LEVELS OF MANAGEMENT

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa.

The level of management determines a chain of command, the amount of authority & status enjoyed
by any managerial position. The levels of management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels
is discussed below:

1. Top Level of Management (executive coaching, change management, leadership, delegation

& empowerment, etc). The board of directors, president, vice-president, and CEO are all
examples of top-level managers. These managers are responsible for controlling and
overseeing the entire organization. They develop goals, strategic plans, company policies,
and make decisions on the direction of the business. In addition, top-level managers play a
significant role in the mobilization of outside resources. Top-level managers are
accountable to the shareholders and general public. The top management is the ultimate
source of authority and it manages goals and policies for an enterprise. It devotes more time
on planning and coordinating functions.
The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the
performance of the enterprise.
i.

2. Middle Level of Management (problem solving, team building, talent development,

performance management). General managers, branch managers, and department
managers are all examples of middle-level managers. They are accountable to the top
management for their department's function. Middle-level managers devote more time to
organizational and directional functions than top-level managers. They are responsible to
the top management for the functioning of their department. In small organization, there is
only one layer of middle level of management but in big enterprises, there may be senior
and junior middle level management.

Their roles can be emphasized as:

a. They execute the plans of the organization in accordance with the policies and
directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better
performance.
 3. Lower Level of Management (emotional intelligence & coaching for performance)
Supervisors, section leads, and foremen are examples of low-level management titles. These
managers focus on controlling and directing. Lower level is also known as supervisory /
operative level of management. It also consists of superintendent etc. According to R.C.
Davis, “Supervisory management refers to those executives whose work has to be largely
with personal oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals
etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with
the workers.

Also referred to as first-level managers, low-level managers are role models for employees. These
managers provide:
 Basic supervision;
 Motivation;
 Career planning;
 Performance feedback; and
 Staff supervision.

ORGANIZATIONS

Organization is defined as:

 A long-term commitment made by the agents to a particular way of handling the

cooperative tasks
 Something that binds agents together to achieve effective coordination towards some
common goal
 An entity comprising multiple people, such as an institution or an association, that has a
collective goal and is linked to an external environment

One of the first decisions that you will have to make as a business owner is how the business should
be structured.  All businesses must adopt some legal configuration that defines the rights and
liabilities of participants in the business’s ownership, control, personal liability, life span, and
financial structure.  This decision will have long-term implications so in in making a choice, you will
want to take into account the following:

 Your vision regarding the size and nature of your business.

 The level of control you wish to have.
 The level of “structure” you are willing to deal with.
 The business’s vulnerability to lawsuits.
 Tax implications of the different organizational structures.
 Expected profit (or loss) of the business.
 Whether or not you need to re-invest earnings into the business.
  Your need for access to cash out of the business for yourself.

In previous discussion, we learned that organizing is the arranging and structuring of work to
accomplish organizational goals. It is an important process during which managers design an
organization’s structure.

Organization structure is define as the formal arrangement of jobs within an organization,

which means that this is where activities are defined such as task allocation, coordination and
supervision are directed toward the achievement of organizational aim.

Why does a business or institution needs organizational structure? It is because organizational

structure is considered as the viewing glass or perspective through which individuals see their
organization and its environment. This structure provides an overview to the top management as
well as the workforce of how the working environment must be.

Organizational chart is the visual representation of organizational structure. This physical

attribution can usually be found inside facilities of organization and serves many purposes one of
which is that it enables one to visualize a complete organization by means of the picture present.
This chart also gives directions to clients of an institution with regards to relations between people
within an organization.
Organizational design refers to the process that involves decisions about six key elements: work
specialization, departmentalization, chain of command, span of control, centralization and
decentralization, and formalization

Elements of Organization

1. Work Specialization - is dividing work activities into separate job tasks. Individual employees
“specialize” in doing part of an activity rather than the entire activity in order to increase work
output. It’s also known as division of labor, a concept we introduced in the management history
module.

Example: At the Wilson Sporting Goods factory in Ada, Ohio, 150 workers (with an average tenure
exceeding 20 years) make every football used in the National Football League and most of those
used in college and high school football games. To meet daily output goals, the workers specialize in
job tasks such as molding, stitching and sewing, lacing, and so forth.

Work specialization is important in an organization because Work specialization makes efficient

use of the diversity of skills that workers have. In most organizations, some tasks require highly
developed skills; others can be performed by employees with lower skill levels. Aside from that it is
also believed that work specialization could lead to great increase in productivity towards the
attainment of unified goal.

2. Departmentalization - is an aspect of organizational that includes the subdivision of a business

into units based on their function or other criteria. Common work activities need to be grouped
back together so work gets done in coordinated and integrated way. Most companies, including
restaurants, are likely to use two or more types of departmentalization simultaneously.

Types of Departmentalization:

 Functional departmentalization - Grouping activities by functions performed. Activities can

be grouped according to function (work being done) to pursue economies of scale by placing
employees with shared skills and knowledge into departments for example human resources,
IT, accounting, manufacturing, logistics, and engineering. Functional departmentalization can
be used in all types of organizations.
 Product departmentalization - Grouping activities by product line. Tasks can also be
grouped according to a specific product or service, thus placing all activities related to the
product or the service under one manager. Each major product area in the corporation is under
the authority of a senior manager who is specialist in, and is responsible for, everything related
 to the product line. LA Gear is an example of company that uses product departmentalization.
Its structure is based on its varied product lines which include women’s footwear etc.
 Customer departmentalization - Grouping activities on the basis of common customers or
types of customers. Jobs may be grouped according to the type of customer served by the
organization. The assumption is that customers in each department have a common set of
problems and needs that can best be met by specialists. The sales activities in an office supply
firm can be broken down into three departments that serve retail, wholesale and government
accounts.
 Geographic departmentalization - Grouping activities on the basis of territory. If an
organization's customers are geographically dispersed, it can group jobs based on geography.
For example, the organization structure of Coca-Cola has reflected the company’s operation in
two broad geographic areas – the North American sector and the international sector, which
includes the Pacific Rim, the European Community, Northeast Europe, Africa and Latin America
groups.
 Process departmentalization - Grouping activities on the basis of product or service or
customer flow. Because each process requires different skills, process departmentalization
allows homogenous activities to be categorized. For example, the applicants might need to go
through several departments namely validation, licensing and treasury, before receiving the
driver’s license.
 Divisional departmentalization - When the firm develops independent lines of business that
operate as separate companies, all contributing to the corporation profitability, the design is
call divisional departmentalization or (M-FORM). For example, the Limited. Inc., has these
division: Th Limited, Express, Lerner New York, Lane Bryant and Mast Industries.

Advantages/Importance of departmentalization:
1. Develop specialization - Departmentalization leads to the benefits of specialization. In
departmentalization, works are divided into different departments on the basis of their
nature and responsibility is entrusted to skilled and efficient manager. When a manager is
involved in one specific function, his expertise and efficiency increases in that particular
field.
2. Administrative control - In departmentalization, the standard of performance of each
department and objective to be achieved is planned. When actual performance deviates
with planned performance, corrective measures are taken to remove the barriers.
3. Fixation of responsibility - Departmentalization divides works into different units on the
basis of nature and responsibility is entrusted to departmental managers. And the
departmental managers are accountable to the job performed by the staff of their concerned
departments.
4. Helpful for expansion - Departmentalization facilitates top manager to direct and supervise
the work performed by subordinate managers. It also helps to divide work into different
units on the basis of nature, and responsibility is entrusted to departmental managers. Such
division of work, thus, is helpful for expansion of business.
5. Management development - Departmentalization helps to develop new managers by
providing them opportunity to take independent decision and initiatives. Consequently, a
high skilled subordinate level manager can get opportunity to promote to the higher level.

Four Basic Legal Forms of Organizations

Sole Proprietorship

The vast majority of small businesses start out as sole proprietorships.  These firms are owned by
one person, usually the individual who has day-to-day responsibility for running the business.  Sole
proprietorships own all the assets of the business and the profits generated by it.  They also assume
complete responsibility for any of its liabilities or debts.  In the eyes of the law and the public, you
are one in the same with the business.
Advantages of a Sole Proprietorship

• Easiest and least expensive form of ownership to organize.

• Sole proprietors are in complete control, and within the parameters of the law, may make
decisions as they see fit.
• Profits from the business flow-through directly to the owner’s personal tax return.
• The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

• Sole proprietors have unlimited liability and are legally responsible for all debts against the
business.  Their business and personal assets are at risk.
• May be at a disadvantage in raising funds and are often limited to using funds from personal
savings or consumer loans.
• May have a hard time attracting high-caliber employees, or those that are motivated by the
opportunity to own a part of the business.
• Some employee benefits such as owner’s medical insurance premiums are not directly deductible
from business income (only partially as an adjustment to income).

Partnerships

In a Partnership, two or more people share ownership of a single business.  Like proprietorships,
the law does not distinguish between the business and its owners.  The Partners should have a legal
agreement that sets forth how decisions will be made, profits will be shared, disputes will be
resolved, how future partners will be admitted to the partnership, how partners can be bought out,
or what steps will be taken to dissolve the partnership when needed; Yes, its hard to think about a
“break-up” when the business is just getting started, but many partnerships split up at crisis times
and unless there is a defined process, there will be even greater problems.  They also must decide
up front how much time and capital each will contribute, etc.

Advantages of a Partnership

• Partnerships are relatively easy to establish; however time should be invested in developing the
partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners’ personal tax return.
• Prospective employees may be attracted to the business if given the incentive to become a
partner.
• The business usually will benefit from partners who have complementary skills.

Disadvantages of a Partnership

• Partners are jointly and individually liable for the actions of the other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on tax returns.
• The partnership may have a limited life; it may end upon the withdrawal or death of a partner.

Types of Partnerships that should be considered:

1. General Partnership
Partners divide responsibility for management and liability, as well as the shares of profit or loss
according to their internal agreement.  Equal shares are assumed unless there is a written
agreement that states differently.

2. Limited Partnership and Partnership with limited liability

“Limited” means that most of the partners have limited liability (to the extent of their investment)
as well as limited input regarding management decision, which generally encourages investors for
short term projects, or for investing in capital assets.  This form of ownership is not often used for
operating retail or service businesses.  Forming a limited partnership is more complex and formal
than that of a general partnership.

3. Joint Venture
Acts like a general partnership, but is clearly for a limited period of time or a single project.  If the
partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership
and will have to file as such, and distribute accumulated partnership assets upon dissolution of the
entity.
 

Corporations

A Corporation, chartered by the state in which it is headquartered, is considered by law to be a

unique entity, separate and apart from those who own it.  A Corporation can be taxed; it can be
sued; it can enter into contractual agreements.  The owners of a corporation are its shareholders. 
The shareholders elect a board of directors to oversee the major policies and decisions.  The
corporation has a life of its own and does not dissolve when ownership changes.

Advantages of a Corporation

• Shareholders have limited liability for the corporation’s debts or judgments against the
corporation.
• Generally, shareholders can only be held accountable for their investment in stock of the
company.  (Note however, that officers can be held personally liable for their actions, such as the
failure to withhold and pay employment taxes.
• Corporations can raise additional funds through the sale of stock.
• A Corporation may deduct the cost of benefits it provides to officers and employees.
• Can elect S Corporation status if certain requirements are met.  This election enables company to
be taxed similar to a partnership.

Disadvantages of a Corporation

• The process of incorporation requires more time and money than other forms of organization.
• Corporations are monitored by federal, state and some local agencies, and as a result may have
more paperwork to comply with regulations.
• Incorporating may result in higher overall taxes.  Dividends paid to shareholders are not
deductible from business income; thus this income can be taxed twice.

Limited Liability Company (LLC)

The LLC is a relatively new type of hybrid business structure that is now permissible in most states. 
It is designed to provide limited liability features of a corporation and the tax efficiencies and
operational flexibility of a partnership.  Formation is more complex and formal than that of a
general partnership.

The owners are members, and the duration of the LLC is usually determined when the organization
papers are filed.  The time limit can be continued if desired by a vote of the members at the time of
expiration.  LLC’s must not have more than two of the four characteristics that define corporations: 
Limited liability to the extent of assets; continuity of life; centralization of management; and free
transferability of ownership interests.

Federal Tax Forms for LLC

Taxed as a partnership in most cases; corporation forms must be used if there are more than 2 of
the 4 corporate characteristics, as described above.

In summary, deciding the form of ownership that best suits your business venture should be given
careful consideration.  Use your key advisors to assist you in the process.
Efficiency and Effectiveness

Efficiency and effectiveness are both commonly used management terms. Yet, while they sound

similar and start with the same letters, they both mean different things.

Efficiency refers to doing things in a right manner. Scientifically, it is defined as the output to input

ratio and focuses on getting the maximum output with minimum resources. Effectiveness, on the

other hand, refers to doing the right things. It constantly measures if the actual output meets the

desired output.

Since efficiency is all about focusing on the process, importance is given to the ‘means’ of doing

things whereas effectiveness focuses on achieving the ‘end’ goal.

Efficiency is concerned with the present state or the ‘status quo’. Thinking about the future and

adding or eliminating any resources might disturb the current state of efficiency. Effectiveness, on

the other hand, believes in meeting the end goal and therefore takes into consideration any

variables that may change in the future.

In order to be efficient time and again, discipline and rigor is required. This can build inflexibility

into the system. Effectiveness, on the other hand, keeps the long term strategy in mind and is thus

more adaptable to the changing environment.

Since efficiency is about doing things right, it demands documentation and repetition of the same

steps. Doing the same thing again and again in the same manner will certainly discourage

innovation. On the other hand, effectiveness encourages innovation as it demands people to think,

the different ways they can meet the desired goal.

Efficiency will look at avoiding mistakes or errors whereas effectiveness is about gaining success.

In the earlier days of mass production, efficiency was the most important performance indicator for

any organization. However, with consumers facing an increasing number of choices, effectiveness of

an organization is always questioned. In order to be a successful organization, there needs to be a

balance between effectiveness and efficiency. Only being efficient and not meeting the

requirements of the stakeholders of the organization is of little use to anybody. And effectiveness

may result in success but at what cost?

Summary:

1.Efficiency means doing the things right whereas Effectiveness is about doing the right things.

2.Efficiency focuses on the process or ‘means’ whereas Effectiveness focuses on the end.

3.Efficiency is restricted to the present state whereas effectiveness involves thinking long term.

4.Organizations have to be both effective and efficient in order to be successful.

FUNCTIONS OF MANAGEMENT

The Four major functions of management are discussed as:

Planning - It includes forecasting, formation of objectives, policies, programmes, producer and
budget. It is a function of determining the methods or path of obtaining there objectives. It
determines in advance what should be done, why should be done, when, where, how should be
done. This is done not only for organization as a whole but also for every division, section and
department. Planning is thinking before doing.

Organizing - includes departmentation, delegation of authority, fixing of responsibility and

establishment of relationship. It is a function of providing everything useful to the business
organization. There are certain resources which are mobilize i.e. man, machine, material, money,
but still there are certain limitations on these resources. A manager has to design and develop a
structure of various relations. This structure, results from identification and grouping work,
delegation of authority and responsibility and establishing relationship.

Staffing - It includes man power planning, recruitment, selection, placement and training. People
are basically responsible for the progress of the organization. Right man should be employed for
right job. It also involved training of personnel and proper remuneration.

Directing - It includes decision making, supervising, guidance etc. It reflects providing dynamic
leadership. When the manager performs these functions, he issues orders and instructions to
supervisors. It also implies the creation of a favourable work, environment motivation, managing
managers, managing workers and managing work environment.

Communication - Communication provides the vital link in any organization. Every successful
manager has to develop an effective system of communication. Communication means exchange of
facts, ideas and information between two or more person. It helps in building up high moral.

Controlling - It is a process of checking actual performance against standard performance. If there is

any difference or deviation then these differences should be detected and necessary steps should be
taken. It involves three elements:
1. Establishing standard of performance.
2. Measuring actual performance with establishment.
3. Finding out reasons for deviation.

Planning Organizing

Staffing FUNCTIONS OF MANAGEMENT Communication

Planning Directing

Other functions of management includes:

Motivation - In a well organization unforeseen problems are created. It becomes necessary for the
workers to have a leader, to whom they can consult for the guidance. One must help the worker to
solve their problems. The manager is the leader for them. So he should accept the problems, should
appreciate the workers for the work done by them. He has to act as a well motivation source for he
workers.

Decision Making - It is the process in which a lot of actions are involved and lot of alternatives are
available. A manager has to choose right alternative for attainment of his goals. There are many
decisions which include marketing decision, cost price decision and capital investment decision.
Forecasting - Correct sales forecasting is essential for manufacturing organization. This helps in
production, by making available right workers and right material at right place and at right time. It
also helps manager for purchasing of raw materials, equipments and labours. Many times
production is made in advance to meet future demands and forecasting is essential because of short
supply of raw material, lack of proper control, to fix up sales targets and to meet future financial
needs. It also helps to give ideas about expansion of business; and for giving training to the
personnel of the organization.

MANAGEMENT ROLES

Managers fulfil a variety of roles. A role is an organized set of behaviour that is associated with a
particular office or position. Dr. Henry Mintzberg, a prominent management researcher, says that
what managers do can best be described by looking at the roles they play at work.
The term management role refers to specific categories
of managerial behavior. There are three types of roles which a manager usually does in any organiz
ation. Being a leader in any organization is a complicated and challenging task that can take of
variety of forms depending on the needs of the organization and the people that are being led.

Mintzberg's observations and research indicate that diverse manager activities can be organized
into ten roles. For an important starting point, all ten rules are vested with formal authority over an
organizational unit. From formal authority comes status, which leads to various interpersonal
relations, and from these comes access to information, which, in turn, enables the manager to make
decisions and strategies.

The ten roles are divided into three categories: interpersonal, informational, and decisional.

1. Interpersonal Relationship - Management is largely about interpersonal relations between the

manager and people both inside and outside the organization, such as employees, superiors,
suppliers and customers. As a supervisor, Alexander will serve in his interpersonal role while acting
as a figurehead, leader and liaison.

Managers' roles involve basic interpersonal relationships:

* The figurehead role. One of the important roles of a leader is simply to be a figurehead for the rest
of the group; this is one of the interpersonal roles because so much of it is about being someone
that employee can turn to when they need help, support, etc. A good leader will project confidence
so that everyone involved feels a sense of security and reassurance that the job will be done right.

* The leader role. Another interpersonal role, this one should be obvious. A manager needs to lead
the employee that she or he is in charge of guiding toward a specific goal. This can include telling
them what to do and when to do it, organizing the structure of the team members to highlight
specific skills that each possesses, and even offering rewards.

* The liaison role. The final role within the interpersonal category, is acting as a liaison. It means
that the manager must successfully interface with a variety of people – both within the organization
and on the outside – to keep things running smoothly. This point is all about communication, and it
is one of the main things that determines the ultimate success or failure of a manager. Being able to
properly communicate with a range of people in such a way that the project remains on track is a
crucial skill to develop

2. Informational Role

 Monitor – acting as monitor is the first managerial role within the informational category.
Just as the word would indicate, being a monitor involves tracking changers in the field that
your organization works in, as well as changes on your team that might be signs of trouble
down the road. Things are never static in business, as it is always evolving, so a successful
 manager is the one who will constantly monitor the situation around them and make quick
changes as necessary.
 Disseminator – it does no good as a manager to collect information from a variety of
internal and external sources if you are only going to keep to yourself. The point of
gathering information is that your team can benefit from it directly, so the next
informational role is dissemination which is getting the information quickly and effectively
to the rest of your team. Wasted time by the team members on a certain part project often
has to do with them not possessing all the relevant information deemed necessary for the
success of the project because the manager failed to do his job and did not disseminate such
vital information.
 Spokesperson – as a head of a team of any size or role within an organization, you, as a
manager will be the representative of that team when it comes to meetings,
announcements, among others. Being a spokesperson is the final informational role on the
list, and it is an important one because perception is often a big part of reality. Even if your
team is doing a great work, it might not be reflected as such to other decision makers in the
organization if you do not act as a good spokesperson.

3. Decisional Roles

 Entrepreneur – in some ways, being a manager within a larger organization is like running
your own small business. While you will have managers above you to answer to, you still
need to think like an entrepreneur in terms of the ability to quickly solve problems.
Thinking of new ideas that could move your team forward and motivate your team to do
beyond what they think they only can. As manager, it is your duty to be an entrepreneur and
inspire your team to be like you.
 Disturbance Handler – also referred to as conflict manager. In management it is almost
inevitable that there will be disturbances along the way during any kind of project or task
that involves more than one person. It is of prime importance that a manager must become
an effective disturbance handler, because getting back on track after a problem arises is
important to short-term and long-term productivity. Whether it is a conflict among team
members or a bigger problem outside of the group, your ability to handle disturbances says
a lot about your skills as a manager.
 Resource Allocator – every project or business is tackled using resources that are limited in
some way or another. As a resource allocator, it is your job to best use what you have
available in order to get the project done and meet you defined goals and objectives.
Resources can include budget, raw materials, workforce, and more. This category is should
be included to be one of the most salient and important things a manager should do.
 Negotiator – business is all about negotiation, and that is especially true for managers.
Being a negotiator does not mean going outside of the organization to negotiate the terms of
a new deal. In fact, most of the important negotiation will take place right within your own
team itself. Getting everyone to buy in to the overall goal and vision for a project is one
example of a manager as negotiator because most likely it would mean that as manager he
will have to negotiate with individual team members to get them to adopt a role that suits
their skills and personal development goals. A good manager will be able to negotiate their
way through these challenges and keep the project on track for success.

MANAGEMENT SKILLS
Management is an explicit process. It can be taught, and it can be learned. It takes time, dedication,
and self-discipline. Management is often defined along functional lines. The functions of
management can be described as planning, organizing, staffing, directing, and controlling.
Management is often the difference between success and failure. Possessing unique managerial
skills is very important for the success of an organization. Some of the salient skills of management
involves the general functions as:
1. Planning – is the first and most important step to any management task. It also
involves the development of the mission, goals, and tactics that will set the course
for the business. Decision making is also part of the planning process, and good
managers use good decision-making RADAR. Th ey can Recognize, Analyze, Decide,
Act, and take Responsibility for their decisions.
2. Organizing - is the function of establishing a business framework and defi ning the
duties, responsibility, and authority of each position. Complex institutions or
 businesses will often have an “org chart” to defi ne the structure, responsibilities,
and chain of command within the fi rm. This is the process where you determine the
roles needed and determine the best resources.
3. Directing - Directing involves coordinating, leading, and motivating all the members
of the business, including yourself. It is considered as the action step.
4. Controlling - involves measuring and reporting data, comparing results to
standards, and taking corrective action to remedy problems revealed by the
analysis. It also involves monitoring the work being done to verify if it coincide with
the standard goal of the company.

Essential Management Skills

 All successful managers possess a similar set of skills. It doesn’t matter whether the
managers are in IT, Finance or Customer service there are certain skills, knowledge and attributes
which are essential requirements for performing the role well.
5 Essential Management Skills:

1. Objective setting

It is vital that a manager can establish and communicate a clear direction to his/her people.

The objectives should be discussed and agreed with people and adequate resources

identified and made available in order to achieve required outcomes.

2. Communication

Managers need good written and verbal communication skills. They must be able to get

their point across in an open and direct way and build positive relationships with their

people, their peers and their bosses.

3. People development

Good Managers know how to work with others to maximize performance. To get the most

from people it is beneficial to have coaching, mentoring and facilitating skills. The ability to

manage performance and provide constructive, encouraging feedback are also key elements

to supporting and developing people.

4. Decision making

Being able to weigh up several different options, make effective decisions and take

appropriate action is all part of being an efficient Manager. Having good judgment and

knowing when the time is right to implement decisions is crucial to appearing credible in

the role.

5. Motivation

Managers who can inspire and motivate their people to raise their levels of performance

and achieve their potential are far more successful than those who struggle in this area.

Rewarding and recognising achievement and encouraging people to achieve their personal

best is key to successful management.

 Importance of Business Management
Business management skills are an important contribution to any company. Because of this,
they should be developed to their full potential in order for a manager his or her organization
to be successful. One of the most important business skills that can be developed is “rare
sense”.
Rare Sense is the ability to think in a level-headed manner and gain the fact-based insight that
produces and promotes business breakthroughs. This is important because it can place a
company on the leading edge of technology and product manufacturing which can then lead to
a higher level of success than that of competitors.

MANAGEMENT TRENDS

A creative aspect of management is being able to spot emerging opportunities before the company’s
competitors are able to. These include potential customer groups, new channels of distribution that
could boost sales and new technologies that could make the company more efficient. Even with
pressing day-to-day responsibilities, a business owner has to be forward-looking and dedicated to
formulating a long-range vision for the business. That is why strategic management emerges and
considered as one effective management trends up until the twentieth century. The history of
strategic management can be traced back several thousand years. Great wisdom about strategy can
be acquired by understanding the past, but ignoring the lessons of history can lead to costly
strategic mistakes that could have been avoided. Certainly, the present offers very important
lessons; businesses can gain knowledge about what strategies do and do not work by studying the
current actions of other businesses. By looking into the SWOT (Strength, Weaknesses,
Opportunities, Threats) strategic management are able to plot and delineate long term plans for the
benefit of the organization.

Strategic Management- process in which management implements a plan or strategy that

maximizes the utilization of resources for the benefit of the organization. It should be used as the
general blueprint of the direction of the organization, which include a strategic analysis, such as –
SWOT (strength, weaknesses, opportunities and threats).

Approaches to Strategic Management

1. Balanced Scorecard System - Is a system that aligns business activities within the vision and
strategies of the enterprise. The system monitors the execution of objects against the company’s
strategies and improve internal and external communication.
This approach provide a business and active versus passive strategic management solution by
providing management daily directives.
The system views the organization from four perspectives – learning and growth, business process,
customers and financial – for the purpose of gathering and analyzing data from each perspectives.
2. Stakeholders Theory
Freeman Strategic Management is a trend based on the ‘’Stakeholder Theory’’
Under this theory, management evaluates the importance of and identifies those
organizational stakeholders that are vital to the success of the enterprise.
According to Freeman’s theory, stakeholders that are vital to the organizational success are
customers, suppliers , employees, communities, shareholders and managers.
3. Two Primary Principles –
* Principle of corporate legitimacy; and
* Stakeholder fiduciary principle
 Stakeholders should benefit from and participate in the decision making process or
management, whereupon the manager act as an agent in the interests of stakeholders for
the benefit and survival of the corporation.
Example of Strategic plans
 The Five Stages Of Strategic Management Process
 Business Planning and Strategy
 Strategic Management Plans
The strategic management process is more than just a set of rules to follow . It is a philosophical
approach to business.
Five stages of the process are;
1) Goal setting - In order to build a successful organization, strategic management needs to be
a general philosophy that provides the organizational management the ability to adapt and
overcome changing customer needs and demands, demands ,government regulation and
laws, markets, business and technological innovations, economies and geopolitically-driven
economic events
2) Analysis - is the key stage because the information gained in this stage will shape the next
two stages. In this stage, gather as much information and data relevant to accomplishing
your vision.
3) Strategy Formation - First step in forming a strategy is to review the information gleaned
from completing the analysis.
STEPS IN STRATEGY FORMATION:
 Determine what resources the business currently has that can help reach the defined goals
and objectives.
 Identify any areas of which the business must seek external resources.
 The issues facing the company should be prioritized by their importance to your success.
4) Strategy Implementation - Successful strategy implementation is critical to the success of
the business venture. This is the action stage of the strategic management process. If the
overall strategy does not work with the business current structure, a new structure should
be installed at the beginning of this stage. Additionally, any resources or funding for the
venture must be secured at this point. Once the funding is in place and the employees are
ready, execute the plan.
5) Strategy Monitoring - includes performance measurements, consistent review of internal
and external issues and making corrective actions when necessary.
KEY POINTS:

 Strategic management is deemed as an effective long-term plan strategy of every business

institution. With the use of strategic management, managers are able to view the business
outside the box and without limitations, thus, producing limitless opportunities for the
growth of the business
 Strategic management deals with the perusal of the SWOT of a business. Meaning to say, the
business does not only focuses on the inside operation of the business but was quick
enough to check and peruse possible weaknesses and threat that they could convert into
strength and opportunities for the good of the organization
 Examining the strength of a business gives way to a more transparent plan for the future,
when the company is able to point out the salient strength of the company, managers find it
easy to use that strength to the good of the organization.
MANAGEMENT CHALLENGES

Managing a business offers great rewards, both financial and personal, but success in this role
requires sharp problem-solving skills and an exceptional understanding of people, including
customers and employees. First-time entrepreneurs are often surprised to find how many different
skills are required to be successful when you are in charge of all aspects of a business.

Six Factors (Threat in SWOT) in Management the every manager needs to know are:

Building a Management Team

From the start-up stage onward, one of the toughest challenges for a business owner is to find the
right people for the management team. The owner must identify the combination of skills and
experience that will give the company the best chance for success, and the ideal combination is
subtly different for every business. The individuals chosen must have personalities that mesh so
that they can work together in harmony, particularly during times of stress. As the company grows,
the owner must constantly look ahead and determine what additional skills may be needed in the
future, making the management team always a work in progress.

Supervising and Motivating Employees

Managing a business requires being a teacher and a listener. Employees need direction and to
understand what is expected of them. They also need to be able to voice their opinions and
concerns. Savvy managers understand that employees can provide valuable ideas on how to
increase sales and improve the company’s operations. Motivating employees to put forth greater
effort is easier if they believe that the company appreciates their contributions to its success.

Allocating Resources
Every decision a business owner makes involves recognizing that the company’s financial and
human resources are limited. Success depends on making good choices about how to allocate these
resources. Every dollar spent and every hour of management time must contribute to the
company’s growth and profitability. Small companies in particular can’t afford to waste resources.
The business planning process is critical to achieving efficient resource allocation as it allows
managers to better prioritize expenditures.

Continual Improvement
Companies must strive to continually improve all areas of their operations. Being satisfied with
current performance can mean falling behind competitors that are more aggressively improving
their products, customer service levels and profit margins. Managers have to instill this philosophy
of constant improvement in all employees, some of whom may be fearful of, and resistant to,
change.

Adjusting to Changing Conditions

A company is greatly affected by the environment around it, including both the local and national
economy, and the actions of competitors. Conditions can change rapidly, requiring quick reactions
and adjustments in strategies. If a business owner sees new competitive threats emerging, he must
be able to devise strategies to quickly counter these threats. This important management function
is called developing “what if” scenarios or contingency planning.

Anticipating Trends
A creative aspect of management is being able to spot emerging opportunities before the company’s
competitors are able to. These include potential customer groups, new channels of distribution that
could boost sales and new technologies that could make the company more efficient. Even with
pressing day-to-day responsibilities, a business owner has to be forward-looking and dedicated to
formulating a long-range vision for the business.
Aside from the Internal threat that every business is facing, to which an effective manager must
able to handle well, there are also Internal threat that which happens inside the organization. This
internal threat are classified as the following:
Internal threat classification and how to handle them:
Communicate.

Managers frequently are not aware of the quality of their communication or, as Tomanek’s example
illustrates, how their communication or interpersonal style are perceived by their employees.

You can help managers understand their unique communication and interpersonal style and how to
“flex” this style in different situations by providing communication templates, scripts, tips or
checklists. Engage in role-play or dialogue with the manager to help them practice their skills and
identify opportunities for improvement. Additionally, educate managers on common
communication breakdowns and how to avoid them and encourage managers to notice signs of
communication problems (misunderstandings, consistent performance problems, etc.).

When all else fails, provide a personal coach if communication problems persist

Resolve conflict.

Many managers ignore problems and do not directly address conflicts with their employees or
work team. Whether these are performance problems, conflicts among team members, issues of
trust or personality clashes, managers are challenged to confront and address problems head-on
and as they emerge, diffuse employees’ feelings and emotions about the problem, listen to both
parties’ needs and desires, derive win-win solutions that lead to more productive and positive work
relations, and prevent conflict in the future by nurturing positive coworker relationships and
recognizing potential for conflict or problems early.

Manage performance.       

Managers must balance meeting goals, managing workloads and motivating employees. These
issues, coupled with the fact that many managers are ill-equipped to provide regular and
constructive feedback and may not understand the importance of documenting performance, can
make managing performance challenging.

To support them, build on-going performance feedback into the performance management process
to ensure accountability. Create an easy method for managers to document performance like a
database, log, or diary. Provide support tools for managers such as rewards, recognition, training
and development to recognize and build performance. Most importantly, train managers in topics
such as performance management, coaching and feedback since many will have had no experience
with these.

Handle protected employees.

Most managers are not well-versed in administering ADA, FMLA and other laws that protect certain
groups of employees, but unknowingly find themselves managing an employee who requires an
accommodation, leave of absence or falls into a protected class.

These situations need to be handled delicately due to their legal nature, so make managers aware
of:

 Legal basics such as conditions or disabilities that are protected

 How to determine essential functions and reasonable accommodations
 Requirements associated with FMLA (eligibility, length of time, etc.)
 Types of employees that are protected under law (gender, race, national origin, etc.)
  Hiring and interviewing liabilities (questions to ask/not ask, etc.)

Administer policies fairly and consistently.

One of the most common challenges for managers is treating employees fairly and consistently. A
manager may allow policies and rules to be disregarded by some employees and not others – or
may disregard employment policies altogether. “Stretching” the rules for some employees can open
up a range of potential liabilities and perceptions of bias and favoritism that have negative far-
reaching affects in the workplace. Be sure to write clear policies and let managers know when
changes have been made. Set clear criteria for making employment decisions, particularly where
managers need to distinguish between employees (recognition, reward, development, etc.). Also,
clearly differentiate between the policies in which managers have discretion to implement and
those in which they do not.

Note: It is important that a manager must always be flexible and avant-garde in his responses to the
management challenges outside and inside the organization to ensure longevity of operation.