Management in businesses and organizations is the function that coordinates the efforts of people to accomplish goals and objectives by using available resources efficiently and effectively.
Management includes planning, organizing, staffing, leading or directing, and controlling an organization to accomplish the goal or target. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Management is also an academic discipline, a social science whose objective is to study social organization.
Etymology
The English verb "manage" comes from the Italian maneggiare (to handle, especially tools), which derives from the two Latin words manus (hand) and agere (to act).
The French word for housekeeping, ménagerie, derived from ménager ("to keep house"; compare ménage for "household"), also encompasses taking care of domestic animals. The French word mesnagement (or ménagement) influenced the semantic development of the English word management in the 17th and 18th centuries.
Note that Ménagerie is the French translation of Xenophon's famous book Oeconomicus (Greek: ???????????) on household matters and husbandry.
While the Italian word maneggiare refers to subaltern responsibilities, the modern Italian language would characterize the work of an executive as gestire.
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Definitions
Views on the definition and scope of management include:
- According to Henri Fayol, "to manage is to forecast and to plan, to organise, to command, to co-ordinate and to control."
- Fredmund Malik defines it as "the transformation of resources into utility."
- Management included as one of the factors of production - along with machines, materials and money
- Ghislain Deslandes defines it as "a vulnerable force, under pressure to achieve results and endowed with the triple power of constraint, imitation and imagination, operating on subjective, interpersonal, institutional and environmental levels".
- Peter Drucker (1909-2005) saw the basic task of a management as twofold: marketing and innovation. Nevertheless, innovation is also linked to marketing (product innovation is a central strategic marketing issue). Peter Drucker identifies marketing as a key essence for business success, but management and marketing are generally understood as two different branches of business administration knowledge.
- Andreas Kaplan specifically defines European Management as a cross-cultural, societal management approach based on interdisciplinary principles.
- Directors and managers should have the authority and responsibility to make decisions to direct an enterprise when given the authority
- As a discipline, management comprises the interlocking functions of formulating corporate policy and organizing, planning, controlling, and directing a firm's resources to achieve a policy's objectives
- The size of management can range from one person in a small firm to hundreds or thousands of managers in multinational companies.
- In large firms, the board of directors formulates the policy that the chief executive officer implements.
Theoretical scope
Management involves identifying the mission, objective, procedures, rules and manipulation of the human capital of an enterprise to contribute to the success of the enterprise. This implies effective communication: an enterprise environment (as opposed to a physical or mechanical mechanism) implies human motivation and implies some sort of successful progress or system outcome. As such, management is not the manipulation of a mechanism (machine or automated program), not the herding of animals, and can occur either in a legal or in an illegal enterprise or environment. Management does not need to be seen from enterprise point of view alone, because management is an essential function to improve one's life and relationships. Management is therefore everywhere and it has a wider range of application. Based on this, management must have humans, communication, and a positive enterprise endeavor. Plans, measurements, motivational psychological tools, goals, and economic measures (profit, etc.) may or may not be necessary components for there to be management. At first, one views management functionally, such as measuring quantity, adjusting plans, meeting goals. This applies even in situations where planning does not take place. From this perspective, Henri Fayol (1841-1925) considers management to consist of six functions:
- forecasting
- planning
- organizing
- commanding
- coordinating
- controlling
(Henri Fayol was one of the most influential contributors to modern concepts of management.)
In another way of thinking, Mary Parker Follett (1868-1933), allegedly defined management as "the art of getting things done through people". She described management as philosophy.
Critics, however, find this definition useful but far too narrow. The phrase "management is what managers do" occurs widely, suggesting the difficulty of defining management without circularity, the shifting nature of definitions and the connection of managerial practices with the existence of a managerial cadre or of a class.
One habit of thought regards management as equivalent to "business administration" and thus excludes management in places outside commerce, as for example in charities and in the public sector. More broadly, every organization must "manage" its work, people, processes, technology, etc. to maximize effectiveness. Nonetheless, many people refer to university departments that teach management as "business schools". Some such institutions (such as the Harvard Business School) use that name, while others (such as the Yale School of Management) employ the broader term "management".
English-speakers may also use the term "management" or "the management" as a collective word describing the managers of an organization, for example of a corporation. Historically this use of the term often contrasted with the term "labor" - referring to those being managed.
But in the present era the concept of management is identified in the wide areas and its frontiers have been pushed to a broader range. Apart from profitable organizations even non-profitable organizations (NGOs) apply management concepts. The concept and its uses are not constrained. Management on the whole is the process of planning, organizing, staffing, leading and controlling.
Nature of managerial work
In profitable organizations, management's primary function is the satisfaction of a range of stakeholders. This typically involves making a profit (for the shareholders), creating valued products at a reasonable cost (for customers), and providing great employment opportunities for employees. In nonprofit management, add the importance of keeping the faith of donors. In most models of management and governance, shareholders vote for the board of directors, and the board then hires senior management. Some organizations have experimented with other methods (such as employee-voting models) of selecting or reviewing managers, but this is rare.
In the public sector of countries constituted as representative democracies, voters elect politicians to public office. Such politicians hire many managers and administrators, and in some countries like the United States political appointees lose their jobs on the election of a new president/governor/mayor.
Historical development
Some see management (by definition) as late-modern (in the sense of late modernity) conceptualization. On those terms it cannot have a pre-modern history, only harbingers (such as stewards). Others, however, detect management-like-thought back to Sumerian traders and to the builders of the pyramids of ancient Egypt. Slave-owners through the centuries faced the problems of exploiting/motivating a dependent but sometimes unenthusiastic or recalcitrant workforce, but many pre-industrial enterprises, given their small scale, did not feel compelled to face the issues of management systematically. However, innovations such as the spread of Hindu numerals (5th to 15th centuries) and the codification of double-entry book-keeping (1494) provided tools for management assessment, planning and control.
With the changing workplaces of industrial revolutions in the 18th and 19th centuries, military theory and practice contributed approaches to managing the newly-popular factories.
Given the scale of most commercial operations and the lack of mechanized record-keeping and recording before the industrial revolution, it made sense for most owners of enterprises in those times to carry out management functions by and for themselves. But with growing size and complexity of organizations, the split between owners (individuals, industrial dynasties or groups of shareholders) and day-to-day managers (independent specialists in planning and control) gradually became more common.
Early writing
While management (according to some definitions) has existed for millennia, several writers have created a background of works that assisted in modern management theories.
Some ancient military texts have been cited for lessons that civilian managers can gather. For example, Chinese general Sun Tzu in the 6th century BCE, The Art of War, recommends being aware of and acting on strengths and weaknesses of both a manager's organization and a foe's.
Various ancient and medieval civilizations have produced "mirrors for princes" books, which aim to advise new monarchs on how to govern. Examples include the Indian Arthashastra by Chanakya (written around 300BCE), and The Prince by Italian author Niccolò Machiavelli (c. 1515).
Written in 1776 by Adam Smith, a Scottish moral philosopher, The Wealth of Nations discussed efficient organization of work through division of labour. Smith described how changes in processes could boost productivity in the manufacture of pins. While individuals could produce 200 pins per day, Smith analyzed the steps involved in manufacture and, with 10 specialists, enabled production of 48,000 pins per day.
19th century
Classical economists such as Adam Smith (1723-1790) and John Stuart Mill (1806-1873) provided a theoretical background to resource-allocation, production, and pricing issues. About the same time, innovators like Eli Whitney (1765-1825), James Watt (1736-1819), and Matthew Boulton (1728-1809) developed elements of technical production such as standardization, quality-control procedures, cost-accounting, interchangeability of parts, and work-planning. Many of these aspects of management existed in the pre-1861 slave-based sector of the US economy. That environment saw 4 million people, as the contemporary usages had it, "managed" in profitable quasi-mass production.
Salaried managers as an identifiable group first became prominent in the late 19th century.
20th century
By about 1900 one finds managers trying to place their theories on what they regarded as a thoroughly scientific basis (see scientism for perceived limitations of this belief). Examples include Henry R. Towne's Science of management in the 1890s, Frederick Winslow Taylor's The Principles of Scientific Management (1911), Lillian Gilbreth's Psychology of Management (1914), Frank and Lillian Gilbreth's Applied motion study (1917), and Henry L. Gantt's charts (1910s). J. Duncan wrote the first college management-textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and became the first management consultant of the "Japanese-management style". His son Ichiro Ueno pioneered Japanese quality assurance.
The first comprehensive theories of management appeared around 1920. The Harvard Business School offered the first Master of Business Administration degree (MBA) in 1921. People like Henri Fayol (1841-1925) and Alexander Church described the various branches of management and their inter-relationships. In the early 20th century, people like Ordway Tead (1891-1973), Walter Scott and J. Mooney applied the principles of psychology to management. Other writers, such as Elton Mayo (1880-1949), Mary Parker Follett (1868-1933), Chester Barnard (1886-1961), Max Weber (1864-1920), who saw what he called the "administrator" as bureaucrat), Rensis Likert (1903-1981), and Chris Argyris (* 1923) approached the phenomenon of management from a sociological perspective.
Peter Drucker (1909-2005) wrote one of the earliest books on applied management: Concept of the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein.
H. Dodge, Ronald Fisher (1890-1962), and Thornton C. Fry introduced statistical techniques into management-studies. In the 1940s, Patrick Blackett worked in the development of the applied-mathematics science of operations research, initially for military operations. Operations research, sometimes known as "management science" (but distinct from Taylor's scientific management), attempts to take a scientific approach to solving decision-problems, and can apply directly to multiple management problems, particularly in the areas of logistics and operations.
Some of the more recent developments include the Theory of Constraints, management by objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile software development, as well as group-management theories such as Cog's Ladder.
As the general recognition of managers as a class solidified during the 20th century and gave perceived practitioners of the art/science of management a certain amount of prestige, so the way opened for popularised systems of management ideas to peddle their wares. In this context many management fads may have had more to do with pop psychology than with scientific theories of management.
Towards the end of the 20th century, business management came to consist of six separate branches, namely:
- financial management
- human resource management
- information technology management (responsible for management information systems)
- marketing management
- operations management or production management
- strategic management
21st century
In the 21st century observers find it increasingly difficult to subdivide management into functional categories in this way. More and more processes simultaneously involve several categories. Instead, one tends to think in terms of the various processes, tasks, and objects subject to management.
Branches of management theory also exist relating to nonprofits and to government: such as public administration, public management, and educational management. Further, management programs related to civil-society organizations have also spawned programs in nonprofit management and social entrepreneurship.
Note that many of the assumptions made by management have come under attack from business-ethics viewpoints, critical management studies, and anti-corporate activism.
As one consequence, workplace democracy (sometimes referred to as Workers' self-management) has become both more common and advocated to a greater extent, in some places distributing all management functions among workers, each of whom takes on a portion of the work. However, these models predate any current political issue, and may occur more naturally than does a command hierarchy. All management embraces to some degree a democratic principle--in that in the long term, the majority of workers must support management. Otherwise, they leave to find other work or go on strike. Despite the move toward workplace democracy, command-and-control organization structures remain commonplace as de facto organization structure. Indeed, the entrenched nature of command-and-control is evident in the way that recent layoffs have been conducted with management ranks affected far less than employees at the lower levels. In some cases, management has even rewarded itself with bonuses after laying off lower-level workers.
According to leadership academic Manfred F.R. Kets de Vries, a contemporary senior management team will almost inevitably have some personality disorders.
Topics
Basic functions
Management operates through five basic functions: planning, organizing, coordinating, commanding, and controlling.
- Planning: Deciding what needs to happen in the future and generating plans for action(deciding in advance).
- Organizing: Making sure the human and nonhuman resources are put into place
- Coordinating: Creating a structure through which an organization's goals can be accomplished.
- Commanding: Determining what must be done in a situation and getting people to do it.
- Controlling: Checking progress against plans.
Basic roles
- Interpersonal: roles that involve coordination and interaction with employees
- Informational: roles that involve handling, sharing, and analyzing information
- Decision: roles that require decision-making
Managerial skills
Management skills include:
- political: used to build a power base and to establish connections
- conceptual: used to analyze complex situations
- interpersonal: used to communicate, motivate, mentor and delegate
- diagnostic: ability to visualize appropriate responses to a situation
- leadership: ability to lead and to provide guidance to a specific group
- technical: expertise in one's particular functional area.
Formation of the business policy
- The mission of the business is the most obvious purpose--which may be, for example, to make soap.
- The vision of the business reflects its aspirations and specifies its intended direction or future destination.
- The objectives of the business refers to the ends or activity that is the goal of a certain task.
- The business's policy is a guide that stipulates rules, regulations and objectives, and may be used in the managers' decision-making. It must be flexible and easily interpreted and understood by all employees.
- The business's strategy refers to the coordinated plan of action it takes and resources it uses to realize its vision and long-term objectives. It is a guideline to managers, stipulating how they ought to allocate and use the factors of production to the business's advantage. Initially, it could help the managers decide on what type of business they want to form.
Implementation of policies and strategies
- All policies and strategies must be discussed with all managerial personnel and staff.
- Managers must understand where and how they can implement their policies and strategies.
- A plan of action must be devised for each department.
- Policies and strategies must be reviewed regularly.
- Contingency plans must be devised in case the environment changes.
- Top-level managers should carry out regular progress assessments.
- The business requires team spirit and a good environment.
- The missions, objectives, strengths and weaknesses of each department must be analyzed to determine their roles in achieving the business's mission.
- The forecasting method develops a reliable picture of the business's future environment.
- A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives.
All policies must be discussed with all managerial personnel and staff that is required in the execution of any departmental policy.
- Organizational change is strategically achieved through the implementation of the eight-step plan of action established by John P. Kotter: Increase urgency, get the vision right, communicate the buy-in, empower action, create short-term wins, don't let up, and make change stick.
Policies and strategies in the planning process
- They give mid and lower-level managers a good idea of the future plans for each department in an organization.
- A framework is created whereby plans and decisions are made.
- Mid and lower-level management may add their own plans to the business's strategies.
Levels
Most organizations have three management levels: first-level, middle-level, and top-level managers. These managers are classified in a hierarchy of authority, and perform different tasks. In many organizations, the number of managers in every level resembles a pyramid. Each level is explained below in specifications of their different responsibilities and likely job titles.
Top-level management
The top consists of the board of directors (including non-executive directors and executive directors), president, vice-president, CEOs and other members of the C-level executives. They are responsible for controlling and overseeing the entire organization. They set a tone at the top and develop 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 and are accountable to the shareholders and general public.
The board of directors is typically primarily composed of non-executives which owe a fiduciary duty to shareholders and are not closely involved in the day-to-day activities of the organization, although this varies depending on the type (e.g., public versus private), size and culture of the organization. These directors are theoretically liable for breaches of that duty and typically insured under directors and officers liability insurance. Fortune 500 directors are estimated to spend 4.4 hours per week on board duties, and median compensation was $212,512 in 2010. The board sets corporate strategy, makes major decisions such as major acquisitions, and hires, evaluates, and fires the top-level manager (Chief Executive Officer or CEO) and the CEO typically hires other positions. However, board involvement in the hiring of other positions such as the Chief Financial Officer (CFO) has increased. In 2013, a survey of over 160 CEOs and directors of public and private companies found that the top weaknesses of CEOs were "mentoring skills" and "board engagement", and 10% of companies never evaluated the CEO. The board may also have certain employees (e.g., internal auditors) report to them or directly hire independent contractors; for example, the board (through the audit committee) typically selects the auditor.
Helpful skills of top management vary by the type of organization but typically include a broad understanding competition, world economies, and politics. In addition, the CEO is responsible for implementing and determining (within the board's framework) the broad policies of the organization. Executive management accomplishes the day-to-day details, including: instructions for preparation of department budgets, procedures, schedules; appointment of middle level executives such as department managers; coordination of departments; media and governmental relations; and shareholder communication.
Middle-level managers
Consist of general managers, branch managers and department managers. They are accountable to the top management for their department's function. They devote more time to organizational and directional functions. Their roles can be emphasized as executing organizational plans in conformance with the company's policies and the objectives of the top management, they define and discuss information and policies from top management to lower management, and most importantly they inspire and provide guidance to lower level managers towards better performance.
Middle management is the midway management of a categorized organization, being secondary to the senior management but above the deepest levels of operational members. An operational manager may be well-thought-out the middle management, or may be categorized as non-management operate, liable to the policy of the specific organization. Efficiency of the middle level is vital in any organization, since they bridge the gap between top level and bottom level staffs.
Their functions include:
- Design and implement effective group and inter-group work and information systems.
- Define and monitor group-level performance indicators.
- Diagnose and resolve problems within and among work groups.
- Design and implement reward systems that support cooperative behavior. They also make decision and share ideas with top managers.
Lower-level managers
Consist of supervisors, section leaders, foremen, etc. They focus on controlling and directing. They usually have the responsibility of assigning employees tasks, guiding and supervising employees on day-to-day activities, ensuring quality and quantity production, making recommendations, suggestions, and up channeling employee problems, etc. First-level managers are role models for employees that provide:
- Basic supervision
- Motivation
- Career planning
- Performance feedback
Training
Universities around the world offer bachelor's and advanced degrees, diplomas and certificates in management, generally within their colleges of business and business schools but also in other related departments. There is also an increase in online management education and training in the form of electronic educational technology ( also called e-learning).
United States of America
At the graduate level students may choose to specialize in major subareas of management such as entrepreneurship, human resources, international business, organizational behavior, organizational theory, strategic management. accounting, corporate finance, entertainment, global management, healthcare management, investment management, Leaders in Sustainability and real estate Masters of Business Administration (MBAs) can be obtained from many universities in the United States. MBAs provide further education in management and leadership for graduate students.
Current best practices
While management trends can change rapidly, the long term trend in management has been defined by a market embracing diversity and a rising service industry. Managers are currently being trained to encourage greater equality for minorities and women in the workplace, by offering increased flexibility in working hours, better retraining, and innovative (and usually industry-specific) performance markers. Managers destined for the service sector are being trained to use unique measurement techniques, better worker support and more charismatic leadership styles. Human resources finds itself increasingly working with management in a training capacity to help collect management data on the success (or failure) of management actions with employees.
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