Citation metadata

Author: Roger L. Luft
Date: 2014
Encyclopedia of Business and Finance
From: Encyclopedia of Business and Finance(Vol. 2. 3rd ed.)
Publisher: Gale, part of Cengage Group
Document Type: Topic overview
Pages: 5
Content Level: (Level 4)

Document controls

Main content

Full Text: 
Page 490


Throughout the years, the role of a manager has changed. Years ago, managers were thought of as people who were the boss. While that might still be true in the early 21st century, many managers view themselves as leaders rather than as people who tell subordinates what to do. The role of a manager is comprehensive and often very complex. Not everyone wants to be a manager, nor should everyone consider being a manager.


Some would define management as an art, while others would define it as a science. Whether management is an art or a science is not what is most important. Management is a process that is used to accomplish organizational goals. That is, it is a process used to achieve the goals of an organization. An organization could be a business, a Page 491  |  Top of Articleschool, a city, a group of volunteers, or any governmental entity. Managers are the people to whom this management task is assigned, and it is generally thought that they achieve the desired goals through the key functions of (1) planning, (2) organizing, (3) directing, and (4) controlling. Some would include leading as a managing function, but for the purposes of this discussion, leading is included as a part of directing.

The four key functions of management are applied throughout an organization regardless of whether it is a business, a government agency, or a church group. In a business, many different activities take place. For example, in a retail store there are people who order the merchandise that will be sold, people to sell the merchandise to customers, people who prepare the merchandise for display, people who are responsible for advertising and promotion, people who do the accounting work, people who hire and train employees, and several other types of workers. There might be one manager for the entire store, but there are other managers at different levels who are more directly responsible for the people who perform all the other jobs. At each level of management, the four key functions of planning, organizing, directing, and controlling are included. The emphasis changes with each different level of manager.

Planning. Planning in any organization occurs in different ways and at all levels. A top-level manager, such as the manager of a manufacturing plant, plans for different events than does a manager who supervises a group of workers who are responsible for assembling modular homes on an assembly line. The plant manager must be concerned with the overall operations of the plant, while the assembly-line manager or supervisor is only responsible for the line that he or she oversees.

Planning could include setting organizational goals. This is usually done by higher-level managers in an organization. As a part of the planning process, the manager develops strategies for achieving the goals of the organization. In order to implement the strategies, resources will be needed and must be acquired. The planners must also then determine the standards, or levels of quality, that need to be met in completing the tasks.

In general, planning can be strategic planning, tactical planning, or contingency planning. Strategic planning is long-range planning that is normally completed by toplevel managers in an organization. Examples of strategic decisions managers make include who the customer or clientele should be, what products or services should be sold, and where the products and services should be sold.

Short-range or tactical planning is done for the benefit of lower-level managers, since it is the process of developing very detailed strategies about what needs to be done, who should do it, and how it should be done. To return to the previous example of assembling modular homes, as the home is nearing construction on the floor of the plant, plans must be made for the best way to move it through the plant so that each worker can complete assigned tasks in the most efficient manner. These plans can best be developed and implemented by the line managers who oversee the production process rather than managers who sit in an office and plan for the overall operation of the company. The tactical plans fit into the strategic plans and are necessary to implement the strategic plans.

Contingency planning allows for alternative courses of action when the primary plans that have been developed do not achieve the goals of the organization. In the economic environment of the 21st century, plans may need to be changed very rapidly. Continuing with the example of building modular homes in the plant, the plant might be using a nearby supplier for all the lumber used in the framing of the homes, but the supplier loses its entire inventory of framing lumber in a major warehouse fire. Contingency plans would make it possible for the modular home builder to continue construction by going to another supplier for the same lumber that it can no longer get from its former supplier.

Organizing. Organizing refers to the way the organization allocates resources, assigns tasks, and goes about accomplishing its goals. In the process of organizing, managers arrange a framework that links all workers, tasks, and resources together so the organizational goals can be achieved. The framework is called organizational structure. Organizational structure is shown by an organizational chart. The organizational chart that depicts the structure of the organization shows positions in the organization, usually beginning with the top-level manager (normally the president) at the top of the chart. Other managers are shown below the president.

There are many ways to structure an organization. It is important to note that the choice of structure is important for the type of organization, its clientele, and the products or services it provides, all of which influence the goals of the organization.

Directing. Directing is the process that many people would most relate to managing. It is supervising, or leading workers to accomplish the goals of the organization. In many organizations, directing involves making assignments, assisting workers to carry out assignments, interpreting organizational policies, and informing workers of how well they are performing. To effectively carry out this function, managers must have leadership skills in order to get workers to perform effectively.

Some managers direct by empowering workers. This means that the manager does not stand like a taskmaster over the workers barking out orders and correcting Page 492  |  Top of Articlemistakes. Empowered workers usually work in teams and are given the authority to make decisions about what plans will be carried out and how. Empowered workers have the support of managers who will assist them to make sure the goals of the organization are being met. It is generally thought that workers who are involved with the decision-making process feel more of a sense of ownership in their work, take more pride in their work, and are better performers on the job.

By the very nature of directing, it should be obvious that the manager must find a way to get workers to perform their jobs. There are many different ways managers can do this in addition to empowerment, and there are many theories about the best way to get workers to perform effectively and efficiently. Management theories and motivation are important topics and are discussed in detail in other articles.

Controlling. The controlling function involves the evaluation activities that managers must perform. It is the process of determining if the company's goals and objectives are being met. This process also includes correcting situations in which the goals and objectives are not being met. There are several activities that are a part of the controlling function.

Managers must first set standards of performance for workers. These standards are levels of performance that should be met. For example, in the modular home assembly process, the standard might be to have a home completed in eight working days as it moves through the construction line. This is a standard that must then be communicated to managers who are supervising workers, and then to the workers so they know what is expected of them.

After the standards have been set and communicated, it is the manager's responsibility to monitor performance to see that the standards are being met. If the manager watches the homes move through the construction process and sees that it takes 10 days, something must be done about it. The standards that have been set are not being met. In this example, it should be relatively easy for managers to determine where the delays are occurring. Once the problems are analyzed and compared to expectations, then something must be done to correct the results. Normally, the managers would take corrective action by working with the employees who were causing the delays. There could be many reasons for the delays. Perhaps it is not the fault of the workers but instead is due to inadequate equipment or an insufficient number of workers. Whatever the problem, corrective action should be taken.


To be an effective manager, it is necessary to possess many skills. Not all managers have all the skills that would make them the most effective manager. As technology advances and grows, the skills that are needed by managers are constantly changing. Different levels of management in the organizational structure also require different types of management skills. Generally, however, managers need to have communication skills, human skills, computer skills, time-management skills, and technical skills.

Communication skills. Communication skills fall into the broad categories of oral and written skills, both of which managers use in many different ways. It is necessary for a manager to orally explain processes and give direction to workers. It is also necessary for managers to give verbal praise to workers. Managers are also expected to conduct meetings and give talks to groups of people.

An important part of the oral communication process is listening. Managers are expected to listen to their supervisors and to their workers. A manager must hear recommendations and complaints on a regular basis and must be willing to follow through on what is heard. A manager who does not listen is not a good communicator.

Managers are also expected to write reports, letters, memos, and policy statements. All of these must be written in such a way that the recipient can interpret and understand what is being said. This means that managers must write clearly and concisely. Good writing requires good grammar and composition skills. This is something that can be learned by those aspiring to a management position.

Human skills. Relating to other people is vital in order to be a good manager. Workers come in every temperament that can be imagined. It takes a manager with the right human skills to manage the variety of workers effectively. Diversity in the workplace is common. The manager must understand different personality types and cultures to be able to supervise these workers. Human skills cannot be learned in a classroom but are best learned by working with people. Gaining an understanding of personality types can be learned from books, but practice in dealing with diverse groups is the most meaningful preparation.

Technology skills. Technology changes so rapidly it is often difficult to keep up with the changes. It is necessary for managers to have up-to-date computer skills in order to keep up with these rapid changes. Many of the processes that occur in offices, manufacturing plants, warehouses, and other work environments depend on computers and thus necessitate managers and workers who can skillfully use the technology.

Time-management skills. Because the typical manager is a very busy person, it is important that time be managed effectively. This requires an understanding of how to allocate time to different projects and activities. A manager's time is often interrupted by telephone calls, problems Page 493  |  Top of Articlewith workers, meetings, others who just want to visit, and other seemingly uncontrollable factors. It is up to the manager to learn how to manage time so that work can be completed most efficiently. Good time-management skills can be learned, but managers must be willing to prioritize activities, delegate, deal with interruptions, organize work, and perform other acts that will make them better managers.

Technical skills. Different from computer skills, technical skills are more closely related to the tasks that are performed by workers. A manager must know what the workers who are being supervised are doing on their jobs or assistance cannot be provided to them. For example, a manager who is supervising accountants needs to know the accounting processes. Similarly, a manager who is supervising a machinist must know how to operate the equipment, and a manager who supervises the construction of a home must know the sequence of operations and how to perform them.


There are many views of management, or schools of management thought, that have evolved over the years. Some of the theories of management that have greatly affected how managers manage today include classical, behavioral, contemporary, closed, and open management thought.

Classical management thought. The classical school of management thought emerged during the late 1800s and early 1900s as a result of the Industrial Revolution. Since the beginning of time, managers have needed to know how to perform the functions discussed earlier. The Industrial Revolution emphasized the importance of better management as organizations grew larger and more complex. As industry developed, managers had to develop systems for controlling inventory, production, scheduling, and human resources. It was the managers who emerged during the Industrial Revolution, many of whom had backgrounds in engineering, who discovered that they needed organized methods in order to find solutions to problems in the workplace.

Classical management theorists thought there was one way to solve management problems in the industrial organization. Generally, their theories assumed that people could make logical and rational decisions while trying to maximize personal gains from their work situations. The classical school of management is based on scientific management, which has its roots in the work of Henri Fayol (1841–1925) in France and the ideas of German sociologist Max Weber (1864–1920).

Scientific management is a type of management that bases standards upon facts. The facts are gathered by observation, experimentation, or sound reasoning. In the United States, scientific management was further developed by individuals such as Charles Babbage (1792–1871), Frederick W. Taylor (1856–1915), and Frank (1868–1924) and Lillian (1878–1972) Gilbreth.

Behavioral management thought. It was because the classical management theorists were so machine-oriented that the behavioralists began to develop their thinking. The behavioral managers began to view management from a social and psychological perspective. These managers were concerned about the well-being of the workers and wanted them to be treated as people, not a part of the machines.

Some of the early behavioral theorists were Robert Owen (1771–1858), a British industrialist who was one of the first to promote management of human resources in an organization; Hugo Munsterberg (1863–1916), the father of industrial psychology; Walter Dill Scott (1869–1955), who believed that managers need to improve workers' attitudes and motivation in order to increase productivity; and Mary Parker Follett (1868–1933), who believed that a manager's influence should come naturally from his or her knowledge, skill, and leadership of others.

During the behavioral management period, there was a human relations movement. Advocates of the human relations movement believed that if managers focused on employees rather than on mechanistic production, then workers would become more satisfied and thus more productive laborers. Human relations management supported the notion that managers should be paternalistic and nurturing in order to build work groups that could be productive and satisfied.

The behavioral science movement was also an important part of the behavioral management school. Advocates of this movement stressed the need for scientific studies of the human element of organizations. This model for management emphasized the need for employees to grow and develop in order to maintain a high level of self-respect and remain productive workers. The earliest advocates of the behavioral science movement were Abraham Maslow (1908–1970), who developed Maslow's hierarchy of needs, and Douglas McGregor (1906–1964), who developed Theory X and Theory Y to explain employee motivation and the impact of different management approaches.

Contemporary management thought. Management thought continues to evolve and influence organizations. One contemporary idea is the sociotechnical system. A system is a set of complementary elements that function as a unit for a specific purpose. Systems theorists believe that all parts of the organization must be related and that managers from each part must work together for the benefit of the organization. Because of this relationship, what happens in one part of the organization influences and affects other parts of the organization.

Another contemporary approach to management involves contingency theories. This approach states that the Page 494  |  Top of Articlemanager should use the techniques or styles that are most appropriate for the situation and the people involved. For example, the manager of a group of Ph.D. chemists in a laboratory would have to use different techniques from the manager of a group of teenagers in a fast-food restaurant.

Closed and open management systems. Within the classical and behavioral approaches to management, managers look only within the organization to improve productivity and efficiency. This is a closed system, meaning the organization operates as though it is in its own environment. Outside influence and information are blocked out.

Another perspective is the open system. As one would expect, here the organization functions in conjunction with its external environment, acting with and relying upon other systems. Advocates of an open system believe that an organization cannot avoid the influence of outside forces.


Management is a very complex process to which this article is but a brief introduction. Other articles in this encyclopedia provide extensive insight into the many styles and theories of management.


Bateman, T. S., & Snell, S. (2013). Management: Leading & collaborating in a competitive world (10th ed.). New York, NY: McGraw-Hill/Irwin.

Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2013). Understanding business (10th ed.). New York, NY: McGrawHill/Irwin.

Robbins, S. P., & Coulter, M. K. (2014). Management (12th ed.). Boston, MA: Pearson.

Schermerhorn, J. R. (2013). Management (12th ed.). Hoboken, NJ: Wiley.

Templar, R. (2011). The rules of management: A definitive code for managerial success. Upper Saddle River, NJ: FT Press.

Roger L. Luft

Source Citation

Source Citation   

Gale Document Number: GALE|CX3727500208