to the respects, the affections and the appeals to group loyalty provided by their fellow workers. Management system of economic incentives, by contrast was less powerful.
• Supervision: the most effective system of supervision is created when the managers consult the group and its informal leaders in order to win acceptance of organizational objectives.
• Democratic administration: workers will achieve their highest level of effectiveness when they are allowed to manage their own affairs with no gang boss in charge. A reanalysis of the Hawthorne experiments revealed that the improvements in productivity in the relay assembly room followed the division of the researchers to allow the women to become a collegial, self managing group. Every change in the work schedule by close consultation with the workers, because the researcher did not want to alienate the women. Only six women participated in this experiment, which has an ideal group size for the development of collegial atmosphere (ironically, the administrative scientists seemed to recognize this with their span of control principles. Physically a manager might be able to supervise more than the prescribed maximum of twelve subordinates, but any more than that, from the point of view of the workers, would reduce, the opportunity for effective group development.

Suggested Posts:

• Difference between Maslow Hierarchy of Needs theory & ERG theory
• Decision Making & Decision Making Models
• Organizational Structure
• Motivation in Management