Principles of Management

The principles of management encompasses concepts and practices related to effective management within organizations.

For example, Henri Fayol’s fourteen principles of management lists guidelines for division of work, unity of command, equity, etc. for managing organizations effectively.

Here are various concepts related to effective management within firms.

An organisation is a social entity that is goal directed and deliberately structured. The concept of ‘organisation’ involves three elements: goals (i.e., purpose), people (i.e., employees) and deliberate structure (i.e., work relationships between the employees).

Effectiveness vs Efficiency

Effectiveness = achieving (stated) goals = doing the right thing.

Effectiveness refers to the amount of resources used to achieve an organisational goal.

Management is the attainment of organisational goals in an efficient manner through planning, organising, leading and controlling organisational resources.

Attainment of goals = effectiveness. Minimising wastes, cost, and redundancies = efficiency.

POLC

POLC (planning, organizing, leading, and controlling) is the acronym for four (major) management functions.

• Planning refers to the process of shortlisting objectives and determining the right course of action to meet those objectives. Objectives are the aims or goals that a frim may want to achieve over different periods of time.

  Creating a shared culture (through the communication of goals to employees throughout the organisation) is one of the most important planning functions in management.

  Communicating goals is action instead of plan. When goals are communicated, the leader creates an ‘influence’, which is known as ‘leading’.

• Organising typically follows planning and reflects the way the organisation tries to accomplish their plans. It involves identifying activities required to attain the objectives.

  Organising may be defined as the tasks associated with the motivation of employees in achieving organisational goals. The influencer is the leader who influences (i.e., motivates). Organising involves ensuring what each employee will do and how they will do those activities. When this is ensured, plans become continually implemented.

• Leadership is the management function of influencing the behaviour of employees to accomplish goals. ‘Leading’ involves use of influence to motivate employees; motivation is the drive or influence that works in employees. The leader triggers it as “to lead is to motivate”.

• Controlling defines where an organisation wants to be in the future and how to get there. It refers to the measurement and correction of performance to ensure plans are executed and firm objectives are attained. The definition of controlling primarily concerns with performance deviations.

  Controlling concerns monitoring employees’ activities, determining whether the organisation is on target towards its goals, and making corrections as necessary. Controlling concerns with performance; such as performance deviations (i.e., comparing actual performance with targeted/planned performance) and strategies to minimise the deviations (i.e., corrections).

Organisational Hierarchy

The workplace represents the organisation. It has four levels: top management, middle management, first-line management, and non-managers (workers).

Every manager plans, organises, leads, and controls – more or less (not only the top managers in organisations).

A typical organisational hierarchy: the top management team (TMT) overseeing and coordinating middle managers, known as general managers (GMs), who coordinate and oversee the functional managers (FMs).

Top managers (TMT) work at the corporate i.e., headquarter level. The GMs work at the business level; they provide reports and information about the operational prospects of the decision they are directly involved with. This assistance enables the top managers to set out effective strategies.

Production is a function, similar to other functions, namely purchasing, accounting, and sales. Those who directly engage in production are non-managerial employees (i.e., workers). Their first-line manager is essentially a production supervisor.

Vertical vs Horizontal Relationship (in Organisational Hierarchy)

A manager who is at the top of the organisational hierarchy is responsible for the entire organisation. Examples of top management positions are managing director, chairperson, executive director, and the CEO.

Middle managers work at the middle levels of the organisation and are responsible for business units and major departments. Examples of middle management positions are department head, and division head.

The relationship between the CEO and a divisional head is vertical relationship (a divisional head is a subordinate to the CEO); while a relationship between two divisional heads is horizontal relationship.

The vertical relationship is characterised by delegation (of tasks and responsibilities to the lower level) and reporting (of performance accordingly to the upper level). On the other hand, the horizontal relationship is characterised by integration and cooperation; they are at the same level with neither is superior to the other. Similarly, two functional managers (e.g., the accounts manager and the sales manager) are at the same level with having horizontal relationship. However, both these managers report to the divisional head, thereby complying with the vertical relationship with their divisional head.

Responsibilities

Leading is one of four major functions of the manager. It means the use of influence to motivate employees to achieve organisational goals. More elaborately, it means creating a shared culture and values, communicating goals to employees throughout the organisation and stimulating employees to perform at a high level.

The ability to shape culture, communicate goals and motivate employees is critical to business success.

These are the top managers’ (TMT) responsibilities, which are concerned with the long-term future and the success of the organisation as a whole. By contrast, the middle managers are generally concerned with the near future.

The liaison role pertains to the development and maintenance of information sources both inside and outside the organisation. This is different from the resource allocator role which pertains to decisions about how to allocate people, time, equipment, budget and other resources to attain desired outcomes.

On the other hand, the negotiator role involves negotiations and bargaining to attain outcomes for the manager’s unit of responsibility. The manager accomplishes about 10 such roles (Mintzberg, 1973).

These roles are categorized into 3 types:

• (1) Informational role (namely, monitor, disseminator and spokesperson roles) which describes the activities used to maintain and develop an information network (requires conceptual and interpersonal/human skills);
• (2) Interpersonal role (managing through people) (includes the figurehead, leader and liaison roles) which relates to relationships with others (requires interpersonal/human skills);
• (3) Decisional roles (managing through action) (includes entrepreneur, disturbance handler, resource allocator and negotiator roles) which relates to managers making choices and taking action in the wake of conflicts, uncertainties, risks and ambiguities (requires conceptual skills).

Skills of Managers

Innovation is what keeps organisations growing, changing and successful.

Innovation is critically important. It allows efficiency (doing things better) and effective work performance (achieving goals and objectives) through management functions and skills in management. To gain and/or maintain a competitive advantage, today’s managers must increase the emphasis on innovation, and shift away from a relentless focus on cost control. Innovations in products, services, management systems, production processes, corporate values etc. are strongly correlated with an organisation’s long-term viability.

The turbulence and change in today’s competitive business environment has led to demand for new approaches of leadership. Organisations now need leaders who can guide their organisation through turbulence and be able to see patterns in the complexity of changing external environments.

Change is now more frequent and unforeseen than before. For example, imagine the changes in business prospects due to changes in the natural environment across countries.

Managers must use their conceptual, technical, and human skills to innovate. This is because, organisations cannot survive over the longer term if they constantly innovate new processes, practices, and strategies to adapt the changing internal and external environment. Please ask your lecturer to know more about the environment and its changes.

The necessary skills for managing an organisation can be placed into three categories: conceptual, human and interpersonal, technical skills.

We gain the conceptual skills through developing our power to critically analyse the organisational problems and prospects. The human skills are no different from interpersonal skills. The third skill category is the technical skills; words typed per minute, number of lines coded.

Technical skills refer to a manager’s ability to see the organisation as a whole as well as the relationship between its parts.

Human skills refer to the ability of a manager to work with and through other people, and to work effectively as a group member.

This ability makes us great human; and in the organisation, a great leader as leading is a human skill.

Sustainable development

‘Sustainable development’ practices are exclusively expressed in terms of environmental performance.

Sustainable development involves making balanced and equitable decisions so that economic (alternatively known as financial), environmental and social outcomes are achieved in both the short and longer terms. These three performance aspects of sustainability are regarded as triple bottom-line or TBL. TBL is also known as SEE (i.e., social, economic, and environmental bottom-lines). Bottom-lines refer to profitability/performance. Therefore, degree of sustainable development refers to how clearly we can “SEE” the interconnectedness of the three (3) types of performance.

The people (individuals/households) and governments (particularly, the powerful nations) have also to share the burden of overcoming pollution. The business sector cannot succeed working alone. It needs to mobilise such initiatives and work together with the two other sectors (i.e., households and government).

Crisis management

‘Crisis’ refers to shocks or surprises in an organisation when the manager fails for foresee the negative situation or impact on performance.

Crisis management requires managers to develop five important leadership skills: staying calm, putting people before business, knowing when to get back to business, telling the truth and remaining visible.

These skills are important required skills for any potentially successful leader, although these skills are not leadership skills by themselves.