Mastering the POSDCORB Method

Fortune magazine, a globally renowned financial publication, annually publishes a revered list of the world's largest and most successful corporations. These 500 companies collectively boast impressive financial statistics, contributing to two-thirds of the U.S. GDP, generating revenues of $12 trillion, earning profits of $890 billion, and employing 28.2 million people worldwide. This remarkable success is attributed to consistent and exceptional performance over many years, with some corporations maintaining this standard for over a century. The foundation for this success lies in the unwavering application of sound management principles and practices, including the implementation of POSDCORB principles, which we will explore in detail.

What is PODSCORB?

PODSCORB is a widely recognized acronym in the field of management, first introduced by Luther Gulick and Lyndall Urwick in their 1937 paper ‘Notes on the Theory of Organization’. This acronym encompasses the essential duties of any chief executive, as defined by Gulick. It is a comprehensive summary of the entire spectrum of responsibilities that a manager at the helm of any organization must fulfill.

POSDCORB, an acronym for Planning, Organizing, Staffing, Directing, Coordinating, Reporting, and Budgeting, was developed by Luther Gulick. He attributed this concept to the 14 principles and 5 elements of management proposed by the renowned French Management Theorist, Henry Fayol. Even after more than 80 years since its creation, POSDCORB remains a widely popular and frequently referenced concept in the field of management and administration across various entities.

What are the tenet of POSDCORB?

1. Planning:

POSDCORB, created by Luther Gulick, outlines a set of steps that a chief executive can follow to effectively manage an organization. This framework emphasizes the importance of planning, organizing, staffing, directing, coordinating, reporting, and budgeting in achieving success. By utilizing these fundamental principles, a leader can exercise control and ensure that the organization is functioning efficiently and effectively.

Planning is a vital aspect of intelligent decision-making. For an organization to achieve its objectives, it must first establish them accurately. This involves determining the direction in which all efforts and resources will be focused for a set period of time, with the aim of achieving a predetermined outcome. The desired outcome should be challenging enough to motivate employees, but not so overwhelming as to discourage and demotivate them.

At ABC Ltd., a toy manufacturing company, the plans for the upcoming financial year are established through a collaborative effort from all departments. This includes marketing, purchase and procurement, design and engineering, manufacturing and operations, and IT, who gather at an annual conference. During this meeting, the Chairman or Managing Director presents their vision for the company's future. After thorough discussion and consideration, the final vision is agreed upon by all departmental heads and managers, with specific milestones set, such as achieving a 25% growth in sales, a 12% growth in EBITDA, and reducing distribution costs by 5%.

2. Organising

The manager should ensure that all necessary resources, including raw materials, monetary funds, human resources, technology, and managerial expertise, are arranged to achieve the goals set during the planning process. However, Luther Gulick cautions about the challenges that may arise when deciding on the procedures to implement the plans. He highlights the need for division of work and specialization to guarantee efficiency, but acknowledges that there may be obstacles associated with this approach.

It may result in the worker being occupied for only a limited number of hours leading to less productivity.

It may result in certain workers doing the certain type of work only

An unfortunate consequence of poor organization is the separation of two important tasks, resulting in a lack of harmony in progress. To address this issue, the POSDCORB theory recommends a strategic approach to dividing labor and assigning duties. By considering factors such as purpose, process, clientele, materials, and job location, an optimal balance can be achieved.

ABC Ltd. can reduce their distribution costs by sourcing necessary raw materials and outsourcing delivery functions to a transport corporation or purchasing new delivery trucks. Additionally, investing in new designs can boost sales. To achieve the organizational targets, departmental heads will need to revise their internal goals and procedures.

3. Staffing

Ensuring that an organization has the right people in the right positions is crucial to its success. This principle emphasizes the significance of human resources and highlights the procedures involved in recruiting, training, and retaining employees who are best suited for their roles. By investing in preparing employees for their positions, organizations can create a skilled and motivated workforce that is capable of achieving its goals. For example, if ABC Ltd. plans to introduce new designs to the market, it may need to recruit additional designers. Similarly, if the company decides to outsource its distribution mechanism, it may need to consider retrenching its delivery staff.

4. Directing

Once the plans have been established, materials sorted, and employees hired, the manager must focus on directing their efforts towards the organization's ultimate goals. This involves breaking down strategic objectives into smaller, achievable targets with specific timelines. As a mentor and motivator, the manager must guide employees on how to perform their duties in the most effective manner and encourage them to overcome challenges to improve their performance.

5. Coordinating

The onboarding process for the new designer will involve familiarizing herself with the company's culture and expectations. The Head of Design and Engineering department will provide guidance and support to ensure a smooth transition, enabling the designer to quickly become a valuable contributor to the company's vision.

Effective coordination between departments is crucial for the success of any organization. As the Chief Manager, it is essential to ensure that all departments are working together seamlessly towards a common goal. Even a slight misalignment between departments can have a domino effect, causing the entire system to collapse. Therefore, it is imperative to take proactive measures and establish a system of communication and collaboration to ensure that all efforts are in sync.

The manager must arrange for the appointment of department, workstation, or project managers to oversee and coordinate the efforts of employees. Delegating authority in this way enables smooth coordination between different managers and departments.

It is important for employees to understand how their individual roles contribute to the overall success of the organization. This knowledge helps them to take ownership of their responsibilities and work towards achieving the company's goals.

For example, a regular meeting between the production, sales, and design departments can facilitate coordination and collaboration, allowing the team to adjust their strategies as needed. This could include redesigning products that are not performing well in the market or increasing production to meet high demand for popular items.

6. Reporting

Effective reporting practices involve maintaining open communication channels throughout an organization. This allows for the timely reporting of work progress to superiors, who can then make necessary modifications to plans. In addition, crucial information such as employee concerns, new regulations, and recognition can be shared quickly and with minimal distortion among relevant parties.

E.g. There will be weekly or bi-weekly meetings held in each of the departments where the progress of the period will be reported to and discussed with the departmental head.

7. Budgeting

Proper financial management is essential to the success of any organization. It is crucial to keep track of every penny spent and allocate resources such as manpower, money, materials, and time to each project or work center in advance. Accountability should be assigned to the employees responsible for the usage of these resources in order to assess future requirements and identify any errors or fraudulent activities. For instance, in ABC Ltd., the 'Budgeting and Controlling' department is responsible for creating budgets and allocating resources to all departments based on their goals and requirements for the year.

What are the underlying principles or assumptions of POSDCORB?

POSDCORD focuses on two assumptions which are central to its administrative management framework, POSDCORB focuses especially in the area of Organisation and Coordination:

Effective management requires a manageable span of control, which refers to the number of employees that a manager can efficiently supervise. To ensure optimal organization of duties and effective supervision, POSDCORB recommends an ideal span of control of three to six employees per manager.

Fragment 22:

Different reporting authorities sometimes may confuse the employee.

Rewritten:

Having multiple reporting authorities can often lead to confusion and lack of clarity for employees.

The concept of distinguishing between line and staff functions is emphasized in POSDCORB. Essentially, this involves having a central holding company responsible for carrying out important tasks like planning, organizing, and budgeting, while the subsidiaries are responsible for executing these plans in accordance with the guidelines set forth by the holding company.

Criticisms:

While POSDCORB has been a useful tool for outlining the responsibilities of a chief manager, it has faced criticism for being too rigid and overly focused on the technical aspects of management. Critics argue that it fails to consider important factors like employee morale and organizational culture, which can have a significant impact on the success of an organization. Additionally, some argue that POSDCORB is too prescriptive and doesn't allow for the flexibility needed to adapt to changing circumstances. Despite these criticisms, many managers continue to find value in the framework provided by POSDCORB.

Criticisms:

The simplicity of the POSDCORB theory has been a subject of criticism, as it is deemed to be a basic checklist of responsibilities for higher management officials. Moreover, with the advent of modern management practices, a number of functions outlined in POSDCORB have already been assigned to departmental managers.

Having a single reporting authority, as suggested by the principle of Unity of Command, is a topic of debate in modern complex organizational systems. It is becoming increasingly common to have multiple reporting authorities, and in some cases, this can even improve employee performance by providing critical insights from different line managers.

Ignores the role of Leadership: