By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 2 Functions of Management students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 2 Functions of Management

→ Budget : Plan expressed in financial terms; a summary of planned financial expenditures and receipts over a period or related to an activity.

→ Strategies : A plan or method for achieving a business goal; a general method or policy for achieving specific objectives of the business.

→ Environment ; The factors which affect surroundings of anything including human beings as well as organisations.

Maharashtra Board OCM 12th Commerce Notes Chapter 2 Functions of Management

→ Evaluate : To determine the value, progress, quality or importance of anything.

→ Missions : Specific goals or important tasks that one has to achieve or perform in a given period of time.

→ Innovative ideas : Ideas which lead to discover or creation of something new.

→ Delegation of authority : Transferring or giving away authority and corresponding responsibility by a superior to a trusted subordinate to manage part of the business.

→ Administration : The control, direction and management of a business or service.

→ Plant : Plant is an industrial establishment that is either a factory, a mill or a workshop concerned with some type of operations. It refers to a place where large machinery is installed and goods are produced or from where distribution of goods takes place.

→ Recruitment : The process of searching for prospective employees and encouraging them to apply for jobs in an organisation. It involves detailed and systematic study of manpower requirements, both operative and executive.

→ Personnel department : This is a department of the organisation that is primarily concerned with the management of human relationships within an organisation. It deals with the organising and training of people at work.

→ Orientation and development programmes : An introductory stage in the process of new employee assimilation and a part of his or her continuous socialisation process in an organisation. Major objective of orientation are to gain employee commitment, reduce his or her anxiety, help him or her understanding organisation’s expectations and convey what he or she can expect from the job and the organisation.

→ Eco-friendly : Eco-friendly literally means earth-friendly or not harmful to the environment. This term most commonly refers to products that contribute to green living or practices that help conserve resources like water and energy.

→ Corporate culture : The beliefs and behaviours that determine how a company’s employees and management interact and handle outside business transactions. A company’s culture will be reflected in its dress code, business hours, office set up, employee benefits, hiring decisions, treatment of clients and their satisfaction and every other aspect of operations.

→ Corporate image : The way an organisation is presented to or perceived by its members and the public; the impression of the policies, personnel and operations of a corporation that is imparted to its employees and the general public.

Maharashtra Board OCM 12th Commerce Notes Chapter 2 Functions of Management

→ Hierarchy : It is a structure of organisation where there are positions created from top to bottom to monitor the work at each level with ease.

→ Motivation : The material and psychological incentives provided by the management to the employees so that they are motivated to accept the delegated responsibility.

→ Synchronise : To cause to move at the same rate or exactly together.

→ Deviation : Behaviour that differs or departs from what is thought of as normal or standard.

→ Break-even analysis : Computing costs and revenues for different volumes of production in order to determine a point after which an enterprise starts earning profit.

→ Efficiency : Ability of producing and functioning effectively with the least waste of efforts, time, cost, etc.


The success of every business organisation is how effective and efficient is its management. Management is a set of principles which is the result of many functions, such as planning, organising, staffing, directing, coordinating, controlling, etc.

Functions of Management-

According to L. A. Allen, ‘Management is what manager does.’ So the function of manager starts with planning and completes with controlling. Luther Gullick give a keyword ‘POSDCORB’ for management. P = planning, O = Organising, S = Staffing, D = directing, Co = Co-ordinating, R = Reporting, B = Budgeting.

Planning –

Meaning :
Planning means deciding in advance what to do, when to do it, how to do it, where to do it j I and who is to do it. It involves selecting missions and objectives and the actions to achieve them. It is an intellectual process of logical thinking and rational decision-making.

Definition : According to James Stoner, “Planning is the process of establishing goals and a suitable course of action for achieving those goals.”

Importance :

  • Helps to set clear objectives : Planning is straight way connected with setting clear objectives, targets and making road rfiaps to achieve them.
  • Provides path of action : Planning provides guidelines and directions in doing the right things in the right direction and in the right way.
  • Improves performance : Due to proper planning, the employees work with established objectives and a clear course of action. It results in improvement of performance and achieving higher profit for the organisation.
  • Minimises the risk : Proper planning helps to deal with changes and uncertainties of future. It can be tackled with preventive measure.
  • Leads to optimum utilisation of resources : Planning facilitates optimum utilisation of resources which brings higher efficiency and better results. Planning reduces ‘ wastage of resources.
  • elps in decision making : Decisions are taken after selecting best available alternative course of action. It helps management to take rational decision.
  • Useful in setting the standards for controlling : Actual performance can be measured with what was planned and any deviation can be bridged by taking controlling steps. Thus, it is important to maintain I discipline at work place.
  • Facilitates co-ordination of all activities : All activities in organisation are j inter-linked and with the help of proper planning it avoids overlapping among activities. Various departments work as per the plan which creates ; smooth flow of hassle-free co-ordination.
  • Facilitates other management functions : Planning is the basis of all functions of management. Once the proper planning is done and goal is set, functions like organising, staffing, etc. can be done.
  • Promotes innovative ideas : It is the most challenging activity and promotes innovative ideas as an outcome of critical thinking.


Meaning : Organising implies the process of identifying, assembling the needed resources men, money, machine an method, grouping and arranging them in proper manner to achieve organisational goals. .
For the execution of the plans, organising is more important. Organising function decides the ways and means to achieve that is planned by the management.

Definition : According to Mooney and Railey, “Organization is the form of every human association for the attainment of a common purpose

Importance of Organising :

  • Facilitates Administration as well as operation : Grouping and assigning the activities is the task of administration and processing accordingly is operational activity. Duplication of work and wastages are minimised and it helps in effective delegation of work.
  • Brings specialisation : The division of work helps in bringing specialisation and leads to increased efficiency in an organisation.
  • Defines the job properly : Organising helps in putting right men on right job according to their qualification, skill and experience. It defines job properly with clarify of roles and responsibilities.
  • Clarifies authority and responsibility : Organisational structure clarifies the way to exercise the power so that misuse of power is controlled. This results in efficiency and increases productivity of the managers.
  • Establishes co-ordination : Organising ensures mutual co-operation among various departments and employees. It establishes smooth co-ordination of all organisational activities.
  • Helps in effective administration : Proper organisational structure with right men at right place with proper delegation of authority and responsibilities leads to efficient and effective administration.
  • Helpful for growth and development : Clearly defined roles and responsibilities, co¬ordination with appropriate control techniques ensures growth and development in every organisation. It is possible when the organisational structure is well-defined.
  • Creates sense of security : Organising defines clear job profile with proper authority and responsibility. It brings mental satisfaction and creates sense of job security among the employees.
  • Scope for innovation : Clarity in job profile, roles and responsibilities provide enough space for manager to develop talent and encourage innovation when the organisational structure is well-defined.
  • Helps in Optimum utilization of resources : Different jobs for different employees brings specialisation and the right workforce utilizes resources at its optimum level. This achieves the desired result in desired time.

Maharashtra Board OCM 12th Commerce Notes Chapter 2 Functions of Management


Meaning : Staffing is a process through which competent employees are selected, recruited properly trained, effectively developed and placed and suitably rewarded. Their efforts are harmoniously integrated towards achieving the objectives of an organisation. It is the function of execution. Right person at right job with right pay in the basic principle of staffing.

Definition : According to Theo Haiman, “The staffing Junction pertains to the recruitment, selection, development, training and compensation of subordinate managers.”

Importance :

  • Effective managerial function : Staffing is the key managerial function as the outcome of other managerial functions is based on the effectiveness of staffing.
  • Leads to effective utilization of human resources : Staffing function takes proper care at every stage such as recruitment, selection, placement, remuneration, training, etc. It results in improvement in performances and progress – of organisation.
  • Builds cordial relationship : Effective staffing encourages smooth human relation which is the key to better communication and co-ordination in an organisation.
  • Helps human resource development : Staffing function trains and develops the existing workforce. It helps to inculcate the organisational culture into employees and ensures smooth functioning of all managerial aspects.
  • Helps in effective use of technology and other resources : Use of latest technology, capital, material and methods helps in improving standard of work and productivity in terms of quality and quantity.
  • Improves efficiency : Proper selection and proper training, the performance level of employees can be improved which leads to the efficiency and organisational development.
  • Long term effect : Staffing function has long term effects on the efficiency of an organisation. Qualified, efficient and well motivated workforce is an asset of the organisation.
  • Essential contribution : Selection of staff is based on the ability of prospective employees to meet the future challenges of an organisation. It contributes for future changes and challenges.
  • Provides job satisfaction : Adequate remuneration, financial and non-financial incentives, training and development programmes motivate employees. It leads to job satisfaction.
  • Maintains harmony : Proper staffing process ensures regular appraisal and promotion on merit basis. Effective communication for the same brings peace and harmony in an organisation.


Meaning : Directing as a management function is concerned with instructing, guiding, communicating, inspiring and motivating the. employees so that their efforts result in the achievement of pre- determined organisational goals. It is a continuous function which flows from top level to the lower level of organisation.

Definition : According to Theo Haiman, “Directing consists of the process and techniques utilising in issuing instructions and making certain that operations are carried out as planned.”

Importance :

  • Initiates action : The manager gives direction to subordinates about what to do. how to do and when to do and sees that his instructions are properly followed.
  • Integrates efforts : Effective direction with proper communication helps in integrating the efforts of all the employees and departments. It results in achievement of organisational goals.
  • Means of motivation : Financial and non-financial incentives boost morale of the employees. Considering their opinion motivates employees to work to their full potential and improves their performance.
  • Provides stability : Effective leadership and direction develops co-operation and commitment among the employees. This provides stability and creates balance among various departments and groups.
  • Coping up with changes : With the right leadership and direction, employees are motivated to understand the nature of change in business environment. Adapting to changes is necessary for the growth of an organisation.
  • Effective utilization of resources : With the help of directing, employees are assigned with duties and responsibilities with proper instruction to avoid wastages. It helps them to use men, materials, machines, money in best possible way which in turn helps to reduce the cost and increase profit.
  • Creates team spirit: Directing focuses or motivating the subordinates for group efforts. The manager as a director plays a vital role in guiding and motivating the employees to achieve the organisational goals with team spirit.
  • Explores capabilities of individuals : Direction helps employees to identify their potentials, abilities for best performance by encouraging and motivating them like a leader.
  • Increases efficiency level : Guidance and motivation of a director as a leader develops team spirit in the organisation. It results into increase in the efficiency level of the whole organisation.
  • Co-operation : Proper direction from top level to the bottom level of management ensures smooth flow of co-operation, team work and efficiency level which leads to attainment of goals.


Meaning : Co-ordination means the integration and synchronisation of group efforts to achieve all goals of an organisation. Co¬ordination between all functions and all levels of employees is most important for an organisation to succeed. It binds all the other functions of management.

Definition : According to Henry Fayol, “to co-ordinate is to harmonise all the activities of a concern to facilitate its working and its success.”

Maharashtra Board OCM 12th Commerce Notes Chapter 2 Functions of Management

Importance :

  • Encourages team spirit : Co-ordination helps in arranging the work in such a way that minimum conflicts arise between all. It increases the team spirit at work place.
  • Gives proper direction : Co-ordination integrates departmental activities and interdependence on each other in a very systematic way.
  • Facilitates motivation : An effective co¬ordination motivates employees to take initiative which increases efficiency growth and prosperity of the organisation. Monetary and non-monetary incentives motivates an employee to work hard and job security.
  • Optimum utilization of resources : Co¬ordination helps to integrate all available resources systematically and ensures minimum wastage. It helps to control the cost of work.
  • Achieve organisational objectives : Co¬ordination leads to minimum wastages of materials, idle time of employees, department disputes and ensures smooth working in the process of achieving organisational goals.
  • Improves relations : Co-ordination develops cordial relations between all levels of management as every department depends on functioning of other department.
  • Leads to higher efficiency: With the help of optimum utilization of resources with effective integration, the organisation can achieve higher productivity and higher profitability.
  • Improves Goodwill : Synchronized efforts of employees with strong human relations results in higher sales and higher profitability.
    It directly results in goodwill in the market and creates good images in society.
  • Unity of direction : Co-ordination harmonizes activities of all departments for achieving common goal by giving proper j direction to all departments of the organisation.
  • Specialisation : The specialised knowledge of all expert department heads in their respective fields leads the organisation towards growth and success in the competitive business world.

Controlling –

Meaning : Controlling means the function of comparing the actual performance with the pres determined standard performance. Due to this, it identifies the causes of deviation, provides \ corrective measures and helps in formulating future plans of an organisation.

Definition : According to Philip Hotter, Control is the process of taking steps to bring actual results and desired results closer together”.

Importance of Controlling :

  • Fulfilling goals of organisation : The main function of controlling is to measure the performance at every stage and take corrective, action if necessary. So, it helps to fulfil the organisational goals.
  • Making efficient utilization of resources : Controlling techniques sets standard of every performance to reduce the wastages and every employee has to follow these standards. This will lead to efficient utilization of resources.
  • Accuracy of standards : An efficient control system helps management in judging the accuracy of standards. They are revised from time to time which is beneficial for checking performances accurately.
  • Motivates employees : The advance intimation of standard of performance gives an idea to employee about what to do and how to do. Their performances are rewarded with bonus and other incentives which motivates employees to perform at their best level.
  • Ensures order and discipline : Continuous checking of performance by superiors and preventive action leads to reducing of unprofessional behaviour of employees. It brings order and discipline in organisation.
  • Facilitates Co-ordination : Control is a function in which the roles and responsibilities of all departmental manager and their sub¬ordinates are well-defined. Controlling helps to use remedial measures to derive result of the organisation.
  • Psychological Pressure : This psychological pressure that their performance will be evaluated and will be rewarded accordingly works as a motivational factor for employees. So they give their best performance.
  • Ensures organisational efficiency and effectiveness : Factors of control makes managers responsible and motivate them for higher and better performance which leads to organisational efficiency and effectiveness.
  • Builds good corporate image : Proper control helps to improve overall performance of the organisation and results in progress of business. This builds a good corporate image and goodwill for the business.
  • Acts as a guide: Controlling function sets the standard of performance and managers as well as subordinates take the help of these standards and achieve the desired results.