Managers and Organizations in Business
Why Are Managers Important?
A great boss can change your life, inspiring you to new heights both professionally and personally, and energizing you and your team to together overcome new challenges bigger than any one of you could tackle alone. If you’ve had the opportunity to work with a manager like this, count yourself lucky. Such a manager can make a job a lot more enjoyable and productive. However, even managers who don’t live up to such lofty ideals and expectations are important to organizations. Let’s look at three reasons why.
- The first reason managers are important is that organizations need their managerial skills and abilities more than ever in these uncertain, complex, and chaotic times. As organizations deal with today’s challenges—the worldwide economic climate, changing technology, ever increasing globalization, and so forth. Managers play an important role in identifying critical issues and crafting responses.
- Another reason managers are important to organizations is that they’re critical to getting things done. For instance, in our chapter-opening story, Lisa wasn’t the person greeting and seating customers, taking their orders, cooking their meals, or preparing a table for another customer. She was the person who creates and coordinates the workplace systems and conditions so that others can perform those tasks.
- Finally, managers do matter to organizations! How do we know that? The Gallup Organization, which has polled millions of employees and tens of thousands of managers, has found that the single most important variable in employee productivity and loyalty isn’t pay or benefits or workplace environment; it’s the quality of the relationship between employees and their direct supervisors.
Who Are Managers and Where Do They Work?
Managers may not be who or what you might expect! Managers can be under the age of 18 to over age 80. They run large corporations as well as entrepreneurial start-ups. They’re found in government departments, hospitals, small businesses, not-for-profit agencies, museums, schools, and even such nontraditional organizations as political campaigns and music tours. Managers can also be found doing managerial work in every country on the globe. In addition, some managers are top-level managers while others are first-line managers. And today, managers are just as likely to be women as they are men. However, the number of women in top-level manager positions remains low—only 27 women were CEOs of major U.S. corporations in 2010. But no matter where managers are found or what gender they are, the fact is . . . managers have exciting and challenging jobs!
Who Is a Manager?
It used to be fairly simple to define who managers were: They were the organizational members who told others what to do and how to do it. It was easy to differentiate managers from non-managerial employees. Now, it isn’t quite that simple. In many organizations, the changing nature of work has blurred the distinction between managers and non-managerial employees. Many traditional non-managerial jobs now include managerial activities. For example, at General Cable Corporation’s facility in Moose Jaw, Saskatchewan, Canada, managerial responsibilities are shared by managers and team members. Most of the employees at Moose Jaw are cross-trained and multi-skilled. Within a single shift, an employee can be a team leader, equipment operator, maintenance technician, quality inspector, or improvement planner.
Is there a way to classify managers in organizations?
In traditionally structured organizations, managers can be classified as first-line, middle, or top.
At the lowest level of management, first-line managers manage the work of non-managerial employees who typically are involved with producing the organization’s products or servicing the organization’s customers. First-line managers may be called supervisors or even shift managers, district managers, department managers, or office managers.
Middle managers manage the work of first-line managers and can be found between the lowest and top levels of the organization. They may have titles such as regional manager, project leader, store manager, or division manager.
At the upper levels of the organization are the top managers, who are responsible for making organization-wide decisions and establishing the plans and goals that affect the entire organization. These individuals typically have titles such as executive vice president, president, managing director, chief operating officer, or chief executive officer. Not all organizations get work done with a traditional pyramidal form, however. There must be someone who coordinates and oversees the work of others.
Where Do Managers Work?
It’s obvious that managers do their work in organizations. But what is an organization? It’s a deliberate arrangement of people to accomplish some specific purpose. Your college or university is an organization; so are fraternities and sororities, government departments, churches, Facebook, your neighborhood grocery store, the United Way, the St. Louis Cardinals baseball team, and the Mayo Clinic. All are considered organizations and have three common characteristics.
- First, an organization has a distinct purpose. This purpose is typically expressed through goals that the organization hopes to accomplish.
- Second, each organization is composed of people. It takes people to perform the work that’s necessary for the organization to achieve its goals.
- Third, all organizations develop some deliberate structure within which members do their work. That structure may be open and flexible, with no specific job duties or strict adherence to explicit job arrangements.
For instance, at Google, most big projects, of which there are hundreds going on at the same time, are tackled by small focused employee teams that set up in an instant and complete work just as quickly. Many of today’s organizations are structured more like Google, with flexible work arrangements, employee work teams, open communication systems, and supplier alliances. In these organizations, work is defined in terms of tasks to be done. And workdays have no time boundaries since work can—and is done anywhere, anytime.
What Do Managers Do?
- Management involves coordinating and overseeing the work activities of others so that their activities are completed efficiently and effectively. We already know that coordinating and overseeing the work of others is what distinguishes a managerial position from a non-managerial one. However, this doesn’t mean that managers can do what they want anytime, anywhere, or in any way. Instead, management involves ensuring that work activities are completed efficiently and effectively by the people responsible for doing them, or at least that’s what managers aspire to do.
- Efficiency refers to getting the most output from the least amount of inputs. Because managers deal with scarce inputs—including resources such as people, money, and equipment—they’re concerned with the efficient use of those resources. It’s often referred to as “doing things right”—that is, not wasting resources. These efficient work practices paid off as the plant reduced costs by more than $7 million in one year. It’s not enough, however, just to be efficient. Management is also concerned with being effective, completing activities so that organizational goals are attained.
- Effectiveness is often described as “doing the right things”—that is, doing those work activities that will help the organization reach its goals. For instance, at the HON factory, goals included meeting customers’ rigorous demands, executing world-class manufacturing strategies, and making employee jobs easier and safer. In successful organizations, high efficiency and high effectiveness typically go hand in hand. Poor management (which leads to poor performance) usually involves being inefficient and ineffective or being effective, but inefficient. Describing what managers do isn’t easy. Just as no two organizations are alike, no two managers’ jobs are alike. In spite of this, management researchers have developed three approaches to describe what managers do: functions, roles, and skills.
According to the functions approach, managers perform certain activities or functions as they efficiently and effectively coordinate the work of others. What are these functions? Henri Fayol, a French businessman, first proposed in the early part of the twentieth century that all managers perform five functions: planning, organizing, commanding, coordinating, and controlling. Today, these functions have been condensed to four: planning, organizing, leading, and controlling. Let’s briefly look at each function.
If you have no particular destination in mind, then any road will do. However, if you have someplace in particular you want to go, you’ve got to plan the best way to get there. Because organizations exist to achieve some particular purpose, someone must define that purpose and the means for its achievement. Managers are that someone. As managers engage in planning, they set goals, establish strategies for achieving those goals, and develop plans to integrate and coordinate activities.
Managers are also responsible for arranging and structuring work to accomplish the organization’s goals. We call this function organizing. When managers organize, they determine what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.
Every organization has people, and a manager’s job is to work with and through people to accomplish goals. This is the leading function. When managers motivate subordinates, help resolve work group conflicts, influence individuals or teams as they work, select the most effective communication channel, or deal in any way with employee behavior issues, they’re leading.
The final management function is controlling. After goals and plans are set (planning), tasks and structural arrangements put in place (organizing), and people hired, trained, and motivated (leading), there has to be some evaluation of whether things are going as planned. To ensure that goals are being met and that work is being done as it should be, managers must monitor and evaluate performance. Actual performance must be compared with the set goals. If those goals aren’t being achieved, it’s the manager’s job to get work back on track. This process of monitoring, comparing, and correcting is the controlling function.
Just how well does the functions approach describe what managers do? Do managers always plan, organize, lead, and then control? In reality, what a manager does may not always happen in this sequence. Regardless of the “order” in which these functions are performed, however, the fact is that managers do plan, organize, lead, and control as they manage. To illustrate, look back at the chapter-opening story. When Lisa is working to keep her employees motivated and engaged, that’s leading. As she makes out the week’s schedule, that’s planning. When she is trying to cut costs, those actions obviously involve controlling. And dealing with unhappy customers is likely to involve leading, controlling, and maybe even planning. Although the functions approach is popular for describing what managers do, some have argued that it isn’t relevant. So let’s look at another perspective.
Mintzberg’s Managerial Roles and a Contemporary Model of Managing
Henry Mintzberg, a well-known management researcher, studied actual managers at work. In his first comprehensive study, Mintzberg concluded that what managers do can best be described by looking at the managerial roles they engage in at work. The term managerial roles refer to specific actions or behaviors expected of and exhibited by a manager. (Think of the different roles you play—such as student, employee, student organization member, volunteer, sibling, and so forth—and the different things you’re expected to do in these roles.) When describing what managers do from a roles perspective, we’re not looking at a specific person per se, but at the expectations and responsibilities that are associated with being the person in that role—the role of a manager. As shown in Exhibit 1-5, these 10 roles are grouped around interpersonal relationships, the transfer of information, and decision making.
The interpersonal roles are ones that involve people and other duties that are ceremonial and symbolic in nature. The three interpersonal roles include figurehead, leader, and liaison.
The informational roles involve collecting, receiving, and disseminating information. The three informational roles include monitor, disseminator, and spokesperson.
Finally, the decisional roles entail making decisions or choices. The four decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator. As managers perform these roles, Mintzberg proposed that their activities included both reflection (thinking) and action (doing). Our manager in the chapter opener would do both as she manages.
Contemporary Model of Managing
A number of follow-up studies have tested the validity of Mintzberg’s role categories and the evidence generally supports the idea that managers—regardless of the type of organization or level in the organization—perform similar roles. However, the emphasis that managers give to the various roles seems to change with organizational level. At higher levels of the organization, the roles of disseminator, figurehead, negotiator, liaison, and spokesperson are more important; while the leader role (as Mintzberg defined it) is more important for lower-level managers than it is for either middle or top-level managers.
Recently, Mintzberg completed another hands-on and up-close study of managers at work and concluded that, “Basically, managing is about influencing action. It’s about helping organizations and units to get things done, which means action.” Based on his observations, Mintzberg went on to explain that a manager does this in three ways:
(1) by managing actions directly,
(2) by managing people who take action
(3) by managing information that propels people to take action
The manager at the center of the model has two roles—framing, which defines how a manager approaches his or her job; and scheduling, which “brings the frame to life” through the distinct tasks the manager does. A manager enacts these roles while managing action in the three “planes:” with information, through people, and sometimes by taking action directly. Although each does a good job of depicting what managers do, the functions approach still seems to be the generally accepted way of describing the manager’s job. “The classical functions provide clear and discrete methods of classifying the thousands of activities that managers carry out and the techniques they use in terms of the functions they perform for the achievement of goals.”
Dell Inc. is a company that understands the importance of management skills. It started an intensive five-day offsite skills training program for first-line managers as a way to improve its operations. One of Dell’s directors of learning and development thought this was the best way to develop “leaders who can build that strong relationship with their front-line employees.”
Robert L. Katz proposed that managers need three critical skills in managing: technical, human, and conceptual. Technical skills are the job specific knowledge and techniques needed to proficiently perform work tasks. These skills tend to be more important for first-line managers because they typically are managing employees who use tools and techniques to produce the organization’s products or service the organization’s customers. Often, employees with excellent technical skills get promoted to first-line manager. For example, Mark Ryan of Verizon Communications manages almost 100 technicians who service half a million of the company’s customers.
Ryan is a manager who has technical skills, but also recognizes the importance of human skills, which involve the ability to work well with other people both individually and in a group. Because all managers deal with people, these skills are equally important to all levels of management. Managers with good human skills get the best out of their people. They know how to communicate, motivate, lead, and inspire enthusiasm and trust.
Finally, conceptual skills are the skills managers use to think and to conceptualize about abstract and complex situations. These skills are most important to top managers. Other important managerial skills that have been identified are listed. In today’s demanding and dynamic workplace, employees who want to be valuable assets must constantly upgrade their skills, and developing management skills can be particularly beneficial in today’s workplace.
How Is the Manager’s Job Changing?
“At Best Buy’s headquarters, more than 60 percent of the 4,000 employees are now judged only on tasks or results. Salaried people put in as much time as it takes to do their work. Those employees report better relationships with family and friends, more company loyalty, and more focus and energy. Productivity has increased by 35 percent. Employees say they don’t know whether they work fewer hours—they’ve stopped counting. Perhaps more important, they’re finding new ways to become efficient.” Welcome to the new world of managing!
Now, Headwaters steers investment transactions to those firms, while keeping a small percentage for itself. The “restructuring drastically reduced fixed costs and also freed management to do more marketing, rather than day-to-day investment banking transactions.” As Maney said, “It was a good strategy for us and positioned us for the future.” It’s likely that more managers will have to manage under such demanding circumstances, and the fact is that how managers manage is changing. Throughout the rest of this book, we’ll be discussing these and other changes and how they’re affecting the way managers plan, organize, lead, and control. We want to highlight three of these changes: the increasing importance of customers, innovation, and sustainability.
Importance of Customers to the Manager’s Job
John Chambers, CEO of Cisco Systems, likes to listen to voice mails forwarded to him from dissatisfied customers. He says, “E-mail would be more efficient, but I want to hear the emotion, I want to hear the frustration, I want to hear the caller’s level of comfort with the strategy we’re employing. I can’t get that through e-mail.” This manager understands the importance of customers. You need customers. Without them, most organizations would cease to exist.
Today, the majority of employees in developed countries work in service jobs. For instance, some 77 percent of the U.S. labor force is employed in service industries. In Australia, 71 percent work in service industries. In the United Kingdom, Germany, and Japan the percentages are 75, 72, and 75, respectively. Even in developing countries like India and Russia, we find 63 percent and 58 percent of the labor force employed in service jobs. Examples of service jobs include technical support representatives, food servers or fast-food counter workers, sales clerks, teachers, nurses, computer repair technicians, front desk clerks, consultants, purchasing agents, credit representatives, financial planners, and bank tellers.
Managers are recognizing that delivering consistent high-quality customer service is essential for survival and success in today’s competitive environment and that employees are an important part of that equation. The implication is clear—managers must create a customer-responsive organization where employees are friendly and courteous, accessible, knowledgeable, prompt in responding to customer needs, and willing to do what’s necessary to please the customer. We’ll look at customer service management in several chapters. Before we leave this topic, though, we want to share one more story that illustrates why it’s important for today’s managers (all managers, not just those in marketing) to understand what it takes to serve customers.
Importance of Innovation to the Manager’s Job
“Nothing is more risky than not innovating.” Innovation means doing things differently, exploring new territory, and taking risks. And innovation isn’t just for high-tech or other technologically sophisticated organizations. Innovative efforts can be found in all types of organizations. “The complexity of the products demands a high level of training. Many distractions that tempt college-aged employees keep the turnover potential high.”
However, the store manager tackled the problem by getting employees to suggest new ideas. One idea—a “team close,” in which employees scheduled to work at the store’s closing time, closed the store together and walked out together as a team—has had a remarkable impact on employee attitudes and commitment. Even if the world around you is collapsing, be bold, be daring, think big.” And his employees obviously got the message. The company’s introduction of the $2,000 minicar, the Nano, was the talk of the global automotive industry. As these stories illustrate, innovation is critical.
Importance of Sustainability to the Manager’s Job
It’s the world’s largest retailer with more than $408 billion in annual sales, 2.1 million employees, and 7,870 stores. Yes, we’re talking about Walmart. And Walmart is probably the last company that you’d think about in a section describing sustainability. This corporate action affirms that sustainability and green management have become mainstream issues for managers.
Although “sustainability” means different things to different people, in essence, according to the World Business Council for Sustainable Development (2005). It is concerned with “meeting the needs of people today without compromising the ability of future generations to meet their own needs.”
From a business perspective, sustainability has been defined as a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into its business strategies. Sustainability issues are now moving up the agenda of business leaders and the boards of thousands of companies. Like the managers at Walmart are discovering, running an organization in a more sustainable way will mean that managers have to make informed business decisions based on thorough communication with various stakeholders, understanding their requirements, and starting to factor economic, environmental, and social aspects into how they pursue their business goals.
Why Study Management?
You may be wondering why you need to study management. If you’re majoring in accounting or marketing or any field other than management, you may not understand how studying management is going to help you in your career.
The Universality of Management
Just how universal is the need for management in organizations? We can say with absolute certainty that management is needed in all types and sizes of organizations, at all organizational levels and in all organizational work areas, and in all organizations, no matter where they’re located. This is known as the universality of management. In all these organizations, managers must plan, organize, lead, and control.
However, that’s not to say that management is done the same way. Because both are managers, both will plan, organize, lead, and control. How much and how they do so will differ, however. Management is universally needed in all organizations, so we want to find ways to improve the way organizations are managed. Those that are poorly managed find themselves losing customers and revenues. By studying management, you’ll be able to recognize poor management and work to get it corrected.
The Reality of Work
Another reason for studying management is the reality that for most of you, once you graduate from college and begin your career, you will either manage or be managed. For those who plan to be managers, an understanding of management forms the foundation upon which to build your management skills. For those of you who don’t see yourself managing, you’re still likely to have to work with managers. Assume that you’ll have to work for a living and recognizing that you’re very likely to work in an organization. You’ll probably have some managerial responsibilities even if you’re not a manager. Our experience tells us that you can gain a great deal of insight into the way your boss behave and how organizations function by studying management. You don’t have to aspire to be a manager to gain something valuable from a course in management.
Rewards and Challenges of Being a Manager
First, there are many challenges. It can be a tough and often thankless job. In addition, a portion of a manager’s job may entail duties that are often more clerical than managerial. Managers often have to deal with a variety of personalities and have to make do with limited resources. It can be a challenge to motivate workers in the face of uncertainty and chaos. And managers may find it difficult to successfully blend the knowledge, skills, ambitions, and experiences of a diverse work group. Finally, as a manager, you’re not in full control of your destiny. Your success typically is dependent upon others’ work performance.
Despite these challenges, being a manager can be rewarding. You’re responsible for creating a work environment in which organizational members can do their work to the best of their ability and thus help the organization achieve its goals. You help others find meaning and fulfillment in their work. You get to support, coach, and nurture others and help them make good decisions.
In addition, as a manager, you often have the opportunity to think creatively and use your imagination. You’ll get to meet and work with a variety of people—both inside and outside the organization. Other rewards may include receiving recognition and status in your organization and in the community. These are playing a role in influencing organizational outcomes, and receiving attractive compensation in the form of salaries, bonuses, and stock options. Finally, organizations need good managers. It’s through the combined efforts of motivated and passionate people working together that organizations accomplish their goals. As a manager, you can be assured that your efforts, skills, and abilities are needed.