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Unit 1 Management Fundamentals

1.1 Explain the concept of management

Think that understanding management isn’t important because you’ll never be a manager during

your career?

If so, think again.
There are millions of people employed in management positions in the U.S. today.
They can be found in every industry and hold positions ranging from shift supervisor to� department head to CEO.
Here’s the really interesting part—many of these managers began their careers in jobs just� like yours.
They started in entry-level positions and, thanks to hard work and perseverance, worked their� way up in the business.

Think that you don’t have what it takes to be a manager?

You may not realize it, but you are involved in management every day, whether it’s following� your supervisor’s directions or organizing your own workload.
By understanding what management is, you’ll become more productive and successful on� the job.
And by becoming more productive and successful, you’ll improve your chances of moving into management, if that’s what you want to do.

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SM:001 Explain the concept of management

What Is Management?

The process of coordinating resources to accomplish an organization’s goals
Managers are the people who make things happen.

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SM:001 Explain the concept of management

Management Functions

Planning
Organizing
Staffing
Directing
Controlling

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Levels of Management

Top level or executive
Mid level or middle
First line or supervisory

SM:001 Explain the concept of management

Management is divided into three levels.

Top level or executive

Responsible for the operation of the entire organization
They are the owners, chief executive officers, presidents, chief financial officers, vice presidents, and general managers.

Mid level or middle

This level of management is responsible for implementing the goals set by top management.
Middle managers are the department heads, production managers, sales managers, and district managers.

First line or supervisory

First-line managers take the vision one step further and make it happen.
They are the ones who are concerned with actually carrying out the actions and plans that the middle managers identified.
They are the office managers, floor supervisors, shift supervisors, and team leaders.

Discussion #3: Ask students to give examples of each level of management from their own lives—at their workplaces, in their families, etc.

Management is responsible for managing a business’s resources, including human resources, financial resources, material resources, and information.

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1.2 Explain factors that affect management

As a young professional, you might have decided that you would like to pursue a career in management.

One of the best ways to set yourself up for success as a future manager is making sure you understand the factors that affect management.
After all, much of the management function involves making decisions based on a variety of information, such as data, facts, and even personal intuition.
In order to make well-informed decisions, managers need to fully recognize and understand both external and internal factors that impact their management responsibilities

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Politics

SM:100 Explain factors that affect management

External Factors Impacting Management

Competition

Economy

Customers

Suppliers

Technology

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Company culture
Personnel
Competition
Company finances

SM:100 Explain factors that affect management

Internal Factors Impacting Management

Comes from within the business, making it potentially less challenging to control

If a factor is internal, its impact comes from within the business, making it potentially less challenging to control than an external factor.

However, this doesn’t mean controlling internal factors is always easy!

Suppose a manager wants to establish his/her business as the most trustworthy company in the industry.
To do that, s/he will need to make those ideals a valued part of the organizational culture.
This isn’t necessarily as simple as sending out a memo—the manager will need to factor in the current culture, the needs and wants of the employees, and any cost of necessary resources to effectively determine the best method of establishing the company’s image.

Internal factors include the following:

Company culture
Personnel
Competition
Company finances

Discussion #1: Ask students to share examples of external and internal factors they have either experienced in their lives or might encounter in the workplace.

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How Many People Can I Manage?

Depends on:

The nature of the work
Employees’ ability to do their jobs
Extent to which management gives employees the right to make decisions
Assistance from staff in carrying out managerial responsibilities
Mode of management’s communication

SM:100 Explain factors that affect management

It is important that managers supervise the right number of workers so the team can work effectively.

There are several factors that determine the number of people a person can manage:

The nature of the work

Some work is big and complicated, requiring many employees to work under a single supervisor.
Other work might need only a few specialists working under one manager.
Work changes from industry to industry, company to company, and team to team.

Employees’ ability to do their jobs

If workers are competent, they need less supervision from managers.
This means managers can oversee more people.
However, if employees need direct supervision, managers might oversee fewer people, so they are available for those who need them.

Extent to which management gives employees the right to make decisions.

If a manager is constantly answering questions or giving directions to employees, then s/he might only be able to supervise a few people.
However, if employees are given a lot of independence, they won’t need as much guidance and managers can supervise a greater number of people.

Assistance from staff in carrying out managerial responsibilities

If managers try to do all the work themselves, they can burn out and leave little time for supervision of employees.
By delegating some of their responsibilities, they can leave time to manage more people.

Mode of management’s communication

Face-to-face meetings require time and proximity, which can limit how many people managers can easily supervise.
If managers communicate virtually via communication tools like emails and/or online meetings, they can reach more people more easily. �

Discussion #2: Ask students to share the job they would like to have in the future. How many employees would a manager on their future team supervise? What factors would be most relevant in determining that number? Why?

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The Span of Management

Span of management: the measurement of how many workers are supervised by one manager

Wide span of control

SM:100 Explain factors that affect management

Narrow span of control

Span of control, or span of management, is the measurement of how many workers are supervised by one manager.

There is no one-size-fits-all span of control—it can be just a few people or, especially with technological advancements, be larger than 10 or more.

Companies may decide to increase their span of control when employees perform similar tasks or don’t need as much supervision.
A company’s span of control might decrease when a manager is responsible for administrative work or for overseeing employees performing unique tasks.

There are two types of spans of control: wide and narrow.

Wide span of control

This means that managers are responsible for overseeing a relatively large number of employees.
Managers can benefit from a broader understanding of the workforce, encourage initiative and independence from employees, and act as a single contact person for the team.
Disadvantages include less personal contact and more administrative responsibility.

Narrow span of control

This means that managers are responsible for overseeing a relatively small number of employees.
The benefits of this structure include more personal contact, direct supervision, and better communication.
Because a narrow span of control usually means more managers responsible for fewer people, disadvantages include increased expenses and the possibility of communication issues with so many points of contact.

Discussion #3: Ask students to give an example of a type of business that would benefit from a wide span of control. Then, ask students to give an example of a type of business that would benefit from a narrow span of control.

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1.3 Discuss the nature of managerial planning

Have you ever set a goal for yourself?

No matter the size, scope, length, or intensity, all goals have one thing in common: they need effective planning in order to be successfully accomplished.
Planning is a big part of being a manager.
After all, managers can’t just work day by day with no consideration for the future and hope that everything works out!
To be successful, managers need to set and reach goals—and to reach those goals, managers need to have plans.

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Planning: the management function of deciding what will be done and how it will be accomplished

First/Primary management function
Used to make decisions and �prevent mistakes
Provides direction to reach goals

SM:063 Discuss the nature of managerial planning

The Importance of Planning

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Be simple.
Be flexible.
Link to long-term objectives.
Be consistent.
Be feasible.
Provide direction for action.

SM:063 Discuss the nature of managerial planning

Characteristics of Effective Planning

An effective plan looks different from business to business.

A large accounting firm will have very different plans from a small nonprofit organization, because it’s likely that their goals will be different.
However, regardless of business size or industry, effective planning needs to do the following things:

Be simple.

If no one understands the plan, how can it be implemented?
Keeping plans simple will help employees complete their work and show how each step connects to meet the overall goal.

Be flexible.

Even the best-laid plans need to change.
Maintaining flexibility in plans helps businesses and managers adjust to any changes that might impact their work.

Link to long-term objectives.

Small, short-term goals are great—but they shouldn’t be prioritized at the expense of long-term goals.
Each small plan should work toward something greater.

Be consistent.

If a plan seems to change each day of the week, then employees will quickly become confused and frustrated—not a combination that will help the business reach its goals!

Be feasible.

Plans should be reasonable and attainable—it’s not feasible for a single lawyer to make plans to handle every divorce in a big city, even with the most ambitious of attitudes.

Provide direction for action.

Plans are like blueprints.
They lay out what work will be done and how that work will be done to reach a given goal.
An effective plan should provide a clear direction for how to proceed.
Otherwise, those plans won’t be useful at all!

Discussion #2: Ask students to brainstorm other qualities of effective planning.

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Barriers to Effective Planning

Trouble making accurate forecasts
Time and cost factors
Internal and external inflexibilities
Rapid change

SM:063 Discuss the nature of managerial planning

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The Planning Process

Develop the context.
Establish goals.
Create a plan.
Create a contingency plan.
Implement the plan.
Evaluate the plan.

SM:063 Discuss the nature of managerial planning

Planning is an ongoing process.

It’s not just a “one and done” step—managers must constantly plan and re-plan to keep up with the ever-changing business environment.
While the planning process doesn’t always look the same for every business, there are several steps that most share:

Develop the context.

This is an opportunity to assess the current situation.
What kind of plan is needed?
What resources do we have?
What data do we need to gather before starting?

Establish goals.

This is a crucial part of the planning process—without goals, the plans have no purpose!
Goals should be measurable, straightforward, and feasible.

Create a plan.

This could include creating and prioritizing assignments, developing timelines and accountability systems, and establishing evaluation methods.

Create a contingency plan.

A contingency plan is an alternative course of action often used when the original plan no longer works.
Having a “backup” plan helps you be prepared for any changes!

Implement the plan.

This is when the plan is put into action.
The business follows the “blueprints” that have been created in order to reach the goals it set at the beginning.

Evaluate the plan.

After the plan (or contingency plan) has been completed, businesses should use their previously created evaluation methods to reflect on what did and did not go well.

Discussion #3: Ask students to reflect on plans they have created and implemented in the past. How did that plan work out? What could have been done differently?

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Types of Planning

Strategic plans

Top-level management
Large, far-reaching goals

Tactical plans

Middle management
More focused perspective

Operational plans

Lower managers
Hyper-focused, day-to-day perspective

SM:063 Discuss the nature of managerial planning

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1.4 Explain managerial considerations in organizing

Managers are responsible for organizing, the management function that includes setting up the way a business’s work will be done.

Organizing involves making all pieces of the business work together to contribute to the overall goals.
When managers organize, they:

Design job roles
Create organizational structures
Allocate tasks, resources, and facilities
Communicate and develop effective relationships with employees

By organizing the workload, employees, and resources of a business, managers make sure the business is efficient and reaching its goals.

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Improves efficiency and reduces waste
Unites goals with the mission
Keeps businesses cohesive and coordinated
Provides a sense of security for employees
Allows for tracking, accountability, and growth
Creates a clear chain of command that clarifies authority

SM:064 Explain managerial considerations in organizing

Benefits of Effective Organization

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Consequences of Poor Organization

Reduced productivity and efficiency
Miscommunication
Damaged reputation
Employee conflict and turnover
Inability to grow or reach goals

SM:064 Explain managerial considerations in organizing

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Steps to Successful Organization

SM:064 Explain managerial considerations in organizing

Step 5: Allocate resources.

Step 6: Coordinate activities.

Step 7: Evaluate results.

Step 1: Determine the work needed to accomplish goals.

Step 2: Group tasks into structures.

Step 3: Assign tasks.

Step 4: Delegate authority.

Organizing is clearly an important part of management—but how do managers get started?

The managerial organizing process involves taking a plan and making it a reality.

Step 1: Determine the work needed to accomplish goals.

As a part of the planning process, managers set goals.
Next, it is time to break down the goals and figure out how to achieve them.
Managers divide goals into tasks and activities, figuring out what needs to be done.

Step 2: Group tasks into structures.

Managers must determine the organizational structure, which is the company’s configuration of employees for accomplishing specific business tasks.

Step 3: Assign tasks.

During this stage, managers design job roles and responsibilities.
Managers must figure out the most efficient way to divide work and use human resources.

Step 4: Delegate authority.

Authority is the formally granted influence of an individual to make decisions, pursue goals, and obtain the resources necessary to support those decisions �and goals.

Step 5: Allocate resources.

Managers must decide how to best divide resources like equipment, facilities, materials, supplies, time, and money among employees to accomplish the work.

Step 6: Coordinate activities.

Managers need to integrate the work of employees and teams together to achieve organizational goals.
The manager is in charge of facilitating this coordination by clearly communicating with employees, making connections among departments, and demonstrating the relationships among work tasks.

Step 7: Evaluate results.

It’s important to periodically evaluate the results of the organizing process.
If the organizing process wasn’t effective, managers should discuss the issues with their employees and make changes to improve in the future.

Discussion #2: Ask your students why evaluating results periodically is important. What are some ways managers can measure whether or not the organization process in place is effective?

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Factors Affecting Organizational Decisions

Size of the organization
Managerial abilities
Competence of employees
Business environment
Business’s life cycle
Business’s strategy

SM:064 Explain managerial considerations in organizing

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1.5 Describe managerial considerations in staffing

Staffing is one of the five functions of management.

The staffing function ensures that a business has the right people working in the right job positions at the right times.

Businesses need top executives with strength and vision to plan for the future.
They need insightful, detail-oriented managers to give the organization structure.
And, they need capable supervisors to direct day-to-day operations.

Organizations acquire these employees through the staffing function.

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Avoid being overstaffed or understaffed
Overstaffed = wasting money on unnecessary components
Understaffed = work isn’t completed �on time or at all
Important: Staffing and organizing �are different.

Organizing = lays foundation for staffing
Staffing = continuous activity

SM:065 Describe managerial considerations in staffing

The Importance of Effective Staffing

Businesses want to avoid being either overstaffed or understaffed.

When a business is overstaffed (too many employees), it is wasting money on unnecessary wages, salaries, benefits, training, etc.
On the other hand, when a business is understaffed (not enough employees), essential work tasks may be completed late—or not completed at all.

This can result in poor customer service, dissatisfied customers, exhausted employees, and, ultimately, lost business.

It’s important to note here that there are differences between organizing and staffing.

Organizing lays the foundation for staffing, but staffing is what gets employees in the door and in the right job positions.
Unlike organizing, staffing is a continuous activity—it’s happening all across the business, all the time.

Discussion #1: Ask your students whether they have visited a business that has been over- or understaffed. What was that experience like? What were the consequences? How could it have been resolved?

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The Staffing Process

Determine need for position(s).
Recruit qualified potential employees.
Screen candidate applications.
Interview potential employees.
Select a final candidate.
Onboard the new employee.
Train and develop employees.
Develop compensation plans.

SM:065 Describe managerial considerations in staffing

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Factors Indicating a Change Is Needed

Organizational growth
A changing economy
Competitive pressure
New management
Changes in government regulations
Need for new types of skills or experience
Need for process improvement

SM:065 Describe managerial considerations in staffing

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Dimensions Impacting Staffing and Developing Strategy

SM:065 Describe managerial considerations in staffing

Dimensions affecting staffing:

Organizational culture
Mission and vision
Organizational structure
Existing policies and practices

Two questions to ask for strategy:

What type of staff do we need to run this organization and meet our organizational goals?
What must we do to attract, develop, and retain (keep) this type of staff?

Every organization should have a human resources management strategy in place to guide all of the process and policies involved in the staffing function.

Before developing this strategy, managers should consider the important organizational dimensions (aspects) that will affect their plans.
Some of these dimensions are:

Organizational culture
Mission and vision
Organizational structure
Existing policies and practices

�How do you develop a human resources strategy?

There are two key questions that managers must ask when developing a human resources management strategy for their organization:

What type of staff do we need to run this organization and meet our organizational goals?
What must we do to attract, develop, and retain (keep) this type of staff?

After considering the answers to these questions, managers should perform a workload analysis and a workforce analysis to see the gaps between the human resources they need and the human resources they have.
Their next job is to determine how to bring staffing supply and demand into balance by designing employment and training plans accordingly.

Discussion #3: Ask your students to explain the importance of employee retention. Then, ask them to brainstorm strategies to retain employees.

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1.6 Discuss managerial considerations in directing

While all of the functions of management are important, directing is considered its “heart.”

Directing involves providing guidance to workers to achieve goals.
Without it, the other management functions (planning, organizing, staffing, and controlling) wouldn’t have much value.
Directing is the source of employees’ energy and performance, and it maintains the healthy functioning of the business.

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SM:066 Discuss managerial considerations in directing

The Importance of Directing

Initiates action
Coordinates individuals’ work and effort
Motivates employees
Provides stability and structure
Initiates change smoothly
Ensures resources are used efficiently

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Directing Activities

Instructing
Supervising
Communicating
Motivating
Rewarding and disciplining
Building group dynamics
Leading

SM:066 Discuss managerial considerations in directing

Directing is all about action.

Managers participate in several activities as a part of the directing function:

Instructing

Instructing is the process of actually giving verbal or written instructions to employees.
Managers should be prepared to offer help and support, answer questions, and solve problems that come up as they instruct employees.

Supervising

Supervising is overseeing employees’ actions, monitoring their performance, and providing guidance and feedback.
The level of supervision required depends on the job, department, and the employees’ working styles.

Communicating

Managers need to communicate plans and directions so employees have a clear understanding of what they should do.
Communicating involves listening to employees’ ideas.

Motivating

Motivation is the process of getting employees to strive to achieve management’s objectives because they want to achieve them.
People are usually motivated by needs.

Rewarding and disciplining

Positive reinforcement is the act of encouraging a desired response by giving something pleasant.
Negative reinforcement is the act of terminating or withdrawing something unpleasant when a desired response is given.
Managers also need to discipline employees who are not following directions or meeting expectations.

Building group dynamics

Directing includes helping employees work together as teams, sometimes by resolving conflict between employees.
It is also important for managers to develop a team spirit.
Managers must help employees build consensus and play off of each other’s strengths.

Leading

Being an inspiring leader is an important part of directing.
Leadership means setting a positive example that others can follow.
It includes guiding employees so they want to do the right thing and achieve goals.

Discussion #1: Ask your students to think of themselves as directors. Which of the directing activities would they find easiest or most in line with their skill sets? Which would they find most challenging?

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Directing Characteristics

SM:066 Discuss managerial considerations in directing

Pervasive
Continuous
People-focused
Creative
Executive

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Evaluative Criteria for Directing

Employee turnover
Quantity standards

Production numbers, sales data, financial standing

Quality standards

Surveys, conversations, evaluations

Time standards

SM:066 Discuss managerial considerations in directing

Managers can examine several key metrics to know whether or not they are directing well.

Employee turnover

A manager who has an unusually high number of employees who leave—especially after a short amount of time—could have some issues with his/her directing.

Quantity standards

Quantity standards are established specifications used to measure the amount of work produced.
These could be production numbers, sales data, or financial standing.

Quality standards

Quality standards (established specifications used to measure the degree of excellence of a good or service) are often represented in surveys, conversations, and evaluations.

Time standards

Managers who can direct employees well will be good at hitting deadlines and managing work time.
No employees will be overworked or underutilized.

Discussion #3: Ask your students about their experiences with employee turnover and quantity, quality, and time standards. How did directing affect these metrics? Do students find these are accurate measures for directing success or failure?

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1.7 Describe the nature of managerial control

Managerial control is the management function that involves monitoring the work effort by comparing actual results to standards or plans, and taking corrective action when necessary.

It is important because it keeps organizations on track and helps businesses achieve their goals by guiding progress and evaluating outcomes.
Controls also inform managers’ decision-making by providing the evidence and facts needed to support one decision or another.
Finally, managerial control allows everyone in an organization to improve performance and achieve at a higher level.
Controlling goes hand in hand with the management function of planning.

When managers plan, they determine strategies and set goals.
When managers control, they check in to see how the organization is doing on accomplishing those goals and fulfilling those strategies.

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Managers control:

Employees
Finances
Marketing/Customer Satisfaction
Technology
Products/Production

SM:004 Describe the nature of managerial control

What Do Managers Control?

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Feedforward = attempt to monitor and control performance before it occurs
Concurrent = monitor and control performance while it is occurring
Feedback = monitor and control performance after it has already occurred

SM:004 Describe the nature of managerial control

Types of Organizational Control

When do managers control, and how do they do it?

Feedforward, concurrent, and feedback are three main types of managerial control.

Feedforward controls are those that attempt to monitor and control performance before it occurs.
For example, if a manager sets rules for how employees are supposed to clock �in and out of a shift, this is meant to prevent any issues with time-tracking from occurring in the first place.

Concurrent controls are those that monitor and control performance while it is occurring.

A quality-control manager inspecting a production line while it is in operation �is an example of concurrent control.

Feedback controls are those that monitor and control performance after it has already occurred.

Let’s say a company wants to know whether a promotional campaign was worthwhile.
Managers can examine sales data to see whether sales increased from the promotion, allowing them to measure the overall success of the campaign after it is over.

Discussion #2: Ask your students about their experiences with different types of controls. What other examples can they come up with?

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Step 1: Determine standards of excellence.

Step 2: Measure performance.

Step 3: Compare performance with standards.

Step 4: Take corrective actions.

SM:004 Describe the nature of managerial control

Managerial Control Process

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Human resources controls
Financial controls
Marketing controls
Technology controls
Product controls

SM:004 Describe the nature of managerial control

Controls to Improve Effectiveness

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Characteristics of Effective Control Systems

Be based on accurate information
Be accepted by all team members
Work with existing processes
Be cost effective
Be easy to track
Be easy to understand
Match the organization’s needs
Be followed by timely corrective action

SM:004 Describe the nature of managerial control

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1.8 Explain management theories and their applications

Slide 1 THINK ABOUT IT

There are a wide variety of management theories in the world—often contradicting each other.

The use of one theory might skyrocket a business to financial success, while the same theory sinks another company’s future.
You’ll even find that no one theory fits all businesses under all circumstances.
So, which one should you follow?
A good starting point is to develop an understanding of what management theories exist

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Aid in pinpointing the causes of business success or failure
Help managers predict the outcomes of their actions
Facilitate analysis of outcomes

SM:030 Explain management theories and their applications

The Significance of Management Theories

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Aims to increase the efficiency with which the tasks are done by:

Breaking tasks into subtasks
Finding better ways of doing the tasks
Reorganizing the tasks so that the work is done most efficiently

Disadvantage: does not account for differences in people
Different from management science theory

SM:030 Explain management theories and their applications

Scientific Management Theory

Scientific management theory involves analyzing the relationship between human resources and the tasks they perform to increase the efficiency with which the tasks are done.

This involves:

Breaking tasks into subtasks
Finding better ways of doing the tasks
Reorganizing the tasks so that the work is done most efficiently

However, there are a few problems with this theory, as it does not account for differences in people.

The method most efficient for one person might not work for another, and workers can become bored with the specific tasks they are required to do.

Note: Scientific management theory is different from management science theory, which relies on quantitative methods to guide managers.

With this theory, managers use mathematics, statistics, modeling, linear programming, and other quantitative techniques to make their decisions.

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Administrative Management Theory

Focuses on the development of highly efficient and effective organizational structure

Clearly identified lines of authority
Adherence to set rules and procedures
Fair rewards and compensation
System of task relationships

Out of this management system came the term bureaucracy

SM:030 Explain management theories and their applications

Administrative management theory focuses on the development of an organizational structure that is both highly efficient and effective.

Key aspects associated with administrative management theory include:

Having clearly identified lines of authority
Adhering to set rules and procedures
Providing fair rewards and compensation
Having a system (interrelated parts acting as a whole) of task relationships

Out of this management system came the term bureaucracy:

A formal organizational system that ensures efficiency and effectiveness by holding a business to pre-established rules and guidelines about authority, responsibility, performance, and accountability

Discussion #2: Ask students to share their experiences with organizations that did or did not prioritize an efficient organizational structure. How did that organization function? What improvements could have been made? Why?

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Other Key Management Theories

Behavioral management theory
Organization-environment theory
Contingency theory of management
Systems theory of management
Chaos theory of management

SM:030 Explain management theories and their applications

In addition to scientific management theory and administrative management theory, there are other key management theories of which managers (and future managers) should be aware.

Behavioral management theory

This theory focuses on the way managers should personally behave to motivate and coordinate employees in order to encourage them to perform at peak levels.
Managers endorsing behavioral management believe that understanding employee motivation, conflict, expectations, and group dynamics increase productivity.

Organization-environment theory

With this theory, managers believe that forces, conditions, and influences outside the organization must be considered when making business decisions.
This theory helps managers recognize that the business does not operate in isolation.

Contingency theory of management

The contingency theory of management recognizes that change is a constant that businesses will always confront, so they must be flexible and innovative.
With this theory, there is no one best way to structure a business, so businesses need to respond to variables, or contingencies, that they face at the time.
This indicates that organizations with different structures can both be successful and that departments within an organization may be influenced by different contingencies and may need to be structured differently.

Systems theory of management

Systems theory recognizes management as a set of distinguishable, but interrelated and interdependent, parts operating together to achieve a goal.
It recognizes that when a change occurs in one part of a system, the other parts of the system are also affected.
This theory combines scientific management with behavioral management.

Chaos theory of management

This theory takes the view that events cannot be controlled or predicted; therefore, they can’t be planned with any degree of accuracy in the long term.
Likewise, businesses can’t operate on the basis of rigid instructions and objectives.
Instead, they need to function on the basis of shared values.
Chaos leads to creativity and innovation.

Discussion #3: Ask students to consider which management theory (or theories) might align best with their personal philosophies. Does that theory (or theories) also fit with their current job, or the nature of their future career? Why or why not?

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