Chapter 1 Defining Management D. Quinn Mills Principles of Management © 2005 D. Quinn Mills. All Rights Reserved. Defining Management Chapter 1 Defining Management 9 Principles of Management What Management Is Management is probably the most important non-technical innovation of the last two centuries—and the one most directly affecting those of us who will be tomorrow’s workers, professionals and managers. But what is management? Why does it exist? How should we define “managers?” What are the tasks and responsibilities of managers? What makes a successful manager? 10 Defining Management Management has several aspects. It is a discipline in its own right, but a relatively young one. Modern organizations are little more than a century old, and management arose with them. Management is, therefore, partly the codified experience of the past one hundred years or so; at the same time, it is increasingly an organized body of knowledge drawing on research. From another perspective, it is the work of a manager to make decisions, communicate them to others, and monitor how well they are carried out (Simon, 1987). The Role of Managers Management is about tasks, including what and how things are done. Tasks are objective and impersonal. Management is also about people. Every achievement of management is the achievement of a manager. Every failure is the failure of a manager. Managers direct and lead other people. The vision, dedication, and integrity of a manager determine success or failure. Managers integrate and match people and tasks in order to get work accomplished. The role of managers is to accomplish things through other people. For a review of what managers do, see Executive Summary 1.1. For the most part, managers are not people who actually do the work, but rather supervise, direct and motivate those who perform work. This isn’t to say that managers don’t work—they do managerial tasks, but not the tasks related directly to production or services provided to customers or clients. People who do the direct work are called individual contributors. It is the role of managers to direct individual contributors. This is a basic distinction that needs to be kept always in mind. 11 Principles of Management Management is a form of work. Indeed it can be seen as some of the most characteristic work of modern society; work that distinguishes our society from all earlier ones. For management is work specific to modern organization, work that causes modern organizations to perform. As work, management has its own skills, its own tools, its own techniques. But the work of management is also different in other distinct ways. Many people are able to work alone much of the time. But management is always centered in an organization—that is, within a web of human relationships. This is because the essence of what a manager does is to see that work gets done by other people, who are usually the most accomplished and efficient at doing particular tasks. It is the manager’s role to see that work gets organized, that individuals take responsibility for particular tasks, that tasks are coordinated so that they add up to accomplishing an overall project, and that the work is done on schedule and to the necessary standards of quality. The objective of managers is always to create top performing organizations. It is this purpose of management that drives all the topics we will consider. Management is a term that denotes both a function and the people who discharge it. The function is organization and supervision; the people are managers. In our society managers have a certain social position and authority, and the term management connotes both. The first criterion in identifying managers is to identify those who have responsibility for the accomplishment of the work of the organization. If the responsibility is for the whole organization, then the person is a member of top management 12 Defining Management (possibly even the chief executive officer—the CEO). If the responsibility is for only a department or even a subunit of a department, then the person is a member of middle or lowerlevel management. Sometimes people get confused about management and associate it with the power to direct other people in the enterprise. Often managers have this authority; but it is the managerial function (defined just above) which defines management, not power. It is this function that remains the distinctive criterion and the organizing principle of management. According to the management thinker Peter F. Drucker, there are five basic activities in the work of a manager that, when coordinated, can help create a viable, growing organization. 1. A manager sets objectives. 2. A manager organizes work. 3. A manager motivates others and communicates with them. 4. A manager measures results. 5. A manager develops the abilities of people, including his or her own. (These activities are discussed in depth in Drucker, 1999). These functions are very straightforward ones. But when managers actually perform them, a host of complications arise. Managers must confront organizational and human factors. 13 Principles of Management Those who study the topic of management have focused on some of the questions raised, including: Different managerial styles which fit different organizational situations Methods of motivation of different people Multiple types of decision-making Formulating strategy for an organization Broadly speaking, the practice of management has two basic sides: one is often referred to as “hard” and consists of planning, budgeting, strategy formulation, decision-making and measuring results; the other is referred to as “soft” and consists of managing people, hiring, evaluation, motivation, counseling, coaching, etc. A frequent clever question is “Why is the soft side of management so hard?”—reminding us that soft issues are often more difficult than hard ones. Why Study Management? A person might want to study management for any of several reasons. First, management jobs are often highly desirable positions, so that a person might want to learn how to manage in order to get a management job. Management jobs often pay well; they usually fit into a well-defined ladder of promotion to the very top of an organization; they carry respect and authority in an organization and status in the wider community. A person who aspires to rise to high position in a large corporation is well-served by making an intense study of management and business, to equip his or her mind 14 Defining Management professionally with all he needs, so that he may be ready when the moment to take charge comes his way. Further, many people have special aptitudes that suit them well for management positions, and they may want to exercise those aptitudes. For example, some people excel at organizing things; something managers do continually. Some people like working closely with others more than they like working alone; managers work with others a great deal. Some people enjoy teamwork; something managers are often engaged in. Finally, some people want to have a role in the decisionmaking in the organizations for which they work; managers often have input to important decisions, and those managers who are at the top of the organization get to make key decisions about the organization as a whole. Thus, because a person aspires to a managerial career (either because managerial jobs are well-compensated, high status jobs, or because he or she has a special aptitude for management), he or she may want to know more about management. There are other reasons for studying management. Sometimes people want to learn more about management because, while they are not themselves managers, nor want to be, they are directed at work by managers, and want to understand how managers think and act. Managers often approach their role with a different, and distinct, mind-set (sometimes called the “managerial perspective.”) 15 Principles of Management Management, Leadership, and Administration Modern organizations involve management, leadership and administration. What are the differences among the meanings of these three terms? Management is about accomplishing tasks, plans, and goals through the motivation and direction of others. Leadership is about energizing others so that they will set out to do things that are desired by the leader. Leadership adjusts more than management to a particular situation; it involves activities that energize others, including offering an exciting vision of the future, inspiring confidence, and demonstrating emotional commitment. There is often a useful role for leadership qualities in the world of business, but a company or organization can also be run by managerial and administrative skills alone. Administration is about applying policies, procedures, standards, and guidelines to actions that take place in an organization. In essence, an administrator resolves a problem by looking up or referring to a rule which covers the situation and applying it. Managers, in contrast, are more creative problem-solvers; they look for a solution to a problem that will be both efficient (getting the task accomplished in as short a period as possible) and cost-effective (getting the task accomplished with as little cost in time, money and other resources as possible). Management is in some senses the broadest of these three terms. There is an element of leadership in effective management; and there is an element of administration in management as well. There is also an element of management that isn't leadership or administration; rather, it is something 16 Defining Management unique. What’s unique in management is the motivation and direction of people who report to the manager. A leader inspires, but doesn’t motivate and direct; but a manager does a bit of all three. An administrator issues rulings, but doesn’t motivate and direct. A manager does a bit of all three. A leader isn’t an administrator, and ordinarily does little or no administrative work. An administrator ordinarily isn’t a leader. So in a sense the manager lies between the leader and administrator—the manager’s work involves some aspects of leadership; some of administration and the work that is unique to a manager. These are very important distinctions which we make at the outset of our discussion of management because there is much confusion in the general public usage of these terms. Managers are sometimes assumed to be leaders and sometimes castigated for not being leaders. The term leader is often used to apply to top or senior managers, no matter how deficient they are in actual leadership skills. Administrators who neither organize nor motivate people are often labeled managers. The result is a confusion that can make it very hard 17 Principles of Management for a person to understand what the work of a manager is, and therefore can make it difficult to learn to manage well. To accomplish the work of his or her organization, a manager employs some of the skills of the leader and some of the methods of the administrator, but he or she merges them in imaginative ways to get work accomplished. We note that skills of leadership and administration are not fully useful in an organization unless combined by managers and applied in a particular context. Management is about applying leadership skills and administrative processes in a particular context to achieve positive results. A Managerial Perspective It is also important to remember that the managerial perspective is always oriented toward: Getting results Being efficient Besting competitors Earlier we defined management in a manner suggested by Peter F. Drucker, focusing on the functions of management. Another way to define it is by emphasizing the managerial perspective. In this definition a manager is a person whose behavior is oriented to three basic objectives: getting results, achieving efficiency and beating competitors. In fact, at several major business schools, candidates for doctorates in management are asked to pass a verbal examination in which they are asked to demonstrate a managerial perspective. 18 Defining Management Learning the managerial perspective is a key element of advanced training in the field. Demonstrating the perspective is not as simple as it may sound. People have very different perspectives, and under close examination it is difficult to alter one’s basic orientations. For example, an economist is fascinated by markets, by systems and by processes of optimization; her attitude is therefore different from that of a manager. An economist presumes results and efficiency and welcomes competition as a guarantor of efficiency in markets. We should also note that a manager’s perspective is not that of a businessperson. A businessperson focuses on profit, whether or not it is associated with results, efficiency or competitive advantage. Often profit is associated with those things, so that the manager appears like a businessperson; but often profit is not associated with managerial concerns. For example, a profit might be made by acquiring a scarce resource and selling it for a high price (such as occurs in real estate speculation) even when there is no production and so no results to be attained, no efficiency to be pursued, and no competition to be bested. It should be no surprise, therefore, that many people engage in the business of buying and selling real estate without needing managers involved. Further evidence of the difference between management and business can be found in the different orientation of what we loosely label “business schools.” In fact, most so-called business schools are actually schools of management. Their names often reveal this. But some business schools label themselves as schools of business. The subtle difference is often reflected in the school’s approach to education. Schools that are schools of management train people for roles in 19 Principles of Management business, government and the not-for-profit sector of our economy; they focus on managerial skills. Schools of business focus on the for-profit sector and on management for that sector. People who graduate from business schools with degrees in management (the Master of Business Administration is the most common degree, but its origin dates from a time before the modern distinctions outlined above between administration and management were made) can, of course, take positions in government and not-for-profits, but their education has been focused on much that is specific to the business sector. Finally, government departments and not-for-profit organizations usually pay no attention to profits and so are not businesses, but along with accomplishing their societal mission are concerned about attaining good results in what they do, and achieving efficient operations, and so have a use for managers. The ordinary (but not universal) lack of competition for government means that managers in government face somewhat different conditions than those elsewhere; but many non-profits (for example, private colleges and universities) are very competitive even though they lack a profit motive, and so have use for the full-range of managerial attitudes and skills. The three orientations that make up the managerial perspective are not the same orientations as those of a leader or an administrator, which again demonstrates that management is a separate and distinct discipline. Leaders are rarely concerned about efficiency; though they are concerned about results and besting competitors. Administrators are rarely concerned about efficiency, nor even about results or competition—they are concerned about following rules. 20 Defining Management Above we noted that managers and business people have different orientations. But management and business are closely related. Management involves running an enterprise; business involves making a financial return. Managers often run business enterprises, and that is the core of the relationship of management and business. In America about eighty percent of our economy is made up of private business organizations, and most managers in America work for them. At the same time, managers also play increasingly important roles in both government and not-for-profit organizations. Government agencies have been the traditional home of administrators since government agencies started long before business enterprises. The people who work in government agencies are often referred to as bureaucrats—people who work in government bureaus. The people who supervise their work are administrators. Today, however, more and more government agencies have turned to effective managers, not just administrators. Top level government officials recognize that with the growth of government and the increasingly complexity of its tasks, managers are increasingly needed. Not-for-profit organizations are also embracing management as they become larger and their missions become more complex. The administrators who used to run not-for-profits increasingly lack the wider and more sophisticated skills possessed by managers, and are less desired in not-for-profit organizations than managers. Management: Lessons from Family Life We know something about management from our families: in many ways being a parent is like being a manager. When we are children, we both benefit from and resist the authority of our parents. Children benefit from what their parents do to 21 Principles of Management help them learn and grow; but they resist the discipline that parents often impose, believing it is necessary to help children grow up properly. As children, we get a glimpse into how people feel about management from the side of people who are managed. Like children in a family, people who work in an organization both benefit from the efforts of managers and sometimes resist their authority. They benefit because the work that is done by managers helps the organization succeed and so helps people earn a living and fulfill their objectives about their careers. They sometimes resist managerial authority because managers must often enforce discipline and press people to meet schedules and keep costs down (not always the most pleasant of tasks!). When we look to our own families, we can learn about being business managers from the management side. We learn entrepreneurship by starting a family; partnering via our relationship with our spouse; leadership by energizing our children about good things to do; supervision as we watch over our children; finance as we try to manage the income and expenses of our families; supply chain management as we make multiple trips each week to the grocery store to feed the whole family; and even marketing and sales as we try to get positions for our children on local sports teams and in music programs. Management as an Art and Science Management is a practice which involves elements of art and science. The art usually involves how people are handled, although there is an element of science to this as well; the science is usually involved with decision-making, though there is an element of art here also. 22 Defining Management In order to be successful, managers must be effective at selfdiscipline. In particular, it is a personal challenge of the first magnitude to stay focused on a particular objective when so much has to be done and so much is going on. It is not unusual for a manager to work in an environment in which the entire leadership team of his organization turns over in only a year or two, so that she has to keep focused on her work while the people to whom she is responsible for results are continually changing, and their priorities with them. Focus permits accomplishment on a grand scale. About the French leader Napoleon one of his senior aides wrote, “He was totally given over to his object. He always applied all his means, all his facilities, all his attention to the action or discussion of the moment…hence the enormous advantage he had over his adversaries, for few people are entirely absorbed by one thought or one action at one moment.” (De Caulaincourt, 1935). Managing for Whom In recent years there has been a vigorous debate about for whose interests business managers exert themselves. Those of one opinion point to the legal ownership of a corporation and insist that executives are agents of shareholders charged with the sole purpose of maximizing shareholders’ financial gain. Those of another opinion point to the importance of employees and customers to the success of any business and insist that executives are leading on behalf of customers and employees first and shareholders third. (See, for example, George, 2003). A further differing opinion is that managers, like other people, have their highest responsibility to the divine power and must 23 Principles of Management make their efforts first and foremost in accordance with divine will. (For a Christian approach to management see Campolo, 1992). Our discussion about effective management is consistent with any of these positions as to the ultimate goals to which managers should be directing their efforts. Managers and Individual Contributors Broadly speaking, all organizations consist of two categories of employees: managers and individual contributors. Managers get things done through other people; manage individual contributors; contribute to production and delivery of services in an indirect fashion. Individual contributors perform work tasks themselves; do not manage other people; have a direct contribution to production or delivery of services. Because managers direct the work of other people, there is a tendency to think of them as more important than others in an organization. In many instances this is simply not the case. Managers are often less important to an organization than are key individual contributors. There are individual contributors without whom the organization cannot function. In contrast, most managers are replaceable. Nor are managers always paid more than individual contributors. There are numerous industries in which the most important individual contributors make more than their managers, among them professional sports, where top players like Barry Bonds or Shaquille O’Neal make much more than the coaches and managers of the teams on which they play. In television, anchor persons often make more than program managers who 24 Defining Management direct them; in motion pictures, top stars often make more money than directors or producers of the shows in which they star; rock star often make much more money than their managers; the most successful sales people in most companies make more money via commissions than do their managers via salaries. Top scientists can make more money than their managers; and medical doctors often make more money than the managers of the wards on which they work. The Importance of Individual Contributors There are many stories that exhibit the importance of individual contributors to firms, and the high esteem in which they are held. Once I visited an engineering facility of a large company. It was a tightly managed company with rules about everything, and managers to enforce them. Yet as I was walking down a long corridor with my host, we suddenly heard a loud noise coming closer. I turned to my host in surprise. “That sounds…” I began with astonishment in my voice, intending to finish, “like a motorcycle,” when around a corner ahead of us came a middle-aged man on a small motorcycle, riding right down the corridor. We pressed ourselves against the wall to let him pass on his bike; he grinned at us as he went by. “Who was that?” I asked. My host grinned sheepishly in embarrassment. “That’s our top engineer,” he told me. “He’s made so much money for the company with the patents he’s got for us that he’s free to do pretty much what he likes.” “Don’t the other people complain about his getting favored treatment?” I asked. 25 Principles of Management “We just tell them that when another person produces like he does,” my host responded, “he or she can ride a motorcycle up and down the halls as well.” Then there is a story about Norbert Weiner, the creator of much of modern computer theory, who was a professor at MIT. Decades ago, Weiner would sometimes walk alone from his office down the long corridors of the university on his way to lunch. In his hand would be a book, which Weiner was focusing on intently. To avoid hitting other people or running into a wall, Weiner would let his left hand trail gently along the side of the corridor to guide himself. Once in a while he’d come to an open door in a classroom which was in use. Led by his hand moving along the wall, he’d turn into the open door, go around the four walls of the classroom, with the students and professor in the room stopping their class to watch in astonishment, until having made a trip around the room, he exited through the same door he had entered and resumed his path down the main building corridor toward the faculty club. No one else would have been allowed to disrupt a class in progress in so unusual a way, but so great was the respect for Weiner and his contributions to the university, that eccentric behavior like this was tolerated in good humor by all. There are many instances, however, in which managers direct the work of lesser skilled or less well-known people, and in those instances managers are usually better paid than those whom they direct. But even there, in many situations workers can earn enough through their regular work weeks and overtime (for which a premium, usually time and a half, is paid) that the worker earns more than his or her boss. 26 Defining Management In general, managers and individual contributors both play significant roles in organizations and both are entitled to respect for the roles they play. Without individual contributors an organization cannot do its work; without managers, the efforts of many individual contributors cannot be coordinated into the activities of a large organization. Managers often make their way into management by first being individual contributors. Sometimes people make it to the top of large corporations having started as workers. For example, Sam Palmisano began as a salesman for IBM in Baltimore in 1973. In 2003 he became CEO of IBM, having spent thirty years working as a salesperson and then a manager in the company. Sam was an excellent individual contributor at IBM. But when he became a manager, he had to give up being a salesperson. Making the Transition This is something all managers must do—give up doing the work themselves. Sometimes the work is tiring and dangerous or unpleasant (as for example on a construction job, or in a manufacturing plant, or cleaning hotel rooms) so that when an individual contributor becomes a manager, he or she is glad to be free of the necessity to do the work. But other times, work is enjoyable, especially for a person who is good at it (as for example for a salesperson, or a professor, or an attorney, or a skilled worker in many trades) and when a person becomes a manager he or she is often reluctant to give up being an individual contributor. In fact, for people who greatly enjoy the work itself, the transition from individual contributor to manager is difficult— sometimes it is even unsuccessful. 27 Principles of Management Such a manager (who longs for the work he used to do as an individual contributor) continually leaves managerial tasks undone to return to the work; either because she is a perfectionist and can do the work better than the people she is managing, and so insists on doing it herself; or because the new manager simply finds management a less rewarding pursuit and prefers an individual contributor’s role. Looking Ahead There are many problems that go with a managerial role— among them: time schedules to meet, irritations in dealing with difficult people, and not seeing production emerge from your direct efforts (a manager’s contribution to getting production done or services delivered is indirect). For some managers, there is the frustration of not being able to direct people as strongly as he or she would like. In the old days of the American economy, when manufacturing involved a much larger proportion of our workforce than it now does, managers felt themselves clearly in control. But in today’s service economy, things are less clear. As the CEO of IBM told a reporter, “If three-fifths of your business is manufacturing, then management is basically supervisory. You can say, ‘You do this. You do that.’ But that no longer works when your business is primarily based on knowledge.” (Sam Palmisano, CEO of IBM, quoted in Hemp and Stewart, 2004). In the chapters that follow we will be discussing management while it is in the middle of the historical transition that Sam Palmisano has described. We will find therefore that managers are adopting novel means of organizing and motivating the workforce for the new types of economic activities which are now burgeoning in the world economy. 28 Defining Management Underneath these changes, however, the important concerns and challenges of management haven’t altered, just as its functions and perspectives have not altered. But the context in which they are applied is changing rapidly, and so how managers act in detail to accomplish their functions is changing. The American economy today is made up of a complex combination of old and new. When we speak of management, we mean both the old and the new. As can be seen in Executive Summary 1.3, today’s managers are called upon to deal with a host of issues. Organizations face increasingly complex challenges and managers are the ones called upon to handle them. These concerns we’ll address in later chapters, together with the following list of the top challenges for management: Finding new employees Planning strategically 29 Principles of Management Satisfying customers Building a high performance culture Reducing stress for themselves and others This book is about management. We will touch on topics of both business administration and leadership in an organization. However, the focus of the text will be to highlight issues of management and the ability to apply administration and leadership skills and techniques within the context of an organization. 30 Defining Management CHAPTER REFERENCES: Campolo, Tony. Everything You've Heard Is Wrong. Nashville, TN: W Publishing Group, 1992. Caulaincourt, Armand De, Duke of Vicenza. With Napoleon in Russia: Memoirs of General De Caulaincourt. New York: William Morrow & Co., 1935. Drucker, Peter F. Management: Tasks, Responsibilities, Practices. New York: McGraw-Hill, 1999. George, Bill. Authentic Leadership. New York: Jossey-Bass, 2003. Hemp, Paul and Thomas A. Stewart. “Leading Change When Business Is Good.” Harvard Business Review. December 2004. Mills, D. Quinn. Leadership: How to Lead, How to Live. Waltham, MA: MindEdge Press, 2005. Simon, Herbert A. “Making Management Decisions: the Role of Intuition and Emotion.” The Academy of Management Executive. February 1987. 31