MANAGEMENT FUNCTIONS AND SKILLS

I. WHAT IS MANAGEMENT? Management entails four basic functions: planning, organizing, leading, and controlling resources (land, labor, capital, and information) to efficiently reach a companys goals.

II. THE FOUR BASIC FUNCTIONS OF MANAGEMENT The four functions of management are not discrete. They overlap and influence one another. To transform a vision into a successful business, managers must perform the functions of planning, organizing, leading, and controlling.

A. The Planning Function Planning is the primary function on which all others depend. In planning, managers develop strategies for success, establish goals and objectives for the organization, and translate their strategies and goals into action plans. Managers use a strategic planning process to develop long-term strategies and goals.

1. UNDERSTANDING THE STRATEGIC PLANNING PROCESS Strategic plans outline the firms long-range (two to five years) organizational goals and set a course of action the firm will pursue to reach its goals. These plans encompass eight major areas of concern: market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility, and financial performance. A good strategic plan answers: Where are we going? What is the environment? How do we get there? Managers use a great deal of information from inside and outside the firm in the seven interrelated steps of the strategic planning process:

a. Develop a Clear Vision A vision is a realistic, credible, and attainable view of the future that grows out of and improves on the present. SAMPLE VISION STATEMENTS: Ford Current: To become the world's leading Consumer Company for automotive products and services. IKEA The IKEA vision is to create a better everyday life for the many people. We make this possible by offering a wide range of well-designed, functional home furnishing products at process so low that as many people as possible will be able to afford them.

b. Translate the Vision into a Meaningful Mission Statement A mission statement is a brief document that defines why the organization exists, what it seeks to accomplish, and the principles that the company will adhere to as it tries to reach its goals. It brings focus and guidance to employees, defines their roles and how they are tied to the goals of the larger organization, and must be congruent with the organizations core values.

SAMPLE MISSION STATEMENTS Google To organize the world's information and make it universally accessible and useful. Microsoft To enable people and businesses throughout the world to realize their full potential. McDonalds To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key dcor and friendly atmosphere Dell Mission Statement To be the most successful computer company in the world at delivering the best customer experience in markets we serve. Apple Computer 1984 Mission Statement To produce high-quality, low cost, easy to use products that incorporate high technology for the individual. We are proving that high technology does not have to be intimidating for noncomputer experts.

c. Develop (Tactical) Action Plans Tactical plans lay out the actions and allocation of resources necessary to achieve specific, short-term objectives that support the companys broader strategic plan. In tactical plans, the steps or tactics needed to achieve the goals defined in a strategic plan. For example, if a company's strategic plan is to become a market leader, its tactical plan might be to double the amount spent on advertising and marketing.

d. Operational plans designate the actions and resources required to achieve the objectives of tactical plans. An operational planning is a subset of strategic work plan. It describes short-term ways of achieving milestones and explains how, or what portion of, a strategic plan will be put into operation during a given operational period, in the case of commercial application, a fiscal year or another given budgetary term. An operational plan is the basis for, and justification of an annual operating budget request. Therefore, a five-year strategic plan would need five (5) operational plans funded by five operating budgets. Operational plans should be prepared by the people who will be involved in implementation. There is often a need for significant cross-departmental dialogue as plans created by one part of the organization inevitably have implications for other parts. Operational plans should contain: clear objectives activities to be delivered quality standards desired outcomes

staffing and resource requirements implementation timetables a process for monitoring progress.

Hierarchy of Plans

Top managers make strategic decisions that generate policies. Middle managers make tactical decisions that generate procedures. Line managers make operational decisions that execute those procedures.

B. The Organizing Function Organizing is the process of arranging resources to carry out the organizations plans. Organizing means adapting to constant changes in personnel, equipment, public taste and interests, and political and economic trends. Most companies form a management pyramid, or hierarchy, with top, middle, and bottom levels.

1. Top managers, such as the CEO, have the most power and take overall responsibility for the organization. They set strategic goals, make long-range plans, establish major policies, and represent the company to the outside world.

2. Middle managers, such as plant, division, or branch managers, report to top managers and coordinate the work of first-line managers. In more innovative management structures, they may function as team leaders, acting as consultants who must understand every departments function and are granted more decision-making authority, previously reserved for high-ranking executives.

3. At the bottom of the pyramid are first-line managers, or supervisory managers, who oversee the work of operating employees to put into action the plans developed at higher levels

Management Levels Along the vertical dimension, managerial jobs in organizations fall into three categories: first-line, middle, and top management. These categories represent vertical differentiation among managers because they involve three different levels of the organization

First-line managers are managers at the lowest level of the hierarchy who are directly responsible for the work of operating (nonmanagerial) employees. They often have titles that include the word supervisor. First-line managers are extremely important to the success of organization because they have the responsibility of seeing day-to-day operations run smoothly in pursuit of organizational goals. Because they operate at the interface between management and the rest of the work force, first-line supervisors can easily find themselves in the middle of conflicting demands. At the same time, the power of first-line supervisors has been gradually eroding because of scuh factors as union influence, the increasing eduactional level of workers, the trend toward work teams, and the growing use of computers to track many activities formerly regulated by first-line managers. Consequently, the job of the first-line supervisor in the future is likely to involve greater emphasis on dealing with internal human relations and on representing the unit externally. Middle managers are managers located beneath the top level of the hierarchy who are directly responsible for the work of managers at lower levels. The managers for whom they have direct responsibility may be other middle managers of first-line managers. Sometimes middle managers also supervise operatin personnel, such as administrative assistants and specialists like engineers or financial analysts. Many different titles ar used for middle managers, including manager director of.. chief, department head, and division head. Middle managers are mainly responsible for implementing overall organizational plans so that organizational goals are achieved as expected. Organizations, particularly the very large ones, traditionally have tended to have several layers of middle managers. For example, at one point, General Motors (GM) had 14 or 15 management levels. That number reflects a post- world war II trend aimed at adding layers of middle management to help coordinate expanding activities. By the early 1980s, however, the trend began to lower costs, reduce the layers involved in decision making, and facilitate communication. During the 1990s , for example, GM has struggle d to streamline still further int he face of relatively high costs and cutthroat international competition. AT&T annnounced it would cut 40,000 positions, many of them in middle management. Reducing layers of middle management has brought wit it both challenges and opportunities. One common result of having fewer layers is that the remaining middle-management levels gain greater autonomy and responsibility. No surprisingly, pressuer on middle managers appears to be increasing in the face of these changes. In one survey, more than half the respondents reported that the middle managers in their organizations are working longer hours than they had previously, and one-fourth said that they are spending more weekends in the office. For those individuals who lose their positions through downsizing, the dislocation can be painful until other suitable jobs are found. Although there may be fewer middle managers in the future, management researcher Rosabeth Moss Kanter argues that the distincton between managers and those managed is also declining. She predicts that there will be less emphasis on hierarchical level and, instead, more weight on horizontal influence, increased reliance on peer networks, greater access to information, and more control over assignment at lower levels. Thus, it appears that as middle managers assume additional responsibilities, many of their surrent duties will be distributed to lower levels in the organization, thereby raising the importance of positions at those levels. Top managers are mangers at the very top levels of the hierarchy who are ultimately responsible for the entire organization C. The Leading Function Leadingthe process of influencing and motivating people to work effectively and willingly toward company goals is the third basic function of management.

Effective leaders are good at motivating, or giving employees a reason to do the job and to put forth their best efforts. When researchers first started studying leadership, they used a trait theory approach, which looked for specific characteristics, or traits, common to all good leaders. Although leaders who are decisive and self-confident are more likely to be effective, different leadership traits are appropriate in different situations.

Additional research has found that leaders with high Emotional Quotients (EQs) and strong interpersonal skills tend to be more effective leaders. Characteristics of a high EQ are: Self-awareness; self-regulation; motivation; empathy; and social skills.

1. Adopting an Effective Leadership Style Leadership style is the way authority is used by a manager to lead others. Three broad categories of leadership styles are autocratic, democratic, and laissez-faire.

a. Autocratic leaders make decisions without consulting others. b. Democratic leaders delegate authority and involve employees in decision making. This method has gained in popularity as more companies have adopted the principles of TQM. c. Laissez-faire, or hands-off, leaders take the role of consultant, encouraging employees ideas and offering insights or opinions when asked. As more businesses reduce management layers in their corporate hierarchies and use teams, this style has become more prevalent. d. Research shows that the leaders with the best results do not rely on one management style. Contingency leadership adapts leadership style to current business circumstances.

2. Coaching and Mentoring Managers can provide effective leadership in two ways: by coaching and mentoring their employees to bring out the best in them.

a. Coaching is taking the time to meet with employees, discussing any problems that may hinder their ability to work, and offering suggestions and encouragement. This requires keen observation, sensible judgment, and the willingness and ability to take appropriate action. b. A mentor is an experienced manager or employee who can help guide other employees through the corporate maze. They help employees through the corporate maze by explaining office politics, serving as role models, and providing valuable advice about how to succeed within the organization.

D. The Controlling Function Controlling is the process of monitoring progress toward organizational goals and objectives, resetting the course if necessary to meet changing conditions, and correcting deviations if objectives are not being met.

1. The Control Cycle Managers strive to maintain a high level of qualitya measure of how closely goods or services conform to predetermined standards and customer expectations. Many firms control for quality using a four-step cycle that involves all levels of employees. Managers at all levels:

a. Set standards, or criteria for measuring performance b. Assess performance using quantitative and qualitative performance measures c. Compare performance to standards and search for causes

d. Take corrective action by adjusting performance or reevaluating the standard

2. Total Quality Management The controlling function is an important part of total quality management, sometimes referred to as total quality control. Today, quality control is only one part of the total quality management process. Total Quality Management (TQM) is both a strategic management process and a philosophy that focuses on delivering the optimal level of quality to customers by building quality into every organizational activity. It directs management focus to four key elements: Employee Involvement TQM uses a participative management style, the sharing of information at all levels of the organization (also known as open-book management). It involves employees in decision making and increases their power in the organization. Customer Focus Finding out what customers really want and providing them with it requires accurate research and customer feedback. It can enable a company to solve technology problems and reduce costs, cycle time, and scrap. Benchmarking is comparing your companys processes and products to the worlds best companies and then working to match or exceed those standards. Continuous Improvement Continuous improvement requires the commitment to an ongoing effort to reduce defects, cut costs, slash production and delivery times, and offer customers innovative products. Experts agree that the entire organization from top to bottommust be actively and visibly involved for TQM to work. Companies that make a halfhearted commitment wont see the dramatic benefits possible with TQM. Although companies can and have been successful without it, no company that operates in a competitive environment can expect longterm success unless managers strive to use these same four elements.

DIFFERENCES AMONG HIERARCHY LEVELS The relative importance of planning, organizing, leading, and controlling varies somewhat depending on managerial level. Planning tends to be more important for top managers than for middle or first-line managers. This is primarily because top managers are responsible for determining the overall direction of the organization, a charge that requires extensive planning.

At the same time, organizing is somewhat more important for both top and middle managers that for first-line managers. This is primarily because top managers are responsible for allocating and arranging resources, even though this function is also performed to some extent by first-line suervisors.

In contrast, leading is substantially more important for first-line supervisors than for managers at higher levels. Since first-line supervisors are charged with the ongoing production of goods or services, they must engage in substantially higher amounts of communicating, motivating, directing, and supporting- all of which are associated with leading. Finally, the management function that is most similar at all three hierarchy levels is controlling. This similarity reflects a common degree of emphasis at all levels on monitoring activities and taking corrective action as needed.

III. MANAGEMENT SKILLS Whatever the type or size of the organization, managers employ three basic kinds of skills: human, technical, and conceptual. As they rise through the hierarchy, they may need to strengthen one or more of these skills.

A. Human Skills are those required in order to communicate with people, to work effectively with them, and to motivate them. Communication, or exchanging information, is the most important and pervasive interpersonal skill that managers have. B. Technical skill is the ability to perform the mechanics of a particular job. They are most important at lower organization levels because first-line managers work directly with the tools and techniques of a particular specialty, such as automotive assembly or computer programming. All managers need some administrative skills to manage an organization such as the ability to make schedules or read computer printouts. C. Conceptual Skills are especially important to top managers because they include the ability to see the organization as a whole, in the context of its environment, and to understand how the various parts interrelate.

Managers are also responsible for playing roles, which fall into three main categories: Interpersonal roles require performance of certain ceremonial obligations, providing leadership to employees, building networks of relationships with bosses, peers, and employees; and acting as liaisons to groups and individuals inside and outside the company. Informational roles involve managers in the gathering and distribution of information to and from a variety of sources inside and outside the organization. Decisional roles are those that involve the manager in resolving unexpected problems, encouraging innovation, and deciding how resources will be used to meet planned objectives. They also negotiate with many individuals and groups including suppliers, employees, and unions.

Adapted from Asst. Prof.Dr. Nilay ALUFTEKN and some notes from Kathryn M. Bartol and David C. Martin, Management, McGraw-Hill Companies, Inc., 1998