CyberSummary

THE IMPORTANCE OF MANAGEMENT

Management is a process designed to achieve an organization's objectives by using its resources effectively and efficiently in a changing environment. Effectively means having the intended result; efficiently means accomplishing the objectives with a minimum of resources. Managers make decisions about the use of the organization's resources and are concerned with planning, organizing, leading, and controlling the organization's activities so as to reach its objectives. Management takes place not only in businesses of all sizes, but in any organization requiring the coordination of resources. Every organization, in the pursuit of its objectives, must acquire resources (people, raw materials and equipment, money, and information) and coordinate their use to turn out a final good or service.

MANAGEMENT FUNCTIONS

To coordinate the use of resources so that the organization can develop, make, and sell products, managers engage in planning, organizing, staffing, directing, and controlling. These functions are interrelated, and managers may perform two or more of them at the same time.

Planning, the process of determining the organization's objectives and deciding how to accomplish them, lays the groundwork for the other functions. The plan specifies what should be done, by whom, where, when, and how. Businesses of all sizes need to develop plans for achieving success.

Objectives, the ends or results desired by the organization, derive from the organization's mission, which describes its fundamental purpose and basic philosophy. A business's objectives may be elaborate or simple; they usually relate to profit, competitive advantage, efficiency, and growth.

There are three general types of plans for meeting objectives--strategic, tactical, and operational. A firm's highest managers develop its strategic plans, which establish the long-range objectives and overall strategy or course of action for the firm to fulfill its mission and objectives. Strategic plans, which cover periods ranging from two to ten years or even longer, may include plans to add products, purchase companies, sell unprofitable segments of the business, issue stock, or move into international markets. Tactical plans are shorter-range plans designed to implement the activities and objectives specified in the strategic plan. These plans, which cover a period of one year or less, help keep the firm on the course established in the strategic plan. Operational plans are very short term and specify what actions specific individuals, work groups, or departments need to accomplish to achieve the tactical plan and, ultimately, the strategic plan. Another element in planning is crisis management or contingency planning, which deals with potential disasters such as product tampering, oil spills, earthquakes, or other disasters. Crisis management plans usually specify how to maintain business operations throughout a crisis and communicate with the public, employees, and officials about the problem and the company's response.

Organizing is the structuring of resources and activities to accomplish objectives efficiently and effectively. Managers organize by reviewing plans and determining what activities are necessary to implement them; then, they divide the work into small units and assign it to specific individuals, groups, or departments. Organizing helps create synergy, establishes lines of authority, improves communication, helps avoid the duplication of resources, and can improve competitiveness by speeding up decision making.

Staffing is hiring people to carry out the work of the organization. Beyond recruiting people for positions within the firm, managers must determine what skills are needed for specific jobs, how to motivate and train employees to do their assigned Jobs, how much to pay employees, what benefits to provide, and how to prepare employees for higher-level jobs in the firm at a later date. One aspect of staffing is downsizing, the elimination of significant numbers of employees from an organization.

Directing is motivating and leading employees to achieve organizational objectives. Managers motivate employees by providing incentives for them to do a good Job.

Controlling is the process of evaluating and correcting activities to keep the organization on course. It involves measuring performance, comparing present performance with standards or objectives, identifying deviations from the standards, investigating the causes of deviations, and taking corrective action when necessary. Controlling and planning are closely linked. The control process also helps managers deal with problems arising outside the firm.

TYPES OF MANAGEMENT

Managers may be classified by level or area of specialization. There are three levels of management, forming a pyramid. Top managers include the president and other top executives, such as the chief executive officer (CEO), chief financial of ricer (CFO), and chief operations of ricer (COO), who have overall responsibility for the organization. Top managers spend most of their time planning and making the organization's strategic decisions. Middle managers are responsible for tactical planning that will implement the general guidelines established by top management. They are involved in the specific operations of the organization and spend more time organizing. First-line managers supervise workers and daily operations of the organization. They spend most of their time directing and controlling.

Financial managers focus on obtaining needed funds for the successful operation of an organization and using these funds to further organizational goals. Production and operations managers develop and administer the activities involved in transforming resources into goods, services, and ideas ready for the marketplace. Human resources managers handle the staffing function, determining the organization's human resource needs; recruiting and hiring new employees; developing and administering employee benefits, training, and performance appraisal programs; and dealing with government regulations concerning employment practices. Marketing managers are responsible for planning, pricing, and promoting products, and making them available to customers. Administrative managers do not specialize in any particular area but, rather, manage an entire business or major segment of a business.

SKILLS NEEDED BY MANAGERS

Managing effectively and efficiently requires leadership, technical expertise, conceptual skills, analytical skills, and human relations skills.

Leadership is the ability to influence employees to work toward organizational goals. Managers can often be classified as one of three types of leaders. Autocratic leaders make all the decisions and then tell employees what must be done and how to do it. Democratic leaders involve their employees in decisions. Free-rein leaders let their employees work without much interference. Which type is best depends on the employees' abilities, the manager's abilities, the situation and other factors.

Technical expertise is the specialized knowledge and training needed to perform a job. Managers need technical knowledge and skills related to their area of management. Today's managers are finding computer expertise to be an essential skill.

Conceptual skills involve the ability to think in abstract terms, to see how parts fit together to form the whole. They also relate to the ability to think creatively. Managers at all levels and in all areas need conceptual skills, but none more so than top-level managers.

Analytical skills are the ability to identify relevant issues and recognize the degree of their importance, understand the relationships between issues, and perceive the underlying causes of a situation. All managers need to think logically, but this skill is probably most important for top-level managers.

Human relations skills are the ability to deal with people, both inside and outside the organization. People skills are especially important in organizations that provide services.

WHERE DO MANAGERS COME FROM?

An organization acquires managers by promoting employees within the organization, hiring employees from other organizations, and hiring employees out of schools and universities. Promoting people within the organization into management positions tends to increase motivation by showing employees that those who work hard and are competent can advance in the company. However, it is vital for companies to hire outside people from time to time to bring fresh ideas into the organization.

DECISION MAKING

Managers make many different kinds of decisions, and decision making is important in all management functions and levels, whether the decisions are on a strategic, tactical, or operational level. A systematic approach using six steps usually leads to more effective decision making.

The first step in decision making requires recognizing and defining the situation, which may be either positive or negative. Situations requiring small-scale decisions often occur without warning; those requiring large-scale decisions usually are preceded by warning signals. The situation must be carefully defined before management can make a decision.

The next step involves developing a list of possible courses of action, both standard and creative. As a general rule, more time and expertise are devoted to the development stage of decision making when the decision is of major importance.

The third step in decision making involves analyzing the practicality and appropriateness of each option. Management should consider both the consequences of each option and whether the options adequately address the decision situation.

The fourth step involves selecting the best option from among the list of options. This is often a subjective process because many situations do not lend themselves to mathematical analysis.

The fifth step is implementing the decision. Implementation can be simple or fairly complex, depending on the situation. Effective implementation requires planning. Additionally, management should anticipate resistance from people within the organization and be ready to deal with unexpected consequences.

Finally, management must monitor the consequences of its decision: Did the decision accomplish the desired result? If not, management must analyze the situation to find out if the decision was the wrong one, if the situation changed, or if some other option should be implemented. The decision situation may have been incorrectly defined, or the results may not have had time to show up.

THE REALITY OF MANAGEMENT

Management is not a cut-and-dried process; it is a widely varying process for achieving organizational goals. Managers plan, organize, staff, direct, and control, but even those functions can be boiled down into two functions: figuring out what to do and getting things done. Managers spend as much as 75 percent of their time working with other people both inside and outside the organization. They spend a lot of time establishing and updating an agenda, a list of both specific and vague items covering short-term and long-term objectives that must be accomplished. They also spend a lot of time networking, building relationships and sharing information with colleagues who can help managers achieve the items on their agendas. Finally, managers spend a great deal of time confronting the complex and difficult challenges of the business world today, such as rapidly changing technology; increased scrutiny of individual and corporate ethics and social responsibility; the changing nature of the work force; laws and regulations; increased global competition and more challenging foreign markets; declining educational standards, which may limit the skills and knowledge of the future labor and customer pool; and making the best use of time itself.