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MGT 3200 (CHAPTER 1)

INVITATION TO MANAGEMENT

WHAT IS MANAGEMENT?

Management is catholic. In other words, it is universal. It’s everywhere. We talk about

managing on the job; managing the home; managing the family budget; managing one’s
career; etc. Management, however, is a relatively young field and as such, many of its
terms and concepts have yet to be standardized. In terms of defining what management
is, there is no single, universally accepted definition. But for our purposes, we will
define management as the process of achieving desired results through the efficient
utilization of human and material resources (Bedeian, 1993).

The above definition of management points out two key concerns in managing others: 1)
effectiveness and 2) efficiency. Effectiveness is concerned with doing the right thing at
the right time in the right way. In other words, it’s concerned with goal attainment.
Efficiency, on the other hand, is concerned with reducing waste or minimizing resource
costs since many resources are scarce (i.e., money, good people, equipment). That is, it’s
concerned with getting more bang for the buck such as increasing outputs while
maintaining the same level of inputs or keeping the same level of outputs while
decreasing the level of inputs. So, effectiveness is concerned with the ENDS and
efficiency is concerned with the MEANS to those ends.

These two goals are related in that it’s much easier to be effective if one disregards
efficiency. For example, Seiko could produce more accurate and attractive timepieces if
it disregarded labor costs and material input costs. Conversely, it becomes increasingly
more difficult to be effective when one becomes more and more concerned with
efficiency. For example, a state university will find it very difficult to give its students a
high quality education if it has a shoe-string budget.

Just because organizations are efficient does not necessarily make them effective.
Sometimes organizations can do the wrong things well! However, high efficiency is
more typically associated with high effectiveness than with low effectiveness. Poor
management is most often due to both ineffectiveness and inefficiency or effectiveness
achieved through inefficiency. The hallmark of good management is effectiveness
combined with efficiency. But remember out of the two: effectiveness is more critical.

The definition of management also points out another major fact concerning
management. That is, the only way a manager gets things accomplished in an
organization is through other people. A manager’s performance is contingent upon the
performance of people underneath him/her. As the old saying goes “you’re only as good
as the people underneath you.” Thus, as a manager, it’s your human resources that are
your most important resources. In fact, this is something that we need to learn from the
Japanese who put a premium on developing their human resources.
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Management can also be considered a science. (You may hear it called a “bastard”
science since it borrows heavily from so many fields such as psychology, sociology,
anthropology, and economics.) It is considered a science since we develop theories of
managing, test these theories empirically using the scientific method, and refine,
reformulate or discard these theories based upon the results of these studies.

Conversely, management, as practiced, is really an art form. For some, managing is

really just a natural extension of their personalities. It comes easy or natural to them.
One piece of evident that convinces this instructor that management is an art form is,
there are many roads to managerial success or many widely different styles of
management that can be successful. If the practice of management were a pure science, I
could give anyone a step-by-step formula and provided that person followed that formula
that person would become a managerial success. But in reality, this is simply not the
case.

I. HOW DID MANAGEMENT BECOME SIGNIFICANT AND WHY IS IT

STILL IMPORTANT TODAY?

With the advent of the Industrial Revolution in the late 18th Century the world of work
was revolutionized. Prior to the Industrial Revolution, goods were produced by highly
skilled craftsmen who through the use of simple tools produced an entire product from
beginning to end and sold this good directly to the consumer. The basic change that
occurred in the Industrial Revolution was the transfer of skills from the craftsmen to the
machines. During and after the Industrial Revolution, factories became common. In
these factories, there were unskilled laborers who simply fed the machines the raw
material, removed the finished material, and passed it on to the next unskilled laborer to
feed it into his machine. In other words, the labor was divided in these factories, the skill
level of the employee decreased as a result, and these employees and their efforts needed
to be supervised and coordinated to get the goods produced. Thus, you needed someone
to manage these workers. So, the Industrial Revolution brings about the advent of
management.

In the beginning of the Industrial Revolution, these factories were relatively small and the
owner was the manager. However, as result of the enormous increase in productivity
brought on by the addition of machinery and the division of labor to the transformation
process, prices dropped and consumption (demand) grew. Modern capitalism was born.
In order to keep up with this growing demand, factories had to become larger. This
growth in size presented a problem for the owner who no longer could manage all the
operations of the factory due to its increased size. As a result, the owner had to hire
people to help him manage. These were people who managed for a profession and did
not own the means of production. These people were professional managers. According
to Peter F. Drucker, the switch from owner/manager to professional manager is the
pivotal event of our time. So, the changes brought about by the Industrial Revolution
create the need for professional management. This is how professional management
became significant.
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Why are managers still important today?

Professional management is still important today because it’s the key to the efficient
accomplishment of organizational and societal objectives. On an organizational level,
while organizations fail for many reasons, poor management is cited most often as the
reason for business failure. Peter F. Drucker called management the lifeblood of every
organization. Likewise, on a societal level, management still persist today because we
need these organizations to provide the goods and services that we both want and need
and that the craftsmen could not make themselves.

II. THE MANAGEMENT PYRAMID

The management pyramid refers to the various levels of management within an

organization. There are three distinct but overlapping levels of management in a typical
organization, each having a different emphasis: first-line, middle, and top.

A) First-line managers: They are called, for example, supervisor or foreman. They are
usually the largest number of managers in an organization. Most people enter
management at this level. They are the first contact with labor or operative level
employees. In essence, they are the middle men caught labor and “management”. They
manage operating employees and resources. They are the only managers not to manage
other managers. Their primary objective is to ensure that plans developed by top
management are fulfilled by their operating employees (i.e., those people who actually
produce the basic product or service of the company). In recent years the power of the
first-line supervisor has been dramatically reduced due to unions and their grievance
procedures and to the passage of anti-discrimination laws such as the Civil Rights Act of
1964. In the case of the latter, employment the Equal Employment Opportunity
Commission who also publishes a set of guidelines on fair employment practices
carefully monitors practices.

B) Middle-managers: They are called plant manager, division head, etc. They manage
other managers. This is a testing ground from which many organizations fill top
management positions. There are two Is of middle management: integrator and
interpreter. One of their duties is to integrate (i.e. coordinate) the activities of different
work groups so they operate in harmony with one another and are better able to cope with
the demands made upon them. As for the latter I, they act as interpreters and transform
top management directives into first-line management. They are a communication
channel between different levels of management.

Due to the increased foreign and domestic competition, there has been an increasing
emphasis on corporate downsizing in American organizations. Corporate downsizing is
when a company adopts a “lean and mean” philosophy, an efficiency orientation.
Companies who are going through corporate downsizing are trying to cut the fat by
eliminating layers of management, asking retained managers/employees to do more,
implementing new computer and information technologies, and farming out what had
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been staff managerial activities such as legal counsel and training and development of
employees to outside consulting firms. The result of this efficiency orientation has been
that many middle level management jobs have been eliminated altogether or have been
replaced by new information technologies or have been farmed out to outside consulting
firms. In fact, by one estimate one million of these jobs have been eliminated in the last
few years. Thus, middle level management jobs seem to be in jeopardy.

C) Top-managers: They are called the CEO, chairman of the board, executive vice-
president, etc. They determine the form of the organization and define its overall
character, mission, and directions. For example, they determine the business the
organization wants to be in and how the organization is going to compete in that business.
They set the strategy for the organization. In other words, they determine the
organizations general goals and the action plans to achieve those goals. They ensure that
goals are set and accomplished according to the organization’s purpose and they monitor
the environment to identify potential problems and opportunities associated with the
organization’s goals or purpose.

The focus is different at different levels of the management pyramid. A top-level

manager’s focus is long-term (e.g., 5-10-15 years) whereas a first-line manager’s focus is
relatively short-term (1 day-1 week-1 month). In addition, the goals that are set tend to
differ. Top-management goals are specific and concrete. Finally, top-managers need to
have more of an effectiveness orientation since they have to determine the right business
to be in and the right way to compete in it whereas 1st-line managers have to have more of
an efficiency orientation since they carry out the plans set forth by upper level
management. One note: all levels of management are concerned about effectiveness and
efficiency. It’s just the relative emphasis that differs across management levels.

III. OTHER TYPES OF MANAGERS

Three common distinctions between different types of managers are:

A) line vs. staff managers:

Line managers are directly responsible for the work activities that contribute to the
process of creating the organization’s basic product or service. They have authority over
the transformation process where inputs are transformed into outputs. At Goodyear
Rubber Company, the department supervisor in charge of tire molding is a line manager.
Every manager who links the tire-molding supervisor with the CEO is also a line
manager (because they are in the LINE of authority that spans from the top to the bottom
of the organization).

Staff managers (why do shepherds have staffs?) use their special expertise to support the
efforts of line managers. Unlike line managers, they have no authority over the
transformational process. An example of a staff manager would be lawyer from the legal
department in the organization. She advises the line manager, who, in turn, establishes
contractual relationships with suppliers, customers, and employees (i.e., unions). Other
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professionals such as psychologists and physicists could also be considered staff

managers. Staff managers are for the most part middle level managers.

In terms of departments, marketing, finance, and operations (i.e. production) have been
considered line departments in a typical organization, whereas departments such as
research and development (R&D), accounting, and human resources have been
considered staff departments. However, which departments are line or staff depends
upon the type of organization. For example, if your organization were a high-tech
computer firm or an aerospace firm, then R&D would be considered a line department.

B) functional vs. general managers:

functional managers have responsibility for a single area of activity such as finance,
production, human resources, accounting, etc…Most managers are functional managers.

General managers are responsible for more complex organizational subunits that include
many functional areas.

C) administrators vs. managers:

administrators are managers who work in public or non-profit organizations as opposed

to private, for profit, business concerns.

IV. FUNCTIONS OF MANAGEMENT AND THEIR RELATIVE

IMPORTANCE AT DIFFERENT LEVELS OF THE MANAGEMENT
PYRAMID

In 1916, Henri Fayol described a “functional approach to management” and suggested

that all managers perform similar activities regardless of their level in the organization,
the size of the organization, or the activity they were managing. He described five
functions of management (collectively known as the management process), they are as
follows:

1) Planning: the process of establishing goals and defining the methods by which they
are to be attained. In short, planning involves goal setting and action planning to achieve
those goals. Goals are important because they get us motivated, they provide us
direction, they energize us, and they get us to start thinking about strategies to achieve the
goals.

Planning is said to have primacy because it is the first thing you must do as a manager.
Planning provides the direction for all the other management functions. Remember, if
you don’t know where you are going any road will get you there. Planning is extremely
important if you are going to be successful as a manager. If you fail to plan, you plan to
fail!
2) Organizing: the process of designing an organization’s structure to achieve its goals. It
includes the determination of what tasks are to be done, who is to do them, how the tasks
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are to be grouped into jobs, how these jobs are to be grouped into departments, how these
departments are to be integrated or coordinated, who reports to whom, and where
decisions are to be made. In other words, it involves job design, departmental design,
organizational design, and authority relationships, to name a few. An example: if you
had a 4 man company that produced widgets and you decided who would do what (i.e.,
marketing the widgets, getting the necessary resources to produce the widgets, and
producing the widgets) and who would make sure that everything was going smoothly
and that it was getting done in an efficient manner, you would be organizing.

3) Staffing and Human Resource Management: the process of assuring competent

employees are selected, developed, and rewarded to help accomplish organizational
goals. Activities such as recruiting new employees, selecting the best employee for a
position, developing employees to take on new jobs, providing training to employees
whose skill levels are not up to par, compensating (i.e., paying) employees for their work
and giving incentives for high performance are considered part of this function.

4) Leading and Interpersonal Influence: the process of getting people to go along with
you willingly and harmoniously in achieving your organization’s objectives. This
function includes activities such as motivating employees, directing others, selecting the
most effective communication channel, and resolving conflicts.

5) Controlling: the process of assuring the efficient accomplishment of organizational

objectives. Controlling consists of three parts: a)monitoring organizational performance,
b) comparing actual performance with “hoped for” performance (this “hoped for” comes
from planning), and c) taking corrective action in one or more the functions if actual
results fall short of “hoped for” results. This process is also called feedback. Feedback is
both informational (tells you what you’re doing right and what you are doing wrong) and
reinforcing (motivational).

Planning and controlling are called the Siamese Twins of Management. You cannot
improve performance by having just one of these two present. For performance to
improve, both must be present. For example, controlling just would not work if you did
you not have goals. The second step of controlling would be meaningless. Likewise,
how can a person expect to get any better if they don’t get any information about what
they are good at and what they are bad at?

Using human, material, financial, and informational resources, managers perform these
five functions of management to achieve effectiveness and efficiency. NOTE: In a
typical managerial day, these functions are performed simultaneously rather than
sequentially. However, when first starting up an organization, these functions are
performed sequentially.

The relative importance of functions by level of the management pyramid:

At 1st-line management, staffing and leading are the most important functions since you
are dealing with operative level employees and the production process.
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At middle level management, organizing is the most important function since a middle
level manager’s job entails integrating work groups.

At top-level management, planning is the most important function since top-level

managers are supposed to determine the overall goals and strategies of the organization.

V. Managerial Roles-Mintzberg

Mintzberg who conducted a study of chief executive officers has defined three different
but highly interrelated general roles that mangers perform. (Even though this is a study
of top management, its results apply to all levels of management. That is, all managers
perform these three general roles.)

According to Mintzberg, all managers have authority over their organizational subunits
and they derive status from that authority. That status causes managers to be involved in
interpersonal relationships with subordinates, peers, and supervisors who, in turn, provide
managers with information they need to make decisions.

Again, there are three roles every manager engages in:

NOTE: While there are three general roles, there are a number or sub roles contained in
each that may not apply to all levels of management.

1) Interpersonal (sub roles: figurehead, leader, and liaison): this role involves interacting
through oral and written communications with others inside and outside your
organization. The purpose here is to develop and maintain positive relationships with
others. If your relationships are negative, then you may get poor information or no
information and as a result, you may make bad decisions. This points up the importance
of treating your human resources well and the importance of developing good
interpersonal or human skills.

2) Informational (sub roles: monitor, disseminator, and spokesperson): this role involves
information processing. You receive information, you give information, and you analyze
information, as a manager. This role makes the manager a nerve center for the entire
organization.

3) Decisional (sub roles: entrepreneur, disturbance handler, resource allocator, and

negotiator): this role involves using information to solve problems or take advantage of
opportunities.

VI. Managerial Skills-Katz

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To perform the functions and to enact the roles of management, you must possess certain
skills.

Katz has defined three skills that are essential to managing: 1) technical, 2) human, and
3) conceptual.

A technical skill is an ability to use a special expertise relating to a method, process, or

procedure in performing a task. Examples include engineering, accounting, QBA, and
finance.

Human skill is the ability to work well in cooperation with others. Examples include the
ability to motivate people, leadership, communication, self-awareness, and empathy.
This is a critical skill for managers due to the highly interpersonal nature of managing.

In a study by Pavett and Lau (1983), managers at all levels related human skills as the
most important for good job performance in managing.

Conceptual skill is the ability to problem solve. It’s the ability to think in the abstract and
in terms of the future. It’s the ability to forecast events, to see opportunities that no one
else sees, and to take advantage of these opportunities. It’s the ability to see the big
picture (i.e., gestalt thinking). It’s the ability to see how the organization and its
environment fit together and how a change in one part affects or causes changes in the
other parts (i.e., systems thinking). People also call it intuition or that gut feeling!

Conceptual skills are the most difficult to acquire because they required a minimum level
of mental ability (i.e., reasonably intelligent) and time/experience to develop.

These skills are found in various quantities at different levels of the management
pyramid.

In general, as you ascend the pyramid the amount of technical skills you need decreases.
1st-line managers need the most technical skills because they are dealing with the
production process and technical employees. Top-level managers must have some
technical knowledge especially when technology is an important part of the product of
service their organization provides. Otherwise, they’ll have difficulty fostering
innovation, allocating resources efficiently, or devising strategies to stay ahead of the
competition.

In general, human skills are equally important at all levels of the management pyramid.
All managers must have strong human skills.

Generally, as you ascend the management pyramid, conceptual skills become more
important. As the emphasis on planning increases, so does the emphasis on conceptual
skills.
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An important point concerning middle level management is that they have a fairly equal
blend of all three skills, which is consistent with their job of interpreter. They must speak
the language of both top and 1st-line management.

VII. Are Effective Managers Successful Managers?

Luthans (1988) studied more than 450 managers in answering the question, “are effective
managers successful managers?” The answer he found was no they are not. Effective
managers are usually not the ones promoted rapidly through the organizational ranks.
(Less than ten percent of the managers in this sample were both effective and successful.)
The managers that were promoted rapidly through the organizational ranks were the best
networkers.

He found in his study that all managers (successful, effective, average, etc.) engaged in
four managerial activities:

1) Traditional management (TM): planning, organizing, & controlling.

2) Communication (COMM): exchanging information & processing information.
3) Human resource management (HRM): motivating, disciplining, managing
conflict, staffing, & training.
4) Networking (NET): socializing, politicking, & interacting with outsiders.

However, he found that the emphasis given each of these activities differed between
effective (those managers with the highest quality and quantity subunit performance, and
the highest subordinate satisfaction and commitment) and successful managers (those
managers who were promoted most rapidly),

ALLOCATION BY TIME

AVERAGE MGR. SUCCESSFUL MGR. EFFECTIVE MGR.

TM 32% 13% 19%

COMM 29% 28% 44%

HRM 20% 11% 26%

NET 19% 48% 11%

This research challenges the traditional assumption that promotions are based upon
performance. It vividly demonstrates that to get ahead in an organization you need social
and political skills. It’s like the old saying, “It’s not what you know. It’s who you
know.” This research also points out that to be an effective manager you must manager
your human resources well (i.e., COMM & HRM). You must give a lot of time/attention
to your people.
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For both effective and successful managers, they must depend upon other people to get
them where they are going. Reinforcing this point, in a study of derailed executives
(those who plateau, were fired, or forced to retire), the Center for Creative Leadership in
North Carolina found that the major difference between these derailed executives and
executives who made it all the way to the top was that the derailed executives were
insensitive to others. Again, the only way you “get ahead” or “get the job done” is
through other people.