Chapter 7: Management How Management Functions To achieve organizational goals, management decides how to utilize human, financial, and material resources. The four major functions of management are planning, organizing, leading, and controlling. Planning Planning is the process of setting short- and long-term goals and deciding how to achieve them. Organizing Organizing is arranging people and tasks to carry out the business’s plans and objectives. The three levels of management are upper management, middle management, and lower-level management. PLANNING Managers are people who get things done by directing others. Short-term goals are often expressed as a sales or income target. Long-term economic goals are to maximize profit. Managers must clearly understand these goal, and they range from department to department, and develop strategies to achieve them. ORGANIZING Each department within company has its own manager who determines tasks and duties, establishes and maintains relationships with other departments. To accomplish these goals managers hire employees and write the necessary job descriptions. The three levels of management are (see Figure 7.1, “Levels of Management”, on page 211): Upper managements: Positions such as CEO (chief executive officer), COO (chief operating officer), CFO (chief financial officer), vice-president of marketing, and vice-president of human resources sets long-term goals. Middle Management: Positions such as plant manager and regional manager interprets plans from upper management and puts them into action Lowe-level management: Positions such as team leader, foreperson, and assistant manager implement plans from above.

Chapter 7: Management How Management Functions Leading Through leadership, managers achieve organizational goals by motivating, communicating, and encouraging participation. Controlling Controlling involves activities, such as employee discipline, performance appraisals, and budgeting. Managers use these methods to increase, maintain, or decrease the resources that are allocated to them. CONTROLLING A budget determines the number of employees in a department, the amount of money the department receives, and the amount of physical supplies it gets. When departments do not reach goals financial and physical resources may be cut. When goals are achieved budgets may be increased. LEADING Managers need to be skilled at motivating individuals and teams, they need to communicate effectively, and be able to hand conflict and stress. Motivating: Skillful managers understand that different rewards, such as money, fixtures, work assignments, verbal praise, trust, etc. motivate different people. Through this understanding managers can increase productivity and achieve organizational goals. Communicating: good leaders communicate directions, urgency, corporate values, plans, and goals efficiently and effectively. When employees do not receive information as it is intended by the sender, tasks have to be redone and time and money are wasted and damage to reputation is done. Encouraging Participation: Business decisions and moral can be improved when stakeholders (employees) are involved in decision making (participative planning).

Chapter 7: Management Managing Resources Businesses often have different managers for each resource area. Purchasing Purchasing managers negotiate with suppliers for the supply and delivery of raw materials, equipment, supplies, and goods for resale. Production Activities of a production manager range from processing the raw materials into a final product to packaging and storing the same product. Marketing and Distribution Using sales strategies, marketing and distribution managers ensure that the company’s products are sold. PURCHASING Raw materials are the ingredients that are transformed into another product. Just-in-time (JIT) is a process by which required items are delivered immediately before they are needed, rather than kept on hand, thereby reducing shipping cost and warehouse needs (space and staff). PRODUCTION Production managers ensure that the business makes what it is supposed to make. Production managers arrange and coordinated maintenance, shift scheduling, machinery repair, and technological improvements. MARKETING AND DISTRIBUTION Sales strategies include advertising, promotional activities, and publicity. Distribution managers attempt to improve product distribution through direct sales (sales representatives) or indirect sales (vending machines, catalogues, and Internet sales).

Chapter 7: Management Managing Resources Research and Development Research and Development (R&D) departments create new products or services or develop new and improved ways to produce the original product or service. Finance Often an accountant, the comptroller who manages the financial department is responsible for keeping records of the company’s financial transactions and money control. RESEARCH AND DEVELOPMENT Consumers often provide businesses with feedback conveying likes and dislikes about product and services. They will also provide information about new products and services that they want or need. R&D managers provide reports containing valuable information for purchasing, production, and marketing managers that allow them to make better decisions. FINANCE Financial controllers and managers set budgets for departments in conjunction with the department managers.

Chapter 7: Management Leadership Styles Leaders have different styles. The style of leadership used is dependent on the situation and the manager’s personality. Autocratic Leadership Autocratic leaders make all the decisions and do not allow for employee participation. Autocratic leadership is often used when quick decisions are necessary, such as lay-offs or company closures. If used all the time, it causes too much discontentment among staff. Laissez-faire Leadership A laissez-faire leader leaves employees alone to do their work. Beneficial to those employees who like independence. Can be difficult for new workers or those who require more direction. AUTOCRATIC LEADERSHIP If employees are not allowed to participate in decision making they feel undervalued and may rebel or quit.

Chapter 7: Management Leadership Styles Democratic Leadership Democratic leaders encourage employees to have a say in the decision-making process. Employees to contribute their ideas and creativity to the job Recognizes employees’ achievements and increases team spirit and morale. Most effective of the three styles to keep employees content and to increase productivity. LAISSEZ-FAIRE LEADERSHIP A laissez-faire leadership style works well when employees are mature and have years of experience. Without feedback, direction, guidance, and motivation occasionally employees may become uncertain, unmotivated, and directionless. This is not an appropriate style when leading employees who are new at their jobs. DEMOCRATIC LEADERSHIP A democratic leaders motivate staff, recognizes achievement, and can lift team spirits. A good leader knows when to apply each of the three different styles and can implement them in a seamless fashion.

Chapter 7: Management Ethical Behaviour and Management Managers make decisions that guide the social responsibility, moral, and ethical behaviour of a business. Management and Employees Managers are role models in an organization. When managers treat others with respect and dignity, their behaviour is perpetuated throughout the organization. Management and the Environment Businesses need to be aware that their decisions impact the environment. Good decisions minimize environmental damage; bad decisions accelerate it. Using environmentally friendly practices creates a positive public image for the company that may improve its bottom line. MANAGEMENT AND EMPLOYEES Managers should provide fair pay, reasonable hours, vacations, and interesting work. Some companies have a code of ethical conduct that documents a company’s polices regarding discrimination, sexual harassment, bribery, kickbacks, and theft of company property. MANAGEMENT AND THE ENVIRONEMNT Recycling is one way businesses are addressing environmental issues. Others include using green building materials, energy conservation programs and mandates, and pollution reduction. See Table 7.1, “10 Ways to Be an Environmentally Friendly Business”, on page 219. Environmental practices may increase sales and decrease costs, therefore increasing profits in the long term.

Chapter 7: Management Ethical Behaviour and Management Management and the Community Ethical decisions that impact local communities are made on a daily basis by a company’s management. Contributing to charitable organizations such as the United Way is one way that companies make a difference in their communities. Teamwork in Companies A team is a collection of individuals with complementary skills who work together to pursue a common goal. Depending on the purpose and duration of the group, different types of teams are used to obtain organizational objectives. Types of Teams MANAGEMENT AND THE COMMUNITY The United Way is a charitable organization that many businesses help by collecting money, supplying paid staff to do fund raising, and payroll donations program. The Body Shop demonstrates its ethical commitment to community by raising millions of dollars to help stop violence in the home. TYPES OF TEAMS The sic main types of teams are: Committee: people form different organizational areas who work on an ongoing basis on a specific task, such as; social committee or an employee benefits committee. Task Force: formed to accomplish a specific task then disbanded such as; a team to design a new building or to design a new product. Cross-functional Team: allowing diversity of input and quick decision making, this team has members form different functional areas such as accounting departments, marketing departments, HR departments, etc. Self-managed Work Team: responsible for their own work, including hiring, training, developing, and scheduling, this team has no official leader. Virtual Team: a team structure where individuals work via computer communications and often over long distances, this style can save time and money. Informal Team: present in all organizations, these groups are not formed by management but arise from the relationships among employees, examples include a car pool, sports team, or lunch group. See Table 7.2, “Advantages and Disadvantages Teamwork” on page 220. Committee Cross-functional team Virtual team Task force Self-managed work team Informal team