Introduction
Management involves getting things done through other people in order to achieve desired organizational goals (Witzel 2004). Management is possible through performance of certain functions by managers. These functions include planning, controlling, leading, organizing and achieving. Whether in large or small organizations, these functions are essential for managers at all times because they assist in achievement of goals. However, managerial practices differ in small medium enterprises and large enterprises because of the size and complexity of the organizations. Managers in large firms perform functions of management differently from those in small medium enterprises. The leadership styles in these two organizations are different because of the structure of the firms. Additionally, organization models are different and so is the culture of the organization. Thus, the management functions of these two firms differ. This paper discusses the differences of planning, organizing, leading and controlling in large firms and small medium enterprises.
Comparison between large firms and SMEs
A large organization usually comprise of many departments and personnel that run those departments. These people determine the organizational structure of the firm, which refer to the arrangement of people and jobs to ensure achievement of goals. Managers in large firms often use organizational charts to represent the structure of the organization. The organizational chart shows the relationship between staff and their superiors and their interaction to achieve organizational goals. In large firms, the organizational chart can be complex because of the many departments involved. Thus, the chart is usually divided into smaller parts for easier understanding. The chart could involve a chief executive officer at the top with other departmental heads depending on the number of departments.
Since the director of the firm cannot perform all duties, he or she must delegate responsibility to the junior staff. Therefore, the need for delegation in large firms is an important aspect of the organization (Robbins et al. 2010). In contrast, small firms have simple structures because they involve fewer employees. The organization chart of these firms is simple and it could be direct where authority flows from the top business owner to other employees.
Two structures characterize organizations. “The centralized organizational structure concentrates decision-making and authority at the top and only one person or a few people are responsible for making decisions” (Graubner 2006, p.111). Small medium enterprises often use this type of organizational structure since the owner of the business is responsible for the operations of the firm. The business owner in such an organization is responsible for decision-making and creating other policies of the organization. Since decisions begin at the top, the owner of the small business is able to control operations closely and provide uniform policies for the organization. Often in small organizations, operations are not diversified and the top managers may have the necessary skills and expertise to run the overall enterprise. There is little confusion in such enterprises since a single person is responsible for making decisions. Since the manager does not delegate responsibility to other people, decision-making is fast in small firms.
The other organization structure is the decentralized structure. In this organization, managers delegate authority and responsibility to other departmental heads within the firm. Several individuals are responsible for making decisions and running the operations of the business. Decentralized structures rely on teams at different levels in the organization. People at each level in the business operations have some freedom to make decisions affecting the firm. Large corporations use the decentralized structure for effective management of business operations.
Decentralized structures benefit from a wide pool of expertise and knowledge for running various operations of the business. The broad management team ensures that the organization has skilled managers to run handle different situations in the operations of business. Since in a decentralized organization the manager involves all employees, decision-making can be sluggish leading to slow business operations (Daft & Samson 2005). It is not usually easy for the manager to ensure that all employees agree with his or her opinion since they also have their views on the running of the business. However, large organizations that use a decentralized structure motivate junior managers and employees by giving them responsibility. With greater tasks and responsibilities, employees work extra hard since they feel valuable in the organization.
In contrast, small firms that use the centralized structure, risk failure because of the bureaucracy involved in such an organization. It lacks flexibility because decisions flow only from top to bottom, which causes lack of motivation for employees. However, decision-making is fast in such firms because the business owners do not need to consult widely and only set goals that employees should follow.
In setting up an organization structure, managers have to plan to ensure they are on the right track. It may take considerable amounts of time especially for managers in large corporations to set up an effective organizational structure because of the many departments and divisions involved (Tripathi & Reddy 2006). Therefore, managers should devote their time in the planning process to ensure they create workable plans. For small enterprises, the planning process is not cumbersome since the organization does not involve many departments.
The chain of command in large organizations differs from that in small businesses. A chain of command refers to the levels of authority starting from the top to the bottom of the hierarchy. The top position could constitute the CEO or business owners while the bottom level consists of employees and other front line workers. The chain of command provides workers with a supervisor to whom they can report their problems and be able to ask questions. The chain of command ensures that each employee is responsible for a particular area in business. Each employee has authority to perform a certain task within the organization. The chain of command helps in creating clear lines of communication between the top management and their subordinates (Griffin 2002). In a large organization, the chain of command could be so long that employees do not who to report to. This long chain could effectiveness in performance as some employees ignore certain issues since no one is watching. On the other hand, small organizations have shorter chains of command and hence the top manager closely watches the work of subordinates. Thus, these organizations are more effective with the shorter chains of command.
Organizing employees to perform tasks within the organization can become difficult when the chain of command is long. The manager may find it cumbersome to get employees to perform certain tasks if he or she is not aware of all the employees under his or her supervision. Most managers in large organizations have difficulties organizing employees in cases with long chains of command. Small organizations can easily carry out organizing procedures because they do not involve many employees. Managers in large organizations should use the support of teams to enable them in organizing employees. Teams are easier to deal with and they are effective in meeting objectives.
Controlling is a function of management that involves setting standards, measuring actual performance and comparing the standards with performance to check for any deviations. Managers in small and large organizations need to control their resources to ensure effectiveness in the organization. Controlling is usually a challenge for managers in large organizations because of the many resources used to establish such an organization. Resources include the personnel, time and materials spent in the firm. Without effective controls, the organization is doomed to fail. Since large organizations have many employees, controlling them is important because they ensure success for the organization. Therefore, it is important for managers to recruit the right blend of employees in terms of qualifications and experience to run the operations of the business.
Large organizations employ controls to determine the effectiveness of operations. Such controls include the feed forward, concurrent and feedback controls that enable managers to control activities at different stages and take corrective measures in case of deviation (Daft & Samson, 2005). These controls provide managers with the relevant information about how they can run the firm better by getting feedback from the relevant stakeholders. In small organizations, controls are effective in giving the business owner about effectiveness and efficiency in utilizing resources. Small firms have fewer resources than large ones and thus, business owners in these organizations take the controlling function very seriously. Lack of controls can affect profits in a business adversely leading to its collapse. Thus, managers in both large and small firms need to establish controls that can detect deviations so that managers take corrective action.
Leading is another function of management that involves influencing followers to a particular direction. A manager in the organization should also be an effective leader in order to influence employees in the organization. An effective leader uses communication skills to interact with employees in the organization and deliver information on achieving goals (Caroselli 2000). Different managers use different leadership styles in the organization to influence employees to follow them.
Since small organizations have simple structures and the authority flows from top to bottom, business owners in such organizations use an authoritarian style of leadership. The business owner is responsible for making decisions and expects employees to follow them without question. These leaders do not involve employees in making decisions, which causes lack of motivation because employees do not feel valuable. Business owners in small firms use this style of leadership because they do not have many employees under their control and thus believe that they will follow instructions without complaining.
In large organizations, employees have greater bargaining powers because of their large numbers. Therefore, an authoritarian style of leadership may not work well in large organizations. Managers use a participative style where they give employees a chance to express their views on certain issues affecting the organization (Caroselli 2000). Managers in large organizations give employees a chance to make decisions and hence motivate them to perform. However, the process of making decisions may take long because of having to consult so many people. With a participative style, managers are able to influence many followers and achieve organizational goals.
Organizational culture affects performance of the business because it determines the response of staff to stimulus based on certain values within the organization. The culture an organization adopts affects managers in achieving organizational goals. An organizational culture refers to the environment in the workplace developed from the interaction of employees. It refers to the values and norms shared by individuals and groups in the organization and their interaction with people outside the firm (Schein 2010).
There are different types of organizational cultures depending on the firm. In small and medium size organizations, a power culture is common. This culture involves control where decisions are centralized at the top management. “This culture gives the business owner power and control over operations in the business” (Schein 2010, p.143). This culture is effective in the small firms because such firms do not use groups and thus there is no consultation. However, the lack of consultation may cause de-motivation in employees and affect performance in the end. On the contrary, large organizations embrace a task culture, which involves a team in completing tasks. Since large firms involve many employees, managers in these firms establish project teams to complete assigned tasks. Thus, employees feel motivated because they have the ability to make decisions within their teams.
Conclusion
Large firms differ from small medium enterprises in the management functions of planning, controlling, organizing, leading and achieving. Large firms have decentralized structures that enable managers to delegate authority and responsibility to junior employees. This involvement establishes a task culture in the firm and motivates employees to achieve goals as the managers involve them in decision-making. Small firms, on the other hand, use centralized structures where decision-making is concentrated at the top and the business owner neither involves employees in decision-making nor delegates authority. This breeds a power culture that gives the business owner control over employees. Business owners of such firms use an authoritative leadership style, which causes lack of motivation in employees and may affect performance of the business.
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