Management and Leadership

Management and Leadership

Management is the process of achieving the objectives of the business by using its available resources effectively.

In a small business, the owner is likely to be the manager as well, responsible for all the managerial tasks. However, as a business grows, then some of these tasks can be delegated to others. The main functions of management are:

  1. Planning: setting clear objectives.
  2. Organising: dividing the work into smaller tasks and delegating to others.
  3. Staffing: having the 'right' person in the 'right' job (known as Human Resource Management).
  4. Directing: decision-making and giving instructions to others.
  5. Budgeting: preparing a detailed financial plan for the next trading year.
  6. Co-ordinating: Bringing the various parts of the business together.

One of the most important skills of management in a large business is knowing how, when and what tasks to delegate to others. Delegation occurs when managers pass a degree of authority down the hierarchy to their subordinates.

The managers must ensure that the subordinates are sufficiently competent to cope with the task, and that they have the necessary skills and time available to complete the delegated task.

In general, management can be categorised as senior management (setting long-term plans and strategies, appraising middle management), middle management (establishing departmental strategies, appraising departmental staff), and supervisory management (monitoring the regular and routine day-to-day tasks).

The relationship that exists between the management and their subordinates in a business can be represented diagrammatically in the form of an organisational chart:

Skill and Health Related Fitness

An organisational chart shows:

a) The different departments within the business. In this example, there are 4 different departments (Production, Marketing, Finance and Personnel).

b) The chain of command. In this example, a chain of command exists between person A (senior manager), person B (middle manager), person C (supervisor) and person D (shop-floor worker).

c) The span of control of each manager. This refers to the number of people directly accountable to a single superior. In this example, the span of control is 4 people.

d) The channels of communication used.

This diagram indicates that this business has four layers in its hierarchy and that there are many 'line' and 'staff' relationships which exist.

A 'line' relationship exists where there is direct authority (in the diagram, an example of a 'line' relationship is between person B and person C).

A 'staff' relationship exists where there is no direct authority. Instead, it is a relationship in an advisory capacity (e.g. an expert who provides advice on, say, computers or staff training). In the diagram, an example of a 'staff' relationship is between person B and person D.

A recent trend in many large businesses has been delayering the organisational chart. This means stripping out one layers of management from the hierarchy. This is done to reduce costs and to improve the speed of communication flows within the business, as well as to provide each employee with more responsibilities.

However, delayering can actually overstretch employees by giving them too much work and can, therefore, actually have a negative effect on their level of morale and motivation.

Traditionally, many businesses had highly centralised decision-making, with all they key decisions being made by senior management, with little responsibility and authority being passed down the hierarchy.

The advantages of this method of management are:

  1. The business has tight control over its operations.
  2. people can specialise in the jobs to which they are best suited.

However, the disadvantages include :

  1. The business becomes rather inflexible and bureaucratic in its operations.
  2. Decisions can take a long time to be made.
  3. There is very little use made of employees further down the hierarchy.

An alternative management method is for decentralised decision-making to occur. This is where responsibility and authority are passed away from the top of the business to regional offices and departments.

The advantages of this method of management are:

  1. The development of many employees by empowering them.
  2. The business becoming faster and more efficient in its operations.
  3. Higher levels of morale and motivation amongst the employees.

However, the disadvantages include:

  1. A loss of control / power at the top of the business.
  2. Getting too many employees involved in decision-making may lead to mistakes being made.

A common management method as business try to become more flexible is matrix management.

This involves a situation where a number of employees from different departments within the business are asked to temporarily work together to achieve, say, the successful launch of a new product. Each person in the team will then be accountable to their departmental manager as well as the team manager.

This can lead to problems of loyalty and prioritising of workloads, as the employee can neglect their departmental duties in favour of the new project they are involved in.

Another management technique is management by objectives, which involves each manager setting objectives for himself, based on the overall objectives of the business.

It was first developed by Peter Drucker in the 1950s, but has become a very popular management tool over the past 20 years. It should lead to improved levels of morale, as the managers are more committed to the achievement of their goals. It forces managers to plan carefully for the next year and the performance of the manager is judged on how effective he has been in the achievement of his objectives for the year.