5 Describe the nature of management and leadership in an effective business.
As we discuss the importance of management and leadership in business, think of
Managers you’ve had
How you’ve acted as a manager
How you will act when you manage or lead in the future
Is there a difference between leadership and management?
You’ll discuss this in great detail in OB LO8 – we’ll look at it from a real business perspective here.
5.1 Describe the roles and functions of management.
The Role of Managers in Business
Why are managers essential in business? Can’t a good business just “run itself”? The answer is a resounding NO! Managers ensure that businesses operate both effectively and efficiently to achieve their objectives. While these terms are often used interchangeably, they have distinct meanings that are critical to understanding management.
Effectiveness vs. Efficiency
Effective = Doing the Right Things:
Achieving the desired outcomes or goals.
Efficient = Doing Things Right:
Accomplishing tasks with minimal waste of time, resources, or effort.
Example:
As the instructor (or “manager”) of this class:
I am efficient if I cover the material properly within the allotted time.
I am effective only if I am teaching the correct material.
Managers can be efficient without being effective, but to be truly effective, they must also be efficient.
Video Resource: The Role of Managers
Watch this video to explore the key responsibilities of managers:
What Do Managers Do?
Key Insights from the Video:
Planning and Goal Achievement (0:00–0:39):
Managers plan the “route” for the business, navigate challenges, and ensure the organization reaches its goals.
Recruiting and Empowering Talent (0:40–1:03):
Managers recruit, retain, and inspire employees. They empower talent to shape the company’s future.
Modern managers must focus on employee empowerment rather than simply giving orders.
Employee-Manager Relationships (1:04–1:10):
The quality of the relationship between employees and managers is crucial for success.
Tutorship and Growth (1:11–1:40):
Employees seek guidance, shared responsibilities, and opportunities to grow.
They want managers who understand them, challenge them, and help them contribute to the business’s success.
Facilitating Communication and Synergy (1:41–2:42):
Managers act as links between units, divisions, and teams, ensuring collaboration and synergy.
The Four Functions of Management (2:43–End):
Managers perform four key functions:
Planning
Organizing
Leading (Directing)
Controlling
The Four Functions of Management
Planning:
Setting goals and determining the best course of action to achieve them.
Organizing:
Allocating resources, assigning tasks, and structuring teams to execute plans.
Leading (Directing):
Inspiring, motivating, and guiding employees to achieve organizational goals.
Controlling:
Monitoring progress, evaluating performance, and making adjustments as needed.
Why Management Matters
Managers ensure that businesses stay on track, adapt to challenges, and achieve their objectives.
They foster collaboration, empower employees, and create a positive work environment.
While being a manager is not easy, it is one of the most rewarding roles, as it directly impacts the success of the business and the growth of its people.
Key Takeaways
Managers are essential for ensuring businesses operate effectively and efficiently.
The four functions of management—planning, organizing, leading, and controlling—are the foundation of successful leadership.
Modern managers must focus on empowering employees, fostering relationships, and driving collaboration.
By understanding the role of managers, you can appreciate their importance in achieving business success and creating a thriving workplace.
When you go on a trip, first you figure out where you want to go; then you formulate a plan on how you will get there.
You might input your destination in Google Maps, then follow the directions to the route it produces.
Planning in an organization is comparable to planning a journey:
First, determine your objectives—what you want to achieve with your business (DESTINATION).
Then, devise and follow a plan to reach those objectives (ROUTE ON THE MAP).
At the highest level, this planning is guided by the business’s Mission Statement, which outlines its purpose and overarching goals. Complementing this is the Vision Statement, which describes how the business envisions its ideal future.
For this session, we’ll focus on Mission Statements, which form the foundation of all organizational planning.
Activity: Exploring Mission Statements
Take a minute to search online for examples of company mission statements.
Does the business you’re analyzing for the business case have a mission statement? (Note: This is not part of the assignment).
Example: SaskPolytech’s 2020-2025 Strategic Plan (PDF is in the course content folder). Refer to pages 14-15 for its Mission, Vision, and Purpose.
Student Discussion: Evaluating Mission Statements
Find an example of a well-crafted mission statement online.
Share it with the class, providing the link or evidence of the mission statement.
Evaluate its effectiveness -Is it a good fit for the company? Why or why not?
Engage with classmates by replying to their posts respectfully and constructively.
Levels of Planning
Using SaskPolytech’s Strategic Plan as an example, let’s discuss the different levels of planning:
A. Strategic Planning
Definition: Long-term plans (2 to 10 years or more) that define the ultimate goals of the business and the major steps needed to achieve its mission statement.
Examples from SaskPolytech’s Strategic Plan (p. 24-27):
Strategic objectives such as expanding programs, entering new markets, or enhancing sustainability initiatives.
These objectives guide the organization’s overarching direction.
B. Tactical Planning
Definition: Shorter-term plans (approximately one year) that outline specific actions or “tactics” to move toward the long-term strategic goals.
Examples from SaskPolytech (p. 30):
The Strategy Cascade: Annual plans developed by each department (e.g., School of Business, School of Nursing) to contribute to strategic objectives.
Tactics include targeted initiatives like launching new programs or updating curriculum.
C. Operational Planning
Definition: Highly detailed, day-to-day plans that specify who will perform what tasks to implement tactical plans and achieve strategic objectives.
Examples from SaskPolytech:
Unit Plans: Department heads assign teaching loads.
Personal Plans: Instructors develop lesson plans and teaching strategies for courses.
D. Crisis Planning (Contingency Planning)
Definition: Preparing for potential disasters or disruptions, with detailed steps to mitigate and manage these situations.
Examples from SaskPolytech:
COVID-19 Pandemic:
Multiple contingency plans (Plans A, B, C, D) to address different scenarios.
Pivoted to remote learning. Refer to “COVID-19 Information and Updates” on every SaskPolytech webpage.
Cyberattack (October 2020):
Cancelled classes temporarily and transitioned to cloud storage for resilience.
Weather-Related Disruptions: Includes plans for extreme weather events (BLERT).
Discussion Prompt
Share examples of crisis planning you’ve encountered in businesses or schools.
How does crisis planning enhance organizational resilience?
Directing: Making Things Happen
Directing ensures that business operations run smoothly. Managers must:
Motivate employees to work collaboratively toward business goals.
Ensure daily operations are conducted effectively.
Demonstrate strong leadership—a fundamental role in business management (explored further in Step 3 of this learning outcome).
Note on Staffing: While some management texts treat Staffing as a separate function, we will integrate it into Organizing (placing the right people in the right roles) and Directing (ensuring they perform effectively). A more detailed discussion on Staffing will be covered in Learning Outcome 7: Human Resources.
Controlling: Keeping Operations on Track
Once a business is operational, managers must ensure it stays aligned with objectives.
The Control Process in a Nutshell:
Establishing standards for products/services.
Monitoring and evaluating performance.
Identifying and addressing discrepancies.
SWOT Analysis: A Strategic Tool
A SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) helps managers assess internal and external factors to make informed business decisions.
Key Benefits of SWOT:
Provides a structured planning framework.
Encourages brainstorming and data collection.
Helps leverage strengths to capitalize on opportunities.
Assists in developing strategies to mitigate threats.
Identifies weaknesses that need improvement.
Classroom Activity:
Watch the linked Wordsmith video on SWOT and take notes during pauses.
If time allows, consider this SWOT Analysis classroom activity:
SWOT Classroom Activity
SWOT Breakdown
Strengths
Skills, abilities, and experience that contribute to achieving business goals.
Knowledge, financial resources, technology, and tools available.
Weaknesses
Gaps in skills, resources, or connections that may hinder progress.
Areas requiring improvement to enhance business success.
Strengths and weaknesses are within your control.
Opportunities
External factors that can positively impact the business (e.g., networking, industry trends, funding opportunities).
Identifying, creating, and leveraging opportunities for growth.
Threats
External challenges that may obstruct business success.
Planning for risk mitigation and impact reduction.
Examples include financial instability, market shifts, or unforeseen circumstances like illness or job loss.
While opportunities and threats are external factors beyond direct control, effective planning can help capitalize on opportunities and minimize risks.
Application to Your Business Case
You will conduct a simple SWOT analysis as part of your Business Case. A more detailed SWOT will be completed in Learning Outcome 6, where you will apply it to your Business Plan.
5.2 Identify three levels of management and their focus.
Levels of Management and Their Functions
In the previous learning step, you explored the multiple functions that all managers perform. However, the specific responsibilities of managers vary depending on their level within a business.
In Learning Outcome 4, you studied Tall vs. Flat Organizations. In flatter organizations, a single manager may perform multiple functions, especially in small businesses. Conversely, in larger and taller organizations, managerial functions are more specialized and divided among different levels of management.
Let’s explore this further.
Levels of Management
1. Top Management
Top management focuses on setting the overall direction of the company, making strategic decisions, and ensuring long-term success.
Key Roles:
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Chief Operations Officer (COO)
President
Board of Directors
Chief Privacy Officer (CPO)
Executive Vice Presidents
2. Middle Management
Middle managers bridge the gap between top management and first-line management. They focus on implementing strategic plans and overseeing departmental operations.
Key Roles:
Plant Manager
Division Manager
Department Manager
Product Manager
3. First-Line Management
First-line managers supervise day-to-day operations and directly manage employees. They ensure tasks are completed efficiently.
Key Roles:
Foreperson
Supervisor
Office Manager
Functions of Management
All managers perform four core functions: Planning, Organizing, Directing, and Controlling. However, the emphasis on each function differs across managerial levels.
|
Level of Management |
Planning |
Organizing |
Directing |
Controlling |
|
Top Management |
1️⃣ High |
2️⃣ Moderate |
3️⃣ Lower |
4️⃣ Lowest |
|
Middle Management |
2️⃣ Moderate |
1️⃣ High |
2️⃣ Moderate |
4️⃣ Lowest |
|
First-Line Management |
4️⃣ Lowest |
3️⃣ Lower |
2️⃣ Moderate |
1️⃣ High |
Types of Planning at Each Level
While all managers engage in planning, they focus on different types of planning depending on their level.
Top Management → Strategic Planning (Long-term vision and direction)
Middle Management → Tactical Planning (Implementation of strategies)
First-Line Management → Operational Planning (Day-to-day tasks and execution)
Areas of Management
In Learning Outcome 1, we discussed Functional Areas in a business. Managers serve as communication links between these areas, ensuring that different functions work together efficiently.
Understanding the distinct roles and responsibilities at each management level helps businesses operate effectively and adapt to changing environments.
5.3 Explain the skills that managers need to be successful in business.
The Role of Management and Leadership
Now that we understand why managers are essential in any business and the four key functions they perform, let’s take a deeper look at what makes a good manager.
Think about managers you’ve had or known over the years—would you consider them effective? What qualities set apart great managers from ineffective ones? Let’s explore these questions further.
📖 Reading Resource: Management Skills – Corporate Finance Institute
🎥 Video: Key Management Skills (3:55)
Essential Management Skills
Effective managers need a combination of technical, interpersonal, and conceptual skills. The emphasis on these skills varies by management level.
1. Technical Skills ⏳ (0:00 – 1:49)
Most important for first-line managers.
Require industry-specific expertise to oversee daily tasks and train employees.
Example: A front-line supervisor at a bank must master the skills required to be a teller, but as they move up to a managerial role, delegation becomes more critical than technical mastery.
2. Human Relations & Interpersonal Skills 💬 (1:50 – 2:41)
Crucial at all levels of management.
Managers are the links between functional areas in a business.
Strong communication, emotional intelligence, and motivation skills are vital for employee engagement.
Example: A bank manager who builds strong relationships earns employee respect and commitment, leading to higher productivity and morale.
3. Conceptual & Analytical Skills 🧠 (2:42 – End)
Most important for top management.
The ability to see the big picture, connect different business functions, and make strategic decisions.
Example: The President of a college may not know how to teach an economics class but understands how to position the institution for long-term success in the education sector.
Leadership: A Critical Management Skill
Leadership is one of the key people skills that managers need. It also falls under one of the four management functions: Directing/Leading.
📌 Fun Fact: The second year of the Business Diploma program has an entire course on Leadership—that’s how important it is!
All managers need leadership skills.
Leadership is about motivation, influence, and getting people to work toward a common goal.
Many organizations invest in leadership training because leadership can be learned, contrary to the outdated belief that it is purely innate.
Leadership styles vary and should ideally adapt to different situations.
Leadership Styles and When They Work Best
|
Leadership Style |
Example of Where It Works Best |
|
Autocratic |
Military, assembly line work |
|
Democratic |
Banking, music bands (framework with room for creativity) |
|
Free Rein (Laissez-Faire) |
Universities, engineering, tech companies (Apple, Google) |
Authentic Leadership: The Gold Standard
A leadership style that overlays both democratic and free-rein leadership is Authentic Leadership. True authentic leaders are rare but highly effective.
Key Traits of Authentic Leaders:
✅ True to themselves and act with integrity
✅ Highly ethical and socially responsible
✅ 100% trustworthy
✅ Take responsibility for failures and credit others for success
✅ Continuously learning and open to change
📖 Reading Resource: Authentic Leadership – Insights
Case Study: Leadership at Home Depot
Home Depot’s leadership journey highlights the impact of leadership styles on business success.
Founder’s Leadership Style (1979) → Customer- and employee-focused culture
CEO Robert Nardelli’s Leadership Style → Autocratic, top-down approach → Led to low customer and employee satisfaction
CEOs Frank Blake & Craig Menear’s Leadership → Authentic, democratic style → Improved sales, revenue, and workplace morale
Discussion Questions:
1️⃣ What type of leader was Robert Nardelli? What about Frank Blake and Craig Menear?
Nardelli: Autocratic
Blake & Menear: Authentic, democratic
2️⃣ How did Blake use leadership and management functions to change Home Depot’s culture?
Led by admitting mistakes and encouraging customer feedback
Used controlling function to evaluate and improve customer experience
3️⃣ Why is leadership especially important for Home Depot’s ability to compete with online retailers?
The retail industry is shifting toward e-commerce
Menear’s leadership led to a 21.5% increase in online sales
The Role of Leadership in Organizational Culture
Organizational culture—the “way of being” in a business—is shaped by management and leadership styles.
Employee empowerment is becoming more popular, especially as younger employees expect a participative, values-driven workplace.
Authentic Leadership is gaining traction as businesses recognize its benefits.
Activity: Exploring Authentic Leadership
5.4 LO5 – Business Case