GENS 201

Semester 21C (Oct 25, 2021)

Management Consideration

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Lecture Objectives
Students to learn-

 Basic understanding of Management

dynamics in entrepreneurship.
 Imperatives of organisational structure and
Human Resource Management in
Entrepreneurship
 Management Consideration as a salient
portion of a Feasibility Study.

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 Management Consideration
Management Consideration will be considered along the
following dimensions:

 Types of Organizations
- For-Profit organisations
- Non Profit organisations
- Mutual Benefit organizations

 Organisational Structure
- Leadership
- Levels of Authority / Responsibility
- Organisational Communication

 Human Resource Management

- Staffing / Recruitment
- Training / Development
- Motivation
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 Three types of organizations
 For-profit organizations: Formed to make money,
or profits, by offering products or services (sole
proprietorships, limited liability companies)

 Nonprofit organizations: formed to offer services

to some clients, not to make a profit (public
hospitals, public colleges, NGOs)

 Mutual Benefit organizations: Voluntary collectives

whose purpose is to advance members’ interests
(unions, co-operatives, trade associations)

Class activity: Students to give specific examples

Organisational Structure
 Organisational Structure is a formal system of
task and reporting relationships that
coordinates and motivates an organization’s
members so that they can work together to
achieve the organization’s goals.

 Organisational Structure defines;

◦ how task are to be allocated
◦ who reports to whom
◦ formal coordinating mechanisms and
interaction patterns that will be followed
Organisational Structure

 Organizational structure is the framework of the

relations on jobs, systems, operating process,
people and groups making efforts to achieve set
goals.

 Organizational structure should facilitate

decision making, proper reaction to
environment and conflict resolution between the
units.

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Elements of organisational structure

Delegation
Communication Accountability
Responsibility
Common
Purpose
Elements
Authority
of Span of
control
Organisational
Departmentalisation
Structure Coordinated
Effort

Division of
Labour Hierarchy
Formalisation
Some Elements of Organizational Structure
 Common Purpose: unifies employees or members and gives every
personnel an understanding of the organization’s reason for being in
existence.

 Span of Control: defines the breadth and depth of formalized authority

over subordinates. Also, it defines the number of people reporting directly
to a particular manager.

 Coordinated Effort: the coordination of individual efforts into a group or

organization-wide effort.

 Hierarchy of Authority: (chain of command) a control mechanism for

making sure the right people do the right things at the right time.

 Formalisation: the degree to which organizations standardize behaviours

through rules, procedures, formal training and related mechanisms.

 Division of Labour: (work specialization) the arrangement of having

discrete parts of a task done by different people in pursuit of a common
purpose and objective.
Some Elements of Organizational Structure

 Departmentalisation: Specifies how employees and their activities

are grouped together along defined purposeful and productive
parameters.

 Authority: the rights inherent in a managerial position to make

decisions, give orders, and utilize resources.

 Responsibility : the obligation to perform assigned tasks.

 Delegation : the process of assigning managerial authorities and

responsibilities to managers and employees lower in the
hierarchy.

 Accountability: defines employee actions, behaviors, performance

and decisions. Also, it is linked to an increase in commitment to
work and employee morale, which ultimately leads to higher
performance and justification of work results to higher
authorities.
Organizational Structure Design
Concerned with designing the optimal
structures of accountability and responsibility
that an organization uses to execute its
strategies:

◦ Simple Structure
◦ Functional Structure
◦ Divisional Structure
◦ Matrix / Hybrid Structures
Simple Structure
An organization with a simple structure has
authority centralized in a single person, a flat
hierarchy, a few rules, and low work specialization

Sales Owner Manager Administration

Production
 Functional Structure
In a functional structure, people with similar
occupational specialties are put together in formal
groups.
◦ Departments: Production Department, Marketing
Department, Finance, etc.

Chief Executive

GM

Production Finance Marketing

Engineering Procurement Credit Budgetting Sales Customer Care

Divisional Structure – Grouping by similarity
of purpose and geography
 Product or Service Divisions – group activities around similar products
or services
 Customer Divisions – tend to group activities around common
customers or clients
 Geographic Divisions – group activities around defined regional
locations

Chief Executive
GM

Kaduna
Abuja Kano

Sales Finance HR

Sales Finance HR Sales Finance HR

Matrix / Hybrid Structures
 An organization combines functional and divisional
chains of command in a grid so that there are multiple
command / communication streams
 Parts are combined to maintain balance of power and
effectiveness across functional, product, geographic and
client focused units

Chief Executive

Production Marketing/Sales Human Resources

Warehousing Distribution Legal
Engineering Customer Care Administration
Tall versus Flat Structures
 As entrepreneurial concerns grow, they:
◦ Build taller hierarchy
◦ Widen span, or both

 Problems with tall hierarchies

◦ Overhead costs
◦ Slow communication and information flow.
◦ Focus power around positions and managers, so staff less empowered

 Modern entrepreneurial organisations are moving toward flatter structures

(delayering) because taller hierarchies have:
◦ Higher management overhead costs
◦ Less information flow
◦ Less staff empowerment

 Pertinently, micro and small entrepreneurial organisations do not have to over-

labour themselves with elaborate organograms. Yet, it is desirable that a form of
structure be put in place to enable free flow of accountability, responsibility,
authority and productivity.
 Tall versus Flat Organizations: Comparison
Chief
Executive
Tall hierarchy

Relatively narrow
Chief span of control
Flat hierarchy

Executive

Relatively wide
span of control
Entrepreneurial Leadership
 Leadership is the process of influencing the activities of an
organized group in its efforts toward goal setting and goal
achievement” - (Stogdill, 1950, p. 3)
 Therefore, entrepreneurial leadership is defined as affecting and
directing the performance of self and employees toward the
achievement of organizational goals and objectives that involve
recognizing and exploiting entrepreneurial opportunities.
- (Renko et al., 2015, p. 55)

 There are many leadership theories that are relevant in

entrepreneurship. Some of them include but not limited to
transformational, contingency, situational, ethical and leader-
member exchange theories. Entrepreneurial leaderships based on
these theories can be productive depending on the various
entrepreneurial scenarios, resources and circumstances.
Leader-Member Exchange (LMX) Theory
 Meanwhile, recent entrepreneurial leadership studies tend to focus more on
LMX theories as this leadership theory seem to encompass the salient
characteristics of the other leadership theories, as much as emphasize
strongly on influence, relationships, accountability and responsibility
between organisational leaders and staff.

 According to Leader-Member Exchange (LMX) Theory, leadership resides in

the quality of the exchange relationship developed between leaders and
their followers. High quality exchanges are characterized by trust, affinity
and mutual respect.

 The nature of the leader-member relationship has implications for job-

related well-being and effectiveness of employees, such that every member
of the organisation takes responsibilities in the absence of the figure head
or appointed leader.

 The general implication is that employees, irrespective of levels and

designations hold themselves collectively accountable and responsible for
successes and failures in confronting organisational tasks.
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Some Entrepreneurial Leadership Skills

Networking

Emotional
Intelligence Communication

Leadership
Skills

Knowledge Self
Confidence

Creativity
Entrepreneurship Leadership Attitudes
 Identify and adopt sound personal values and
organisational ethics.
 Develop sound emotional and cultural intelligence
 Communicate effectively
 Continuously seek knowledge and improvement
 Practice reflection
 Network widely with other entrepreneurs
 Take calculated risks
 Take responsibilities for successes and failures.
 Be innovative and creative
Levels of Authority / Responsibility
 Entrepreneurs must ensure that the levels of
authority conferred on members of staff are such
that organisational activities and productivity are
not compromised due to absenteeism, internal
competition, resignations or bureaucracy.

 There must be flexibility in the way authorities and

responsibilities are assigned such that no member
of staff is allowed to monopolise or abdicate
authority or responsibility.

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Organisational Communication
 Communication is an interactional
process in which meaning is
stimulated through the sending and
receiving of verbal and non-verbal Sender
messages.

 Communication actually occurs

through a process whereby a “Sender”
sends the message to a “Receiver” Encoding
who in turn gives feedback.

Organisational Communication is a Feedback


key element of Management function. Transmission
 Therefore, organisational
communication is a deliberate
attempt to manage the flow of Receiver
information so as to ensure that
productive and useful information
flows smoothly, accurately and
timely. Decoding

Understanding
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Types of Organisational Communication-1
Formal Communication:

 Such communication is associated with the formal organisational

activities.
 Management uses the following forms of communication to achieve
organisational goals and objectives:
1 Departmental meetings,
2 Conference,
3 Telephone calls,
4 Company news bulletins,
5 Special interviews and special purpose publications and messages,
6 Internal and external letters.
 Entrepreneurs must ensure that they give formal communication a pride
of place in their organisational scheme of management as it usually
serves the purpose of maintaining the organisational and legal memory.

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Types of Organisational Communication-2
Informal Communication
 This is one of the commonest types of communication in
entrepreneurship.
 Oftentimes, Management employs informal communication to
deepen organisational and operational understanding amongst the
workforce. Such communication includes comments, suggestions
etc.
 It may be conveyed by a simple chat, explanation, glance, gesture,
smile or mere silence.
 Managers and executives usually favour the growth and
development of informal network of communication due to the rich
and honest content.
 Informal communication serves a very useful purpose in
disseminating certain information which, in the general interest of
the organisation cannot be transmitted through the official
channels.
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Human Resource Management
 Staffing / Recruitment
The most important resource in every entrepreneurial concern is the human
resource. As such, Management must ensure that recruitment of members of
staff is based on qualification, merit and needs, irrespective of the size of
the business.
 Entrepreneurs must avoid recruiting staff on the strength of emotions,
sentiments and clannish considerations.
 Critical in modern staffing is ensuring that clear job descriptions and
responsibilities are given to every staff. This must be reinforced from time to
time by line managers.

 Training / Development
In order to maximize the potentials of the staff on the job, entrepreneurs
must form the habit of allotting sufficient budget to training and
development of their staff.
This enables higher productivity and positions the entrepreneurial concern
for marketplace competitiveness.
Several research efforts indicate that staff training and development lead to
increased productivity, motivation and retention of staff. 25
Human Resource Management
Motivation

 In order to improve staff motivation towards higher

productivity, there is always need for management to
motivate staff through tangible and intangible tools.

 Tangible tools may include increased salaries, promotions,

bonuses, paid vacations, gifts amongst other incentives.

 Intangible motivational tools could include higher

responsibilities, praises, trainings, mentorship
programmes, among others.

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Conclusion
 Management as an integral portion of entrepreneurship
entails that entrepreneurs recognise the importance of
proper organisational structure, levels of authority,
leadership, communication, staff recruitment,
training/development and motivation in pursuit of
entrepreneurial success.

 The elements of management discussed herein are equally

useful in the three types of orgnisation mentioned earlier viz;
for profit organizations, non-profit organisations and mutual
benefit organisations.

 Elementally, these elements of management ought to reflect

copiously in the Management Consideration section of the
Feasibility Study Project for this semester.

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END

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