What exactly is management? Have you ever been in a team situation in which one person has been instrumental in making the group work more effectively? That person could have been a peer or a superior, but somehow he or she knew exactly what had to be accomplished, assessed the resources available to achieve the goal, and organized and led other group members to accomplish that goal. If so, you’ve seen management in action.

Management is the process of working with people and resources to accomplish the goals of an organization. An organization can be a simple working group, a corporate department, or a multibillion-dollar company. The size of the group doesn’t matter, but the skills of a manager and the process a manager goes through are similar across all management levels.

What are the four functions of management? As Figure 7.1 shows, a manager performs four primary functions: planning, organizing, leading, and controlling/monitoring. In the rest of this chapter, we’ll examine three of these functions in more detail and explain how they integrate all of a company’s resources, including its human, financial, and technological resources. In Chapter 8, we’ll examine leadership as a function of management.

Figure 7.1

The Four Functions of Management

What are the different levels of management? Within a company, there are different levels of managers, each with increasing levels of responsibility. Figure 7.2 shows a traditional managerial pyramid with examples of jobs held by managers at each level and the tasks they perform.

Figure 7.2

The Managerial Pyramid

What do top managers do? At the peak of the pyramid are top managers, who are the corporate officers of the firm and are responsible for an organization as a whole. Most corporations have a chief executive officer (CEO) or president. Depending on the company’s size and complexity, it might also have a chief financial officer (CFO), a chief operations officer (COO), and a chief information officer (CIO).

Top managers develop the “big picture” for a company. In other words, they outline its long-term goals and strategic vision. Then they create plans that will take the company in that direction. They establish the culture of an organization and inspire employees to adopt the vision they have for the organization. In smaller corporations, especially small start-up companies, top managers may also be responsible for planning and carrying out the day-to-day tasks of a company. But as the business grows, companies such as these usually need to hire more employees and divide the work into smaller tasks and areas of responsibility, which usually requires hiring a new layer of managers.

What do middle managers do? Middle managers manage individual divisions or segments of an organization and are responsible for creating the specific plans to implement the strategic vision set by the firm’s top managers. Included in this management layer are division managers of the firm’s functions, such as finance, marketing, sales, operations, and information technology (IT). Also included in this layer are team leaders who are not arranged by function but are responsible for cross-functional groups of employees who work on projects or other tasks of the organization.

Are the people who supervise the day-to-day operations also managers? The bottom of the managerial pyramid includes first-line managers. These managers supervise the individual employees who carry out the day-to-day operations of a company.

Does every company have all these different managers? Not all companies have all three layers of management; some have more, and some have fewer. Typically, you’ll find the extra layers are middle managers.

What skills should a manager have? Because managerial tasks are so varied, a successful manager needs to possess the following types of skills:

• Conceptual skills. The ability to think abstractly

• Technical skills. The specific knowledge for the discipline

• Time management skills. The ability to be effective and productive with one’s time

• Interpersonal skills. The ability to motivate and communicate easily with others

• Decision-making skills. The ability to analyze options and implement the best plan of action

It is a rare person who masters all of these skills. Moreover, because they are ­responsible for a variety of jobs and because these jobs can change quite rapidly, managers must assess the skills that are required in any given situation. Managers must also be willing to acquire these skills if they are lacking in a specific area by studying, undergoing training, or finding mentors to help them.

What do we mean by conceptual skills? To make good decisions, a manager must have conceptual skills—the ability to think abstractly and to picture the organization as a whole and understand its relationship to the business community. Conceptual skills also include understanding the relationships between the parts of an organization itself. Whenever new market opportunities or potential threats arise, managers rely on their conceptual skills to help analyze the impending outcomes of their decisions. Conceptual skills are extremely important for top managers and often develop with time and experience.

What technical skills do managers need? Technical skills include the abilities and knowledge that enable employees to carry out the specific tasks required of a discipline or a department, such as drafting skills for an architect, programming skills for a software developer, or market analysis skills for a marketing manager. How to operate certain machinery is also a technical skill. Managers must be comfortable with technology and possess good analytical skills to interpret a variety of data. In addition to having the skills pertinent to their own jobs, managers must also know how to perform or at least have a good understanding of the skills required of the employees they supervise.

What time management skills does it take to succeed as a manager? Managers who possess time management skills are able to be effective and productive with their time. As a manager, how do you do this? Eliminating time wasters, such as constant interruptions, setting aside time each day to return phone calls and e-mail, ensuring that meetings have a clear agenda, and successfully delegating work to others, can increase the productive use of your available time. Tracking how you spend your time each day can also improve your time management.

Why are interpersonal skills important for managers? Managers achieve their goals by working with people both inside and outside an organization. Interpersonal skills enable managers to interact with other people to motivate them and develop their trust and loyalty and get them to work together well.

Top managers need good interpersonal skills to successfully communicate with the firm’s board of directors, investors, leaders in the business community, and middle managers. Middle managers need good interpersonal skills to communicate with all levels of management and act as liaisons among groups. Lower-level managers need good interpersonal skills to motivate employees, build morale, and train and support those who perform the daily tasks of an organization. And all managers need good interpersonal skills to communicate with and motivate people who are different than themselves. Because the workplace is becoming more diverse, this is becoming an increasingly important managerial skill.

Why do some people consistently make better decisions than other people? It is critical that managers have good decision-making skills—the ability to identify and analyze a challenge, identify and examine the alternatives, choose and implement the best plan of action, and evaluate the results. When making important decisions, managers often go through a formal decision-making process similar to that shown in Figure 7.3. Analyzing data and looking for trends allow a manager to identify unseen problems or opportunities. Examples may include poor growth in sales, an increase in customer dissatisfaction, or an opportunity to expand into a new market. Next, managers work with their teams to generate possible solutions. They can then evaluate each potential solution based on various criteria, such as cost, feasibility, and time and resources needed. Once they have evaluated the potential solutions, managers select the best plan of action. At this point, managers often seek the opinions of customers or other people in the marketplace before completely committing to this choice. If the feedback is not positive, another alternative might be pursued. When the final choice has been made, plans are established to implement the plan of action. Finally, managers evaluate the results of their decisions. If changes need to be made, the entire process begins again.

Figure 7.3

Stages of Decision Making