SEY0000000259_IPM4_COL_240x185_PB_B[1-246] (ID 194138)

Introductory
Personnel
Management

N4

Anzel Mans

Published by

Printers code: SEY259

First Edition 2016

Seyfferdt Publishers
Posbus 44
Bapsfontein
1510

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B

Introductory Personnel Management N4

Contents

Module 1: Economics and management

1.1 Economic and business concepts............................................................... 3
1.1.1 Economy........................................................................................ 4
1.1.2 Organisation................................................................................... 5
1.1.3 Private vs public sector.................................................................. 8
1.1.4 Financial institutions.................................................................... 10
1.1.5 Government agencies.................................................................. 12
1.1.6 Employer vs employee................................................................. 13
1.1.7 Customers vs consumers............................................................. 15
1.1.8 Suppliers...................................................................................... 17
1.1.9 Managers vs owners.................................................................... 18
1.1.10 The public.................................................................................... 20
1.2 The organisation in the company............................................................. 22
1.2.1 Needs and satisfying needs......................................................... 22
1.2.2 The role of production................................................................. 25
1.2.3 Factors of production................................................................... 26
1.2.4 Production process...................................................................... 27
1.2.5 The entrepreneur and the private organisation.......................... 29
1.2.6 Functions in an organisation........................................................ 31
1.3 The role of management in the organisation........................................... 34
1.3.1 Responsibilities of management.................................................. 36
1.3.2 Management tasks...................................................................... 37
1.3.3 Managerial decision-making........................................................ 39
1.4 Conclusion................................................................................................ 43
1.5 Module summary..................................................................................... 43

Module 2 - The enterprise as an organisation

2.1 Introduction to enterprises...................................................................... 48
2.1.1 Terms and concepts..................................................................... 49
2.1.2 Forms or types of business ownership........................................ 60
2.1.3 Aims of organisations................................................................... 63
2.2 Activating the enterprises........................................................................ 66
2.2.1 Entrepreneurship needed to activate the enterprise.................. 67
2.2.2 People needed to activate the enterprise................................... 69
2.2.3 Technology neede to activate the enterprise.............................. 71
2.2.4 Process needed to activate the enterprise.................................. 76
2.3 Organisational structures......................................................................... 78

i

2.3.1 Line structures............................................................................. 79
2.3.2 Functional structures................................................................... 81
2.3.3 Influence of external environment.............................................. 83
2.4 Organisational design............................................................................... 85
2.4.1 Division of labour......................................................................... 86
2.4.2 Specialisation............................................................................... 89
2.4.3 Authority and delegation............................................................. 91
2.5 Conclusion................................................................................................ 97
2.6 Module summary..................................................................................... 97

Module 3 - The human being as employee in the enterprise

3.1 The behaviour of individuals and groups............................................... 103
3.1.1 Human behaviour...................................................................... 104
3.1.2 Individual behaviour and individual differences........................ 124
3.1.3 Group behaviour........................................................................ 129
3.2 Interpersonal and organisational communication................................. 138
3.2.1 Upward, downward and horizontal communication................. 138
3.2.2 Formal and informal communication........................................ 140
3.2.3 Importance of effective communication.................................... 142
3.3 Career development.............................................................................. 143
3.3.1 Meanings and definitions.......................................................... 143
3.3.2 Career planning and development............................................ 149
3.3.3 Self-development....................................................................... 152
3.4 Conclusion.............................................................................................. 153
3.5 Module summary................................................................................... 153

Module 4 - The managemant of human resurces in an organisation

4.1 Terms and concepts............................................................................... 159
4.2 Human resources provisioning............................................................... 164
4.2.1 Concepts in provisioning............................................................ 164
4.2.2 The recruitment process............................................................ 165
4.2.3 Screening and selection process................................................ 170
4.2.4 Placement and induction........................................................... 173
4.3 Human resource maintenance............................................................... 176
4.3.1 Performance appraisals............................................................. 177
4.3.2 Compensation management..................................................... 179
4.4 Human resource development............................................................... 183
4.4.1 Training and development......................................................... 183
4.4.2 Different types of training and development............................. 186
4.5 Conclusion.............................................................................................. 187
4.6 Module summary................................................................................... 188

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Introductory Personnel Management N4

Module 5 Human relations within an organisation
5.1 Interpersonal relations in the workplace............................................... 192
5.2 Conflict, competition and cooperation.................................................. 197
5.2.1 Conflict....................................................................................... 197
5.2.2 Competition............................................................................... 200
5.2.3 Cooperation............................................................................... 204
5.3 Labour relations..................................................................................... 206
5.3.1 Labour relations as a tripartite relationship in the
workplace.................................................................................. 206
5.3.2 Rights of employee vs rights of employer.................................. 207
5.3.3 Important concepts related to labour relations in the
workplace.................................................................................. 209
5.4 Conclusion.............................................................................................. 214
5.5 Module summary................................................................................... 215
Glossary ................................................................................................... 217
Bibliography ................................................................................................... 225

iii

List of tables

Table 001. Financial institutions in South Africa............................................ 10
Table 002. Business functions........................................................................ 32
Table 003. Main responsibilities of management at all levels........................ 36
Table 004. Main management tasks............................................................... 38
Table 005. Steps in decision-making process................................................. 40
Table 006. Summary of the different types of markets ................................. 52
Table 007. Forms or types of ownership aimed at making the most profit...60
Table 008. Main aims of organisations........................................................... 64
Table 009. Roles of an entrepreneur ............................................................. 67
Table 010. Advantages and disadvantages of organisational charts.............. 78
Table 011. Advantages and disadvantages of line organisational structures.80
Table 012. Advantages and disadvantages of functional organisational
structures.......................................................................................... 81
Table 013. The five most important components in the external
environment................................................................................. 84
Table 014. Different forms of division of labour at the disposal of the
organisation.................................................................................. 87
Table 015. Advantages and disadvantages of the division of labour.............. 88
Table 016. Advantages and disadvantages of specialisation in the
workplace..................................................................................... 90
Table 017. Types of span of control................................................................ 95
Table 018. Two main types of motivation.................................................... 105
Table 019. Seven learning styles that describe how adults learn................. 123
Table 020. The simplest and most basic types of personalities.................... 126
Table 021. Characteristics of groups............................................................ 130
Table 022. Some of the key differences between formal and informal
groups ........................................................................................ 132
Table 023. Benefits of group work in the workplace.................................... 133
Table 024. Some of the common problems experienced with group work.134
Table 025. The different flows of communication in the organisation......... 139
Table 026. Difference between formal and informal communication
channels in the workplace.......................................................... 141

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Introductory Personnel Management N4
Table 027. Steps need to be followed by employees in developing a career
plan..................................................................................................... 151
Table 028. Aspects that involve the provisioning of human resources........164
Table 029. Steps in the recruitment process................................................ 166
Table 030. Sources of recruitment............................................................... 169
Table 031. The process of selection and screening...................................... 171
Table 032. Some of the most common employee benefits and services.....180
Table 033. These two types of training........................................................ 186
Table 034. Sources of conflict in the organisation........................................ 198
Table 035. Pros and cons to competition amongst employees in the
workplace...................................................................................202
Table 036. The rights of both the employee and employer......................... 208

List of figures

Figure 001. Module 1 – Structure......................................................................2
Figure 002. The production factors used in the input phase during the
production process ......................................................................27
Figure 003. Module 2 – Structure....................................................................47
Figure 004. Steps to effective delegation in the workplace.............................94
Figure 005. Module 3 – Structure..................................................................101
Figure 006. Module 4 – Structure..................................................................157
Figure 007. Screening and selection process ................................................171
Figure 008. Placement and induction............................................................174
Figure 009. Module 5 – Structure..................................................................191
Figure 010. Guidelines for handling conflict in the workplace......................199

v

Preface

Personnel Management lies at the heart of human resources in any
organisation. Employees are the organisation’s biggest asset; they are
the drivers in the business who make things happen for their employers.
People are ultimately responsible for the success and profitability in the
workplace. Therefore people also need to be managed effectively to help
reach their full potential, to be as productive and effective as they can be,
to be satisfied on the job, to be motivated, driven, and passionate about
their roles in the organisation.

In South Africa, the human resources field is blossoming into an occupation
that is dedicated to the people, for the people. It is guided by legislation
and principles, but also by HR professionals with integrity, honesty and
passion for what they do. Human resources is a challenging, yet rewarding
career. It shapes the way you think about the world of work, employees,
trade unions and employers. It helps you to understand why people behave
the way they do, why they make the demands they do, and why they are so
affected by what happens in the organisation.

Aspiring Human Resource professionals need to have a clear grasp on all
the concepts, theory and roles of personnel management in the workplace.
From understanding economics and entrepreneurship, to understanding
the psyche of people, why and how they behave the way they do, how they
are motivated, what drives them, how they communicate and how they
respond to conflict. Most aspects of human resources will be dealt with in
this textbook, as an introduction to the Personnel Management, Personnel
Training and Labour Relations subjects as part of the Human Resources
Management course.

Students must use this textbook, in conjunction with additional reading of
newspapers, articles, journals and blogs on the topic, to supplement their
learning in human resources. The textbook was written in a fun, interactive
and practical way to draw on all learning styles and stimulate thinking and
comprehension. If this book is used correctly, with additional reading as
recommended, it aims to create a well-rounded and prepared student
entering into the N4 Human Resources Management course.

For feedback on this textbook, you are invited to contact the author directly
by emailing her at [email protected].

vi

Introductory Personnel Management N4

1 Economics and 1
management

Learning objectives

After studying this module, students should be able to:

•• Define and use subject terminology such as the following, correctly:
Economy, enterprise, private and public sector, financial institutions,
government agencies, employer and employee, customers, suppliers,
managers, owners, the public.

•• Describe the interaction between the enterprise and its economic
environment in the following:
♦♦ Needs and satisfying of needs.
♦♦ The role of production in supplying goods with which needs are
satisfied.
♦♦ Factors of production
♦♦ The role of the enterprise and the private enterprise.

•• Explain briefly the following functions of the enterprise:
♦♦ Purchasing
♦♦ Production
♦♦ Marketing
♦♦ Financing
♦♦ Administration
♦♦ Personnel

•• The role of management in the economic environment.
•• Explain the responsibilities of management.
•• Explain decision-making as an aspect of management and the steps

involved in decision-making.
•• Basic management tasks.

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Module 1: Economics and management

•• Explain briefly the basic elements of the management task in a
pragmatic manner.
♦♦ Planning
♦♦ Organising
♦♦ Leading
♦♦ Controlling

This module is structured in the following way:

Unit 1 - Economic and Unit 2 - The Unit 3 - The role of
business Concepts organisation in the management in the
economy organisation

•Economy, •Needs and satisfying •Responsibilities of
organisation, private needs management
and public sector,
financial institutions, •The role of •Managerial decision-
government agencies production making

•Employer and •Factors of production •Management tasks
employee, customer
vs consumer, •Production process
suppliers, managers,
owners and the •The entrepreneur
public
•Functions in an
organisation

Figure 001. Module 1 – Structure

One of key competencies required of human resources manager in the South
African job market today is knowledge and
understanding of business and the economy,
and how both of these concepts interlink with
each other. Human resources departments no
longer play an administrative role in
organisations, but continuously move toward
becoming a strategic business partner to the
management team.

In order to fulfil this role and to add value
to the organisation, it is vital that HR
Professionals keep up to date with the
economy and how changes will affect
organisations and workers alike. Whatever
happens in the economy of our country, will
have a ripple effect on organisations, workers
and human resources departments.

Example: If the price of food and fuel continue to increase in a country,
workers will feel the pressure of not having enough income to support
their families.

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Introductory Personnel Management N4 1

This might lead to them putting counter pressure on their employers for
salary increases.
If organisations cannot afford to give workers more money, it could
lead to retrenchments and unemployment, which in turn has a negative
impact on a country’s economy.

As an aspiring human resources manager, it is therefore very important to have
a clear understanding of economic and business concepts, as well as the place
of organisations in our economy and how organisations function. Moreover,
you also need to understand the role of management and their key tasks within
the organisation.

Group activity 1 A

(a) In your groups, think about and answer the following questions:
(b) Why is it important for HR Professionals to know about business and

the economy?
(c) What do you think is a ‘strategic business partner’?
(d) What do you think the is meaning of ‘business’?
(e) What do you think is the meaning of ‘economy’?
(f) What role do organisations play in the economy?
(g) What role do HR Professionals play in the economy?
(h) In your opinion, what are the main responsibilities of management in

an organisation?
(i) What do you think is the key tasks of management within the

organisation?

1.1 Economic and business concepts

Before looking at the Organisation in an Economy and the role of management
within organisations, it is important to grasp a few key concepts. These
concepts will form the basis of this module and the rest of this textbook and
needs to be clearly understood before moving on to the next module. Like the
pieces of a giant puzzle, these concepts need to be in place first, before you will
be able to see the whole picture.

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Module 1: Economics and management

The following concepts need to be clearly understood:

1.1.1 Economy

Definition
Economy is defined as ‘all activities related to the production and
consumption of goods and services in a country’.

The economy of a country is a structure developed to provide for the needs
of consumers, organisations and the country as a whole. People have certain
needs that have to be met in order for them to survive - like food and water.
People make many economic decisions every day: They decide what to buy,
how much of it to buy and how much they are willing to pay for it. In order to
meet these needs, the economic problem of what to produce, how to produce
it and for whom to produce it, needs to be solved.

Organisations form part of the economy of a country, and are needed to
produce goods and services that consumers can use in their day-to-day lives.
They have to decide what to produce, how it is going to be produced, what
factors of production are needed to produce the products and how much
they are going to charge for it. We will learn more about needs, wants and
production factors in Unit 1.2.

The economy therefore consists of three main role players:
•• Households and individuals – They buy products and services from

organisations every day to meet their diverse
needs and wants.
•• Organisations – They produce and sell
the products and services individuals and
households need
•• Governments - They decide what goods and
services and how much of these should be
provided to individuals, households and
business, and they need to decide how to
finance their expenditures.

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Introductory Personnel Management N4 1

The economic decisions made by these role-players have an important
impact on the economic life of every individual, every household and every
organisation in a country.
Interesting Fact: Every country in the world has their own economy, dependent
on the interaction between organisations, government and households. Some
economies focus on a free-market system where any organisation can enter
the market and produce and sell products to consumers, while others have
a socialist system, where the government controls the resources, and the
production and selling of products and services to consumers.
In a socialist system, everything is controlled and owned by the community as a
whole. South Africa has a mixed economic system, which means that they have
both the free-market system and socialist systems at play in the country.

Individual activity 1 A

Answer the following questions in your workbook:
(a) Define the word ‘economy’ in your own words.
(b) Discuss the economic problem in South Africa.
(c) Who are the role-players in our economy?
(d) What does each role-player (do) in the economy?
(e) Why are these role-players important for the functioning of an economy?
(f) South Africa has a mixed economy. What does this mean?

1.1.2 Organisation

Definition
Organisation is defined as ‘a group of people who form a business, club, or
enterprise together in order to achieve a particular aim’.

Organisations play a very important part in the economy of every country. They
evaluate the needs and wants of consumers, decide what to produce, how to
produce it, what factors of production they are going to use as well as the price
point of their products.

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Module 1: Economics and management
In order to produce the products and services consumers need, organisations
need workers (labour), natural resources (raw materials), capital (machinery
and money) and entrepreneurship (skills to start and run a business): these are
called the factors of production, which will be discussed in Unit 1.2.

Organisations have one goal in mind: They want to make a profit. They will
use all the factors of production at their disposal to create the products and
services consumers need and want, and then sell it to these consumers at
a price that will make their business profitable. In order to make a profit,
Organisations need to pay attention to the inputs (resources) they use and the
processes they use to convert the inputs into outputs. This notion is explained
through the IPO Model:

The IPO Model talks about three main elements in the production process:

1. Input

The factors of production needed to produce the product is brought into the
organisations.

2. Processing

The factors of products that were brought into the organisation must now be
converted into a product through the use of various systems and processes
inside the organisation.

3. Output

The final product is produced after the inputs were converted in the processing
phase.

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Introductory Personnel Management N4 1

Let us consider the following practical example:

Example: John owns a factory that produces ice cream. In order to
produce the ice cream desired by the consumers, John uses the IPO
model.
Input : John needs milk, sugar, flavouring, ice cream sticks packaging
material labour (workers, machines and money) to start the production
process.
Processing: John’s employees take the inputs and convert them into a
product through the machines, blenders and freezers available inside the
organisation.
Output: John now has a variety of ice cream products available to sell to
consumers, including ice cream sticks, cones, tubs and soft serves

The economy of any country is dependent on these organisations like John’s
Ice Cream Factory, to create jobs, employ people and sell products that will
eventually lead to income for the economy. Organisations are therefore
influenced by the external environment, while also having an influence on
the environment in which they exist. The external environment consists of:
Government Legislation, Taxation, Availability of Resources and Consumer
Behaviour. The relationship between organisations and the external
environment is depicted in the figure below.

Example: John’s Ice cream factory is dependent on the milk (raw
materials- factor of production) to produce ice cream during the
summer months (need of consumers). All of the sudden there is a
shortage of milk, causing a major rise in milk prices across the country.
John’s factory now has to pay more for milk, which leads to the factory
not being able to produce the ice cream at the price point consumers are
willing to pay. The availability of resources will therefore have an impact
on what organisations produce and the price they will sell the product
for.

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Module 1: Economics and management

Individual activity 1 B

Answer the following questions in your workbook:
(a) Define the word ‘Organisation’.
(b) Organisations produce products. How do they go about identifying and

producing products and services in the market?
(c) What role do organisations play in the economy? Are they important?
(d) What is the main goal of organisations? How would they achieve this?
(e) Discuss the impact of the external environment on organisations.
(f) Do organisations have an impact on the external environment? Explain.
(g) Explain the IPO model in your own words. Use an example to substantiate

your answer.

1.1.3 Private vs public sector

Organisations in a free-market country are divided into two major categories:
Private Sector and the Public Sector.

Definition
Private Sector is defined as ‘the area of the country’s economy under
private rather than governmental control’.

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Introductory Personnel Management N4 1

Definition
Public Sector is defined as ‘the area of the country’s economy under
governmental rather than private control’.

The Private sector refers to all those organisations that exist in a country’s
economy that are owned and run by private individuals. They decide for
themselves what to produce, which production factors they are going to use
and at what price they are going to sell these products and services. They also
invest their own money and take all the risk for their organisations on
themselves. The government has no say or ownership in these organisations
and has no input into how these organisations are managed.

Example: The following organisations in south
africa are seen as part of the Private sector in
our economy : Kates Bakery, Jabu’s Car Wash,
Pick ‘n Pay, Jay’s Tavern and Volkswagen.

The public sector, on the other hand, are all those organisations that are owned
and run by the State, like central government agencies and local and regional
authorities. In South Africa, the public sector includes those organisations that
are partially state owned – this means that these organisations are owned by
the state and certain private individuals. These organisations produce products
and services that citizens of our country cannot live without, such as electricity
services.

Example: The following organisations in South
Africa are seen as part of the public sector in
our economy: South African Post Office, South
African Airways, Eskom, Telkom, Spoornet/Transnet and certain schools
and hospitals.

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Module 1: Economics and management

Individual activity 1 C

Make a poster to present to the rest of your class, covering the following
points:

(a) Differentiate between the private and public sector.

(b) Explain the difference between the two concepts through the use of
relevant examples.

(c) Present your poster to the rest of your class.

1.1.4 Financial institutions

Financial institutions play a very important role in the economy in any country.
For any economy and financial market to function well, financial institutions
are needed. South Africa has a variety of financial institutions available to meet
the needs of the various role-players in our economy.

Table 001. Financial institutions in South Africa

Financial institution Description Functions

South African Reserve • Principal monetary • Banker and advisor to
Bank authority in South Government.
Africa that plays a key
role in our economy. • Managing the South
African money and
banking system

• Formulate and
implement monetary
policies

• Provision of economic
and statistical services

• Lends money to
Commercial Banks

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Introductory Personnel Management N4

Financial institution Description Functions

Commercial banks, • Banks serves as • Borrow money from the 1
merchant banks and linkages between SARB
the Land Bank customers who save
money and customers • Lend money to
JSE who borrow money. consumers/individuals
and organisations in the
AltX • Stock exchange country.
that shares in listed
companies that are • Commercial banks
bought and sold. deal directly with large
numbers of customers,
Alternative market of such as small businesses
the JSE for small and and individuals.
medium companies
not able to list on the • Land Bank develops and
JSE’s mainboard. provides appropriate
products for commercial
and development
clients.

• Raises capital for
businesses

• Channels savings into
investments

• Provide Organisations
with opportunities to
merge and grow

• Improve corporate
governance

• Create investment
opportunities

• Barometer of the
economy

• Provides opportunities
for smaller
organisations, including
start-ups, family
owned companies,
black economic
empowerment
companies and junior
mining companies.

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Module 1: Economics and management

Retirement funds Non-profit institutions. • Important for individuals
Funds designed to who need to ensure that
provide for members after their working lives,
in their old/retirement they will have sufficient
age income to survive.

• Most working people
contribute to a
retirement fund through
an ‘employer-sponsored
scheme’

Group activity 2 B

Divide into five groups, each group doing research on one of the above
financial institutions. Cover the following aspects in your research:
(a) Define and describe the financial function.
(b) What is the role and function of the financial institution?
(c) Where do they fit into the economy of South Africa?
(d) How can they assist individuals, organisations and the government?
(e) Create a one page poster to present your research to the rest of the

class.

1.1.5 Government agencies

Sometimes, the Government of a country will appoint certain agents to provide
specialised services to the community. These agencies are normally privately
owned, but provides a service to certain remote areas or in areas where
there is a specific need. Some agencies are responsible for the oversight and
administration of specific functions, such as the intelligence agency.

Definition
Government Agency: ‘an official, administrative unit of government that
provides, directs and supervises specialist services to the community

There are various types of government agencies, all completely different from

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Introductory Personnel Management N4 1

government departments, ministries and other public bodies.
Some of the key Government Agencies in South Africa, are listed as examples
below:
•• National Lotteries Board
•• South African Bureau of Standards
•• National Consumer Commission
•• Grain Crops Institute
•• Nelson Mandela Metropolitan University
•• South African Sugarcane Research Institute

Individual activity 1 D

Do some research on Government Agencies in South Africa. Identify the
following:
(a) Choose at least five different agencies to do research on.
(b) Name of the agencies.
(c) What they do.
(d) What their main functions are.
Report on your findings in class.

1.1.6 Employer vs employee

Organisations need people to be productive and make a profit. Without people
making the products consumers need and want, there will not be anything for
consumers to buy. It is thus very important to have the right people, with the
right skills, in the right position at the right time, in order to add value to the
organisation in the long run. Remember, organisations want to make a profit;
without people, this will not be possible
It is very important to differentiate between the following two concepts at this
point:

13

Module 1: Economics and management

Definition
Employer is defined as ‘a person or organisation that employs people to
produce products and services needed by consumers and pays them for
their services’.

Definition
Employee is defined as ‘the worker who is employed and paid by the
organisation to produce the products and services needed by consumers’.

Both the employer and employee has their own goals and objectives.
Employers want employees to use their time and skills to produce products and
services that will provide them with a profit.
Employees on the other hand, need a job to get an
income so that they can look after their families. It
is therefore a mutually interdependent relationship:
The one party cannot survive without the other.
Without the employees, organisations will not be
able to produce and sell products and services and
without the employer, employees will not have an
income.
In South Africa, the employment of people is dependent on the availability of
jobs in the job market. At this stage, the demand for jobs are much higher than
the supply, which means there are more people looking for employment than
jobs available for them.

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Introductory Personnel Management N4 1

Individual activity 1 E

Answer the following questions in your workbook:
(a) What is the difference between an employer and an employee?
(b) What is the relationship between these two concepts?
(c) Explain their mutually interdependent relationship in your own words.
(d) Employers and employees have their own goals and objectives. Explain

this in your words.
(e) Employment is dependent on the availability of jobs. Do you agree with

this statement? Why do you say so?
(f) Do some research on the demand and supply of jobs in South Africa:

1. Do you agree that the demand for jobs is higher than the supply?
2. What is the implications of the shortage of jobs on our economy?
3. What can the Government do to fix this? (Explain your answer?)

1.1.7 Customers vs consumers

Organisations produce products to fulfil the needs of consumers and
customers in South Africa. Without someone to buy the products and services
organisations produce, they will not be able to make a profit. There are two
main categories of buyers in South Africa:

Definition
Customers is defined as ‘the person or business that buys the product and
services that the organisation puts up for sale.’

Example: ‘Customer’ refers to those people or business that by the
final product from the organisation. They include retail shops, such
as Pick ‘n Pay or Spar, buying directly from the factory to sell to the
people, or the individual who buys bread directly from the bakery every
day. Individuals who buy the product can also be the consumer of the
product.

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Module 1: Economics and management

Definition

Consumer is defined as ‘the individual who finally consumes the product,
after buying it’.

Example: Consumers are seen as those individuals who finally use or
consumer the product or service bought from the organisation directly
or from the retail store. Mothers who buy infant formula for their babies
are the customers, their babies are the consumers. If you buy a chocolate
bar from the shop and eat it, you are the customer and consumer.

Remember, individual customers and consumers will only purchase products
and services they have a need for and they will most likely look for the
cheapest product to buy. Money is a
scarce resource – some people have to
work very hard to earn a small salary,
others are unemployed and are
dependent on social grants.

When income is small, individual
consumers and customers will think
twice about buying a product that
is not within their price range and they will only buy the necessities to keep
their family’s tummy’s full. Organisations need to keep this in mind and plan
accordingly if they aim to be profitable and successful as a business in South
Africa.

Individual activity 1 F

(a) Clearly differentiate between a customer and consumer, with examples.
(b) Identify whether the following parties are a consumer or a customer:

1. Jasper taking his private vehicle for a car wash.
2. A mother who buys infant cereal for her baby.
3. Amy choosing her shade of make-up.
4. A Spaza-shop owner buying directly from the factory
5. A bakery who buys flour from a supplier.
6. Jason, a student, buying stationery for his semester at College.

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Introductory Personnel Management N4

1.1.8 Suppliers

Organisations need certain resources in 1
order to produce the products and services
customers and consumers need. They
purchase these resources from suppliers,
who are the foundation of the production
chain. These resources take the form of the factors of production, including raw
materials, electricity, labour and entrepreneurship, which will be discussed in
more detail in Unit 1.2.

Definition

‘Suppliers’ is defined as ‘those businesses and individuals who supply
organisations with the resources they need to produce the products and
services they have planned’.

Example: Remember John’s Ice Cream Factory? Well he needs a few
resources in order to produce the ice-cream, in his factory. some of
these resources include:

•• Milk and sugar- supplies by a local farmer Mlusi Jengu Farms
•• Electricity - supplied by Eskom
•• Packaging - supplied by an international packaging firm,

Pack-It.

As already mentioned, suppliers fall close to the beginning of the production
process, as they provide organisations with the factors of production that they
require to produce the goods and services they have planned. The production
process combines all the factors of production and transform them into
the goods and services customers and consumers want to buy – this will be
discussed in more detail in Unit 1.2.

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Module 1: Economics and management

Individual activity 1 G

Answer the following questions in your workbook:
(a) What is a supplier?
(b) Why is a supplier so important in the production process?
(c) Do research on a few local suppliers in your area.

1. What products or services do they supply?
2. To whom are they supplying their products?
3. What products do they produce with the resources supplied by the

supplier?

1.1.9 Managers vs owners

Another very important distinction to make is that of managers and owners.
Owners of certain organisations may hire managers to look after their business.
Others may decide to manage their own business.

Definition
Manager is defined as ‘a person who is in charge of running a business, a
shop/store or a similar organization or part of one’

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Introductory Personnel Management N4 1

Definition

Owner is defined as ‘an individual who owns something, in this case, a
business or organisation’.

Whether an owner decides to manage his own organisation or chooses to
hire someone to manage it for him, is a decision that will not be taken lightly.
Managing a business is hard work and requires a complex mix of skills and
competencies of the individual hired to manage the business. Managers must
share the goals and objectives of the business and combine all the factors of
production to produce the products and services as set out by the owner of the
business. The role of management will be discussed in more detail in Unit 1.3.

Some business owners may decide to manage their business on their own,
to avoid possible problems with the manager who does not really know the
business and its objectives that well. In most cases, however, owners do not
have the time or energy to manage their own organisations, and therefore
require the assistance of mangers to help them manage their business affairs.

Example: Remember John’s Ice Cream Factory? His factory is doing so
well that John decides to expand his business and start a factory shop
on the premises of the factory. John realises that he won’t be able to
handle both the factory and the shop by himself, and decides to hire a
young manager to look after the factory shop someone he can train to
take over from him in future.

Individual activity 1 H

Answer the following questions in your workbook:
(a) What is the difference between an owner and manager of a business?
(b) Can an individual be both the owner and manager of an organisation?

Explain.
(c) Provide examples from local companies in your are: are the business is

managed by the owner and one where it is managed by a manager, who
is not the owner.
(d) Which option, in your opinion, would be the best route to follow? An
owner who is also the manager, or separate manager who is not the
owner? Why do you say so?

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1.1.10 The public

The last concept to consider is that of the public. The public forms part of the
external environment of the organisation and should always be kept in mind
when planning and managing activities inside an organisation.

Definition
The public is defined as ‘those ordinary people, businesses and societies
that fall in the environment external to the organisation’.

The public consists of all parties outside the organisation, who are either in
a professional relationship with the employer (like suppliers or customers),
or have no connection with day-to-day operations whatsoever (like local
newspapers and government agencies). The connection between the
organisation and the public is a very important one – any negative event may
hamper public opinion and therefore also the organisational image.

Example: John’s Ice Cream factory is situated close to Soweto in
Johannesburg. He continuously aims to contribute to community
development and uplifting youth in the area by providing internships
and vacation work programmes. He also provides food parcels and
discounts at the factory shop to members of the community. As a result
of his involvement in the community, John’s factory is very popular and
has a good image in society.

Individual activity 1 I

Answer the following questions in your work book:
(a) What role does the public play in the success of an organisation?
(b) Why should organisations keep the public in mind in its day-to-day

operations?
(c) In your area, which organisations have a positive image in the community

and society around it? Why do you think this is the case?

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Group activity 1 C

Complete the following crossword puzzle by reading the clues below:

Across Down

• 3. The worker who is employed and • 1. The area of the country’s economy
paid by the organisation to produce under governmental rather than
the products and services needed by private control (2 words)
consumers.
• 2. An administrative unit of
• 4. Those ordinary people, government that provides specialist
businesses and societies that fall services to the community at large. (2
in the environment external to the words)
organisation.

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Module 1: Economics and management

• 6. The area of the country’s • 5. A person or organisation that
economy under private rather than employs people to produce products
governmental control (2 words). and services needed by consumers
and pays them for their services.
• 7. All activities related to the
production and consumption of • 8. Those businesses and individuals
goods and services in a country. who supply organisations with the
resources they need to produce the
• 9. The person or business that buys products and services they have
the products and services that the planned.
organisation puts up for sale
• 11. An individual who owns
• 10. The individual who finally something, in this case, a business or
consumes the product after buying it. organisation.

• 11. A group of people who forms a
business, club, or enterprise together
in order to achieve a particular aim.

• 12. A person who is in charge of
running a business, a shop/store
or a similar organisation or part of
one.

1.2 The organisation in the company

As we learned in Unit 1.1, the organisation does not exist in isolation, but
it exists as part of a community, a country and an economy. Organisations
produce goods and services to satisfy the wants and needs of customers and
consumers inside the borders of a country and community. It is based on
these needs and wants that many organisations decide what to produce, how
to produce it, which factors of production to use and at what price to sell the
products and services.

1.2.1 Needs and satisfying needs

Organisations will only produce products and services if they know there is a
need for it in the market. Consumers have certain basic needs, including water,
clothing and food, as well as some wants, including a new Hi-Fi, IPod or bicycle.

Definition

A need is defined as ‘something that you cannot live without; something
very important or essential to life’.

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Example: Bianca has needs that are essential to life, including water,
food, clothing and shelter.

Definition
A want is defined as ‘something that you desire to have, but you don’t
necessarily need to survive’.

Example: Bianca also has some wants, including a new watch, laptop
computer, a new pair of stilettos shoes, a purple purse and a car. Non of
these are essential to life or her survival.

Every individual has needs and wants which are different from a peer, friend,
family member or acquaintance. Needs and wants therefore have the following
characteristics:
•• Our needs and wants are unlimited – once a need has been satisfied,

another one arises.
•• Some of our wants and needs are satiable – if you want a bicycle and you

get one for your birthday, then you no longer need or want a bicycle.
•• Some needs and wants can be temporarily satisfied – if you are thirsty

and you want a Coke, once you get the cool drink, your need for a drink
is satisfied. However, a few hours later, you might need another drink to
cool you down.
•• Some needs and wants can be satisfied through substitution – if you want
a motorcycle to travel to work, but it is too expensive, then you might
consider a scooter, which is cheaper, but can still satisfy your need for
transport.
Organisations must always keep these needs and wants in mind when
considering the types of products and services they are going to produce.
In order to make a profit, they need to produce goods and services that
consumers want and need. If they focus too much on products and services
that there is no need for, it will be very hard for them to be successful and
make a profit.

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Module 1: Economics and management

1. Needs hierarchy

In 1954, an America Psychologist, Abraham Maslow, created a theory on what
motivates people. He created the hierarchy of needs, which is placed in
chronological order, stating that a bottom
need must be achieved, before the next
need can be aspired for. This is especially
true in the working environment, where
people are motivated by different needs
and wants.
Most people work because they need an
income to pay for their basic physiological
needs, such as shelter, food and water.
Once they have an income to provide for these basic needs, they move on to
the next need, a need for safety. Once their need for safety is met, they move
to the next need for belonging/love. And so they move up the hierarchy of
needs, until they reach the last need for self-actualisation.

Source: https://doodlesbaker.wordpress.com/2014/03/31/maslows-hierarchy-of-needs/

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Introductory Personnel Management N4 1

Group activity 1 D

Divide into groups of four to five and take a blank flipchart sheet and some
markers. Draw two big circles that overlap somewhat in the middle, like in
the picture provided. Write at the top of the one circle: ‘Wants’ and at the
top of the other circle ‘Needs’.
Now, in your groups, brainstorm all the needs and wants you could have
as an individual. Write each idea in the relevant circle, as per the heading.
If there are certain needs and wants that overlap, write down in the small
part where the circles overlap.
Discuss your circles with the rest of the class.

Individual activity 1 J

Answer the following questions in your work book:
(a) Differentiate between needs and wants in your own words.
(b) Give an example of different needs and wants you have.
(c) Discuss the characteristics of needs and wants.
(d) Explain needs and wants in light of Maslow’s hierarchy of needs.

1.2.2 The role of production

Definition
A want is defined as ‘something that you desire to have, but you don’t
necessarily need to survive’.

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Module 1: Economics and management

Production is a very important part of many organisations throughout the
country. Through production,
organisations produces goods and
services to satisfy the needs and wants
of consumers. To ensure efficient
production of goods and services in a
factory or manufacturing environment,
production factors are needed in the
right quantities and right combinations.
The factors of production go through a transformation phase until the final
product is made and sold to the customers. It is only through the effective
transformation and utilisation of these production factors that organisations
can expect to be profitable and successful in the market. The main aim of
production is to turn these inputs into sellable outputs needed by customers
and consumers in the market.

1.2.3 Factors of production

The factors of production are an essential part of the production process.
These factors, or resources that are needed in the production process, will
determine the output of the production process.

Definition
Production factors are defined as ‘all the inputs that are used in the
production of goods or services in an attempt to make a profit’.

The production factors used in the input phase during the production process
include the following:
•• Natural Resources (Raw materials)
•• Labour (Workers)
•• Capital (Money, equipment and machinery)
•• Entrepreneurship

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Introductory Personnel Management N4 1

Figure 002. The production factors used in the input phase during the
production process

Individual activity 1 K

(a) Consider John’s Ice Cream Factory.
1. What natural resources does he need to produce the ice cream?
2. Does he need labour in the production process?
3. Identify the capital needs John has for his ice cream factory.
4. John needs to have entrepreneurial skills. What does this mean?

(b) Choose another organisation in your area and identify the factors of
production required to produce the identified product or service. Share
your findings with the rest of the class.

1.2.4 Production process

All the factors of production used in the production of goods and services will
be used in the first step in the production process. Most of these resources are
normally purchased from suppliers, and in the right combination, will lead to
the output of products consumers will buy and use.

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Module 1: Economics and management

Definition
Production Process is defined as ‘the steps followed to produce a product
with the provided inputs transformed into a sellable output’.

The production process is illustrated in the flow chart below:

Depending on the product being produced, most production processes follow a
similar pattern. Let us consider the following example:

Example: Amy wants to start her own cupcake business. She wants
to bake them herself and sell them amongst her classmates at the
college. She decides to explain her business to you by making use of the
production process.
1. Factors of production(input)- She will need flour, sugar, eggs and

milk for her cupcakes, as well as butter and icing sugar for the
frosting (raw materials). She will also need an oven to bake the
cupcakes in and a blender (Equipment). she already has baking skills
(entrepreneurship) and has decided to bake the cupcakes herself as a
start(labour).
2. Production - All the ingredients will be mixed with the blender, then
she will place the dough into cookie cups in a muffin tin and place it
in the oven. While the cupcakes are baking, she will make the frosting
with the blender and place it in the piping bag, ready to pipe, once
the cupcakes have cooled down.
3. Output - Big, colourful cupcakes with delicious frosting will be
produced.
4. Exchange - she will sell her cupcakes for R6 each among her friends
at the college.
5. Consumption - Her friends, who bought cupcakes, will finally
consume the product that she had produced.

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Introductory Personnel Management N4 1

Group activity 1 E

Divide into groups of four to five and take a blank flipchart sheet and some
markers. Identify a product that the whole group enjoys to buy and take
it through the production process. Draw the whole process with relevant
resources on your flipchart and share with the rest of the class. Use the
example provided above as a guide.

1.2.5 The entrepreneur and the private organisation

Entrepreneurship is one of the production factors that is essential to the
success of any organisation. Without an entrepreneur who has the idea for a
business opportunity, with the willingness to invest money and resources, and
take the risk of possible failure or loss, there will not be an organisation to run
or manage. Entrepreneurship is therefore a very important requirement of the
production process.

Definition
Entrepreneurship is defined as ‘the development of a business from the
ground up; coming up with an idea and turning it into a profitable business’.

Entrepreneurship asks of the entrepreneur to recognize and identify the
right opportunities, finding the right resources to pursue the opportunity
and creating the right team to do so. It is thus clear that successful
entrepreneurship involves more than just having a great idea.

Definition
An Entrepreneur is defined as ‘someone who can take any idea, for a
product or a service, and have the skills set, will and courage to take
extreme risk to do whatever it takes to turn that concept into reality’.

Entrepreneurs are very important in any country’s economy. Not only do they

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start businesses, but they also create job opportunities for citizens in the
country. They are innovators, risk takers and job creators – all essential in the
sustainability of an economy.

Entrepreneurs normally start off in small or family-owned private enterprises.
As their success grows, they will consider expanding their business in order to
increase their profitability. The small business or private enterprise are seen as
the cornerstone of the free-market system in South Africa; it is from here that
new innovations and great developments arise. It provides for unique, tailor-
made services that are not provided by bigger, public organisations.

Example: Katrina is a young, talented
dress maker who has just opened her own
boutique from home. She is seen as an
entrepreneur who started her own small,
private business, with the opportunity
to expand, create jobs and make a
meaningful contribution to the economy
as a whole.

Individual activity 1 L

Locate and approach an entrepreneur in your area and set up an interview
with the individual. Ask him/her the following questions and write a one
page report on your findings?
(a) When did you become an entrepreneur?
(b) Why did you decide to become an entrepreneur?
(c) What inspired your idea for the business?
(d) What are you producing and where do you sell it?
(e) What challenges did you experience when you first started off your

business venture?
(f) What opportunities are available to you and your business in the future?

Add a few more questions to the list. Remember to write a one-page report
on your learnings.

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1.2.6 Functions in an organisation

An owner or manager cannot manage a big organisation on their own.
They need help. The bigger the organisation, the bigger the responsibility
to manage all aspects of the business to ensure that it remains profitable.
The more workers and employees the organisation has, the more difficult to
manage them, and the operations, at the same time. Therefore, owners of big
organisations need help. Organisations are divided into different functions,
built and designed solely to support the business.

Definition
Business Function is defined as ‘a department within an organisation that
is dedicated to managing and controlling specific elements, production
factors and functions within an organisation’.

Each one of the business functions are responsible for the management
and control of all the elements within their division or department. Smaller
organisations might have one or two of these functions; larger organisations
might have all of them. The type and amount of business functions an
organisation chooses will depend on their need for that function in the
organisation. Some of these functions are crucial for the functioning of the
organisation, others are there only to support the organisation and all its
activities. Several business functions are at the disposal of organisations to
make the job of management resources easier. are discussed in the table
below:

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Module 1: Economics and management

Table 002. Business functions

Description Purpose What the function involves

Purchasing A department To make sure that • Sourcing reliable and affordable
that is there is enough suppliers
responsible for stock available
the sourcing to sell, or that • Transporting material to the
and purchasing there are enough business
of resources resources available
for the to provide a • Negotiating prices with suppliers
organisation service.
• Determining quantity and quality
of products to be supplied

• Receiving and storing material

Production This To decide how • Following a product or process
department products and layout.
is also services will be
known as the produced and sold • Coverts the inputs (Resources)
operations or to customers. through transformational
manufacturing processes into a sellable output
department, or final product.
i.e. the hub or
the centre of • It includes: the design of
the business. products and the design of
processes to manufacture these
products.

This To get the right • Advertising products and services
to consumers.
department product or service
• Determine the right product,
Marketing promotes an to the right at the right price to satisfy the
needs of consumers.
organisation customers for the
• Designing packaging material
and drives sales right price at the that attracts consumer attention.

of products and right time and • Ensures that the products and
services get to the consumers.
services. place

Financing A department To manage the • Setting up budgets and
that is money that comes controlling the implementation
responsible into and goes out of budgets in the organisation
for controlling of the business.
and managing • Controls and tracks expenses and
the finances income.
within the
organisation. • Assist top management with
strategic decisions.

• Manage the organisation’s cash
flow.

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Human resources (Personnel) Administration Description Purpose What the function involves 1
To control planning
Public Relations This and administration • Providing administrative aid to
department is and keep the rest of the business.
General Management responsible for documents such
all activities in as invoices and • Process paper work and
planning and receipts for future information for internal
administration reference departments.
of business
operations. To hire people • Taking care of internal
to work in the communications.
This business, and
department manage their • Events planning and travel or
takes care performance and function arrangements.
of the day-to-day working
organisation’s lives. • Recruitment and selection of
employees new employees.
and everything To promote a
related to their positive image • Training and development of
positions and of the business workers
lives within the to the public. It
business. also facilitates • Performance and talent
communication management of workers.
This between the
department organisation • Taking care of employee health
is the link and the external and wellness.
between the environment.
organisation • Payroll and compensation
and the To ensure that the administration.
external whole business is
environment. running properly • Labour relations, disciplinary and
investigations.
The general
management • Liaising with the media and
team external stakeholders.
oversees and
coordinates • Arrange press conferences or
all activities functions to create awareness of
within the the organisational brand.
organisation.
• Deal with any emergencies that
may damage the reputation of
the organisation.

• Deal with media relations and
social media.

• Oversees and controls all
activities within the organisation.

• •Advice and guide departments
on challenges or problems they
may experience.

• •Troubleshooting problems and
challenges the organisation is
faced with.

• •Delegate responsibility to other
departments.

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Module 1: Economics and management

Group activity 1 F

In your groups, find an organisation in your local area and arrange to have a
meeting with one of their managers. As a group, determine the following:
(a) Which business functions does the organisation have?
(b) What are their most important roles and tasks of these functions?
(c) Why are these functions so important in the organisation?

1.3 The role of management in the organisation

No organisation can survive without the proper management of all its
activities and functions. Whether the owner of the organisation decides to hire
managers or manage the organisation on their own, it is vital for the success of
the organisation to have properly trained and experienced managers.

Definition
Management is defined as ‘the organisation and coordination of all the
activities of a business in order to achieve defined objectives and goals’.

The management team of an organisation has a big responsibility: Not only do
they have to manage and coordinate resources, production factors and day-to-
day activities in the organisation, but also ensure
that the highest level of output is produced with
the smallest amount of input. They need to
ensure that the organisation is profitable, that it
is productive and that it has a good image in the
environment in which it exists.
There are managers at different levels in the
organisation, all responsible for their own teams
and departments. Their scope of responsibility is
different, yet they all form part of the management team of the organisation.
Management is divided into three levels:

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Introductory Personnel Management N4 1

Top management

Responsible for making organisation-wide decisions
and establishing the plans and goals that affect the
entire organisation.

Example: CEO’s, Directors, Chief Executive
Officer and Chairman of the Board.

Middle management

Includes all levels of management between first-line
and top level. They manage the work of first-line
managers.

Example: Department Head, Project Leader,
Plant Manager or Division Manager.

First-Line management

The lowest level of management – Manages
the work of non-managerial individuals who are
directly involved with the production or creation of
products and services.

Example: Supervisor, Team Leaders or
Foreman.

Individual activity 1 M

Answer the following questions in your workbook:
(a) Define ‘Management’ in your own words.
(b) Why is management so important in the success of an organisation?
(c) Name the three main levels of management.
(d) Differentiate between the three main levels of management in an

organisation.
(e) Why are managers at different levels in the organisation necessary?

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Module 1: Economics and management

1.3.1 Responsibilities of management

Definition

Managerial Responsibility is defined as ‘a duty or task that managers are
required or expected to do’.

As already mentioned, management teams in any organisation have a
responsibility to oversee all business activities and ensure that the organisation
ultimately is productive and profitable. Depending on the level of management,
each manager has his or her own duties, responsibilities and tasks to perform.

Table 003. Main responsibilities of management at all levels

Level Responsibilities

Top • Responsible for the overall direction and operations of the
management business.

Middle • Setting organisational goals and defining strategies for
management achieving it.

• Monitoring and implementing the external environment.
• Decision-making that affects the entire organisation.
• Interact with representatives from the external environment,

such as important customers, financial institutions and
government figures. Establishing objectives, policies and
strategies.
• They mobilise available resources and production factors.

• Responsible for business units and major departments and all
relevant activities in those departments.

• Translating executive orders into operation.
• Implementing management plans and policies.
• Directly supervising lower-level managers.
• Gives recommendations and communicates with top-level

management.
• Coordinates and communicates communication with lower

levels.

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Introductory Personnel Management N4

First-line • Directly responsible for the production of goods and services.
management • Directing non-supervisory employees within the organisation.
• Develop morale in workers on the line.
• Maintain the link between workers and middle-level 1

management.
• Informs workers on decisions and policies as directed from

Middle Management.
• Inform Top Management about the performance, difficulties,

feelings, demands, etc. of workers.

Individual activity 1 N

Answer the following questions in your workbook:
(a) What is the definition of managerial responsibly?
(b) Why are the responsibilities of management so important in the

organisation?
(c) What is the main aim of the management team in any organisation?
(d) In table format, differentiate between the various responsibilities of the

three levels of management.

1.3.2 Management tasks

Together with the high level of responsibility that management has in an
organisation, they also have four key management tasks: these include:
Planning, organising, leading and controlling.

Definition
Management Tasks is defined as ‘the main tasks and duties of
management in an organisation’.

Important point – there are more managerial tasks, but this module will focus
only on the four main tasks.

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Module 1: Economics and management
Table 004. Main management tasks

Planning

•• Defined as the process of making plans for something.
•• Managers must decide where to take their organisation in the future and

choose the steps to get there.
•• Managers should be fully aware of challenges facing their businesses;

managers also need to forecast future business and economic conditions.
•• Managers must formulate objectives to reach before a given deadline, then

evaluate their plans and the implementation thereof in the organisation.
•• Planning helps allocate resources and reduce waste.

Organising

•• Defined as the arrangement of tasks, resources or activities in a specific
order.

•• Managers organise by bringing together the production factors to achieve
organisational objectives.

•• They identify activities to be accomplished, assign activities to groups or
individuals, create responsibility and delegate authority.

•• They then coordinate the relationships of responsibility and authority within
the organisation.

Leading

•• Is defined as the act of directing, guiding and inspiring others to work
together in order to reach organisational objectives.

•• It requires the use of authority to achieve those ends as well as the ability to
communicate effectively.

•• Effective leaders must be able to motivate and communicate effectively with
their teams.

•• They can influence their personnel to view situations from their perspectives.
•• Leading also involves supervision of employees and their work.

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Controlling

•• Defined as the establishment of benchmarks or standards, comparing actual
business performance against these standards and benchmarks, and then
taking corrective action, if required.

•• Involves measuring organisational achievement against established objectives
and goals.

•• Managers first establish objectives and goals, then measure achievement of
them, identify anything that is keeping the company from achieving these
goals, and then provide means of correction if necessary.

Individual activity 1 O

Answer the following questions in your workbook:
(a) What is a management task?
(b) Name and differentiate between the four main management tasks.
(c) Why are these tasks important in the organisation?
(d) Can one of these four main tasks be neglected or left out by the manager?

Why do you say so?
(e) Which one of these management tasks do you believe is the most

important? Why do you say so?
(f) Which other management tasks would you add to this list?

1.3.3 Managerial decision-making

An additional, very important, task of management is that of decision-making.

Definition
Decision-making is defined as ‘process or action of making very important
decisions within the organisation’.

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Module 1: Economics and management

Making decisions is a hard task. Most managers make many decisions during
their day, be it on what to do about an
absent employee or how to make up
lost production time. Making the right
decisions in the workplace is vital to
the success of the organisation in the
long run. A wrong decision could cost
the organisation a lot of money, and
maybe result in it closing down. It is
therefore essential that management is
able to make good decisions.

The decision-making process is a critical process in any organisation, and
includes the following steps:

Table 005. Steps in decision-making process

Step Description

Identify the • The problem at hand is completely analysed.
purpose of the • Certain questions are asked:
decision
♦♦ What exactly is the problem?
♦♦ Why should it be solved?
♦♦ Who are affected by the problem?
♦♦ Does the problem have a deadline or specific time-line?

Gathering • A problem in an organisation will normally affect many
information stakeholders.

• There can also be many factors involved and affected by the
problem.

• In solving the problem, you need to gather as much
information as possible related to the factors and
stakeholders involved.

Judging • The baseline criteria for judging alternatives should be
alternatives determined.

• The organisational goals and corporate culture should be
kept in mind.

• Must consider alternatives that will benefit the organisation
and not harm it.

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Introductory Personnel Management N4

Brainstorm • Stakeholders should brainstorm and list all the ideas to solve 1
and analyse the problem
different
choices • It is very important to fully understand the causes of the
problem and prioritise the cause with the highest effect.

• Stakeholders can generate possible solutions or alternatives,
based on the causes of the problem.

Evaluate • Each alternative identified should be evaluated against the
alternatives judgement principles and decision-making criteria.

• Alternatives should be compared for their positives and
negatives.

Select the best • The selection of the best alternative is an informed decision,
as you have already identified all possible alternatives and
alternative chosen one that fits the problem and all stakeholders at play.

Execute and • Decisions should be converted in a sequence of activities.
evaluate the • It should be executed individually, or with the help of a team.
decision • The outcome of the decision should be evaluated, in order to

identify gaps and plan action points for future improvement
of decision-making.

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Module 1: Economics and management

Individual activity 1 P

Answer the following questions in your workbook:
(a) What is decision-making?
(b) Why is decision-making important in the organisation?
(c) Discuss the seven steps in the decision-making process in detail.
(d) Should these steps be discussed or dealt with in order? Why do you say so?
(e) Could any of these decision-making steps be left out or swopped around?

Why do you say so?

Individual reflection 1

In your workbook, after you have completed this module, reflect on the
following questions:
(a) Which part of this module did you most enjoy? Why?
(b) Which part did you find most challenging? Why?
(c) What was your biggest learning from this module?
(d) On a scale from 1 to 10 (1 being the lowest and 10 being the highest),

score your level of comfort and understanding of this module.
(e) If your score was below 5, what would you do to improve your

understanding of this module?
(f) If your score was above 5, what would you do to improve your learning

even further?

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