As working adults, we are no strangers to managing our time. Most budding entrepreneurs usually plan their day a night before or early in the morning. As individuals we manage our money, time, work, social life, and other commitments simultaneously. We are often in awe of people who manage to make time for everything including themselves. What is the difference between them and others? Both have the same 24 hours in a day, but how do they manage to juggle time so much better? It is all about their management skills.
The way you manage your business determines how the managers working under you will handle their teams. The environment of a business is contagious making it vital to create and maintain an environment where everyone can work collectively to achieve the business goals.
Management exists since humans exist, so it has been there for centuries now. The only difference is that back then we chased animals and now we are chasing money. Whether it was the royal dynasties ruling their subjects or an officer directing his army, there was always a need for a leader to ‘manage’ the troop. As we have evolved over the decades, so did our approach towards management.
The definition and meaning of management have been shaped over several decades. It is important to know how management has evolved over the years for better understanding of it. A major transformation in the concept of management was witnessed during the industrial revolution of the 18th century. There are several management concepts that can be divided into three broad categories based on their timeline.
The Classical theory
Prof Babbage, Robert Owens, Henry Robson, Towne James, Watt Junior and Seebohm Rowntree are often considered as the pioneers of management theory. The classical theory of management was primarily focused on the job content, standardization and division of labour. It also led to the beginning of the ‘science of management’ where F.W. Taylor, Emerson and H.L. Grant considered a scientific approach towards managing an organisation.
The Neo-Classical theory
During this period, the classical theory of management began to evolve-an upgraded and improved version of the existing classical theory. The classical theory was focused on the job content but the neo-classical theory placed an emphasis on employee relationships in an organization.
The Bureaucratic Model
Max Weber, a German sociologist proposed the bureaucratic model of management. The bureaucratic model included a set of rules and division of labour as a management practice. It also takes into account the hierarchy of authority and placement on employees on the basis of their technical competence.
Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.
- Stephen Covey
The core elements
While managing a business, an entrepreneur has to handle its various resources. After the industrial revolution, it was found that a set of resources is utilised by every business as mentioned below:
These resources are also popularly known as the 5 Ms of Management.
Five key areas of management in a modern business
The above elements are usually a part of most businesses. Every business is divided into departments for effective functioning. Each department has its own set of responsibilities to cater. The key areas of a business can be numerous based on the size and type of a business. It is totally an individual choice as to how many departments they wish to have in their business. Usually, there are five departments that every business has nowadays. These departments have their individual management styles, techniques, making it key areas of management in a modern organisational setting.
Production management covers the manufacturing of goods and services. It is the primary function where the goods or services that the business is selling are produced at the right time, right cost and right quantity. Usually, material, purchase and inventory management are also a part of production management. Key things handled in production management usually include:
Picking the location of the plant and maintaining it
Planning and development of the product
Handling the purchase of raw materials
Storing raw materials
Managing the machines and systems
A business cannot exist without money, without the right financial management, all the profits go in vain. The financial department looks after the money aspect of the business. The numbers derived from this department directly impact the operations of other departments. Handling the capital, preparing and following a budget, portfolio management and handling the sources of investments are all a part of financial management. The finance department manages:
Capital budgeting and expenditures
Handling the profits and losses (Both short term and long term)
Distribution of dividend to investors
An employee in your office, be it any human who is working for you, plays a crucial role in your business. The human resources handle the ‘man’ element of management. They ensure that they hire the right people for the right job at the right remuneration. It is a huge responsibility as the workforce is a foundation of any organization. The duties of human resource management usually include:
Induction and training
Wages and salaries
Office management is also referred to as administration or general management. It is usually responsible for functioning and coordinating between all the other departments. They take care of the paperwork of the company. Collecting data, overseeing reports and coordinating with clients, communicating between different teams – that’s all them. The usual responsibilities of office management include:
Collecting and managing data
Organizing the events and conferences of a company
Managing everyday correspondences
Coordinating with staff, suppliers, and clients
Marketing management is one of the significantly growing areas of a business. It focuses on marketing the products and services that the business is trying to sell. Marketing directly impacts the sales and revenues of a business. In the past years, marketing campaigns have managed to change the fate of an organisation.
One of the most popular marketing strategies used by Fast-Moving Consumer Goods (FMCG) companies in India is the sachet packing. The strategy literally exposed the product to a whole new demographic. The affordability of sachets made it available to millions of people in the country. The components of marketing management are:
Tracking consumer behaviour
Estimating price of the products
Conducting marketing research
Coming up with promotional and advertising strategies
Functions of management
Functions of management are quite a debatable topic on the internet. There are several management theorists, who came up with their own set of functions of management. According to them, a management requires a set of functions for smoothly conducting their business. The most popular acronym for the function of management is POSDCORB. It stands for Planning, Organising, Staffing, Directing, Co-ordinating, Reporting, and Budgeting. It gives a systematic framework that aids a business to ensure maximum efficiency.
Good management is the art of making problems so interesting and their solutions so constructive that everyone wants to get to work and deal with them.
- Paul Hawken
The 14 Principles of Management
Henry Fayol is known as the ‘father of modern management’. To regulate and organise the internal activities of an organisation, he came up with a set of 14 principles of management. Each of the principles mentioned below can be applied to any and all levels of management –
Division of work
Division of work simply means segregating the work and assigning tasks to the employees on the basis of their specialisation. In a bank, you will always see that each employee is given a specific task and section to handle. This ensures that an employee can lay his full focus on the task assigned to him. Division of work increases the focus of an employee, leading to better productivity, accuracy and overall efficiency.
Authority and responsibility
Authority and responsibility are the principle that goes hand-in-hand with each other. Using his authority, a manager allocates tasks to his employees. However, he is responsible to get the task done from his employee as well. The performance of subordinates is impacted on how a manager handles his authority and responsibilities.
Discipline is needed in any sphere of life where you wish to achieve something. Discipline is all about being consistent. In order to have a healthy work culture, discipline is needed on both ends- the managers and the subordinates.
It is not the goal that is a game changer. All the runners in an Olympic running race have the same goal to win the gold. However, what separates the winner from others is his skill set and discipline. As Swami Vivekananda rightly said, ‘The whole point is to discipline the mind.’
Unity of Command
Unity of command simply means that an employee should be answerable and accountable only to one manager. This helps in avoiding conflict and confusion that may arise by receiving multiple directions from different managers. As the popular saying goes, ‘too many cooks spoil the soup.’
Unity of Direction
Unity of direction means that the managers and the subordinates, all those who are working on the same project should be on the same page. They all should be directed towards the same goal and be involved in the same plan.
Subordination of Individual Interest
The principle of Subordination of Individual Interest refers to keeping the interest of the organisation over and above your personal interests. Simply focus on the company’s goal rather than the individual ones. This works exactly like the theatrical play, where the overall play matters more than the individual performance.
Remuneration of Personnel
Money is a huge motivator, be it an employee or an investor. The principle states that the remuneration should be such that an employee and an employer both are content with it. For an employee, it is all about getting paid well for his efforts. For an employer, it is about getting his money’s worth.
Centralisation is all about striking the perfect balance between hierarchy and division of power. It is all about making decisions that are not biased and neutral in nature. Centralization is subjected to the size of an organization; bigger the business, bigger the chain of hierarchy.
Scalar Chain is the principle that promotes clarity of authority. The scalar chain model indicates there is a clear line from the subordinates to the highest management. The clarity helps the employees to be aware of their hierarchy and whom they are reporting to.
Order is having things arranged in an optimum manner. Be it products, people, or activities, having an order generates better results. An order works in favour of the company and also those who are working for it. It sets a positive and standardized tone of getting things done in an order. Just like most of us have a set way of style in ordering food at a restaurant. The usual drill being first the tasty starters, then the filling main course and we do always have a room for dessert, right?
Equity here neither refers to the capital of your business nor has anything to with shares. Here, equity is basically equality. It simply means treating everyone with equal respect. It discourages employees and owners from behaving in an entitled manner. Instead, it encourages them to connect with each other on a human level.
Stability of Tenure of Personnel
Job security is one of the key factors that any employee looks for while applying for a job. Having job security takes the stress-off an employee’s head and allows him to focus on his work. That is the reason why even though freelancing is a pretty lucrative career these days, most people opt for a stable full-time instead due to the volatile opportunities.
A good manager walks with the employees rather than ahead of them. Encourage your employees to take initiatives by creating an environment where they can voice their opinions. An enthusiastic and dynamic culture will get the employees more involved and encouraged.
Esprit De Corps
There is no ‘I’ in the team. Working together as a team creates an uplifting and motivating environment. The unity of an organisation can be one of its biggest strengths. Communicate openly and focus on group achievements rather than individual strengths unity.
Management is all about an entrepreneur’s vision. We all are managers of our own life. Knowing the above elements and key areas gives us a better understanding of management. Applying the principles and functions of management in your business will only make it more efficient and successful. Your leadership skills and management skills as a business owner will impact your business the most. Read our article on ‘leadership’ to know about its impacts on an entrepreneur’s journey.