Business management can be defined as the acquisition, allocation, and utilization of resources through planning, organizing, staffing, leading, and controlling. Management involves the coordination of human, financial, material, and information resources in order to realize company goals and operate a business efficiently. Managers are the employees charged with these responsibilities. Managers play a variety of roles in a company, summarized as interpersonal roles, information roles, and decision-making roles. Managing entails five functions: planning, organizing, staffing, leading, and controlling. The day-to-day tasks of management include: considering problems and making decisions in how to deal with them, implementing courses of action, and reviewing decisions and actions and making any necessary changes.

BACKGROUND

The basic elements of modern management practices can be traced to ancient times. The Egyptians, for example, developed advanced management techniques related to labor division, hierarchy of authority, and teams. They developed complex bureaucracies to measure and forecast river levels and crop yields, distribute revenues within the government, manage trade, and complete massive construction projects such as the pyramids. The Babylonians, Greeks, Romans, Chinese, and other cultures made similar contributions to management science.

Although management systems existed long before the modern era, it was not until the late 18th and 19th centuries that advanced business management techniques emerged in response to the Industrial Revolution. The Industrial Revolution resulted in the formation of extremely large organizations characterized by job specialization and the administration of large amounts of human resources. A new breed of middle-level managers were needed to plan and direct human efforts and to administer large pools of capital.

Among the most influential American contributors to management practice during the Industrial Revolution was Daniel C. McCallum (1815-1878), the superintendent of the Erie Railroad during the mid-1800s. To more efficiently manage the vast human and capital resources involved with construction of the railroad, he established a set of guiding management principles that emphasized: a specific division of labor and responsibilities, the empowerment of managers to make decisions in the field, compensation based on merit, a clearly delineated managerial hierarchy, and a detailed system of data gathering, analysis, and reporting that would foster individual accountability and improve decision making.

SCHOOL APPROACHES TO

MANAGEMENT

The efforts of McCallum and other managers of his era were reflected in the first of five schools of management that emerged during the early and middle 1900s. The first of these schools was scientific management, which dominated management philosophy between the 1890s and the early 1920s. Scientific management concepts were heavily influenced by the ideas of American efficiency engineer Frederick W. Taylor (1856-1915). Taylor believed that organizational efficiency could be achieved by using statistics, logic, and detailed analysis to break jobs and responsibilities down into specific tasks. The chief contribution of scientific management was that it successfully applied modern techniques of science and engineering to the management of resources and organizational systems.

Scientific management principles were displaced during the 1920s by the classical management school of thought. Classical management theory is largely attributable to Henri Fayol, who is also known as the father of management. Classical management emphasized the identification of universal principles of management which, if adhered to, would lead to organizational success. Universal principles encompassed two broad areas. The first was identifying business functions and the second was structuring organizations and managing workers.

In essence, classical theory holds that management is a process consisting of several related functions, such as planning and organizing. Thus, by identifying specific business functionsincluding marketing, finance, production, and subfunctions within those and other major categoriescompanies can efficiently divide an organization into departments that work as a process. Furthermore, by carefully structuring chains of authority and responsibility, an entity can successfully facilitate the performance of individuals within departments to achieve company goals.

Importantly, Fayol is credited with identifying five basic management functions: planning, organizing, commanding, coordinating, and controlling. In addition, his 14 principles of management established a framework for management that continues to influence modern management theory. Those principles included: unity of command, meaning a worker should be responsible to only one superior; unity of direction, which implies that each group of activities having a single goal should be unified in a department or work group, or at least under one manager; centralization, or centralized control and decision making; and stability of tenure of personnel, which suggests that, for efficiency reasons, employee turnover should be kept to a minimum even if that means sacrificing quality for long-term loyalty.

The classical school of management remained dominant from the 1920s until the 1940s. It was gradually supplanted, however, by theories that focused on the importance of individual needs and group interaction in organizations. Human relations management arose in the 1930s, largely as a result of studies and experiments (including the classic Hawthorne experiments) conducted by Harvard University psychologist and researcher Elton Mayo (1880-1949) and his contemporaries. To the surprise of classical theorists, Mayo's research demonstrated that mechanistic, efficiently designed processes did not necessarily create more efficient organizations. Instead, the research demonstrated that success could be attained by showing more concern for workers' psychological needs. The human relations school advocated such techniques as employee counseling, feedback, and communication with coworkers, superiors, and subordinates.

Both the classical and human relations management ideologies were eclipsed during the 1950s by the behavioral management school of thought. It also emphasized the importance of the human psyche in management. It differed, however, from the human relations approach in that it stressed behavior over interaction. It sought to rationalize and predict behavior in the workplace through scientific analysis of social interaction, motivation, the use of power and influence, leadership qualities, and other factors. Behaviorists believed that a chief goal of managers should be to increase the effectiveness of workers through motivational techniques, such as empowerment and participation in decisions, and to redesign jobs to take advantage of individuals' strengths and weaknesses.

Demonstrating the gradual transition from mechanistic management theory to a more humanistic approach was the renowned Theory X and Theory Y, which American management theorist Douglas McGregor (1906-1964) posited in the 1950s. Theory X depicts the old, repressive, pessimistic view of workers. It assumes that people are lazy and have to be coerced to produce through tangible rewards. It also presumes that workers prefer to be directed, want to avoid responsibility, and treasure financial security above all else. In contrast, Theory Y postulates that: humans can learn to accept and seek responsibility; most people possess a high degree of imagination and problem-solving ability; employees will self-govern, or direct themselves toward goals to which they are committed; and, notably, satisfaction of ego and self-actualization are among the most important needs that organizations should address.

Coinciding with the behavioral management ideology, which gained acceptance throughout the 1950s (and remained relevant into the 1990s), was the fifth school of thought, quantitative management. Quantitative management theorists believe that, while the behavioral dimension of organizations merits attention, scientific and analytical techniques related to process and structure can help organizations be much more efficient. Quantitative management entails the application of statistical analyses, linear programming, and information systems to assist in making decisions, allocating resources, scheduling processes, and tracking money. Specifically, it advocates the substitution of verbal and descriptive analysis with models and symbols, particularly those that are computer-generated. In fact, it is because of advanced electronic information systems that quantitative management techniques were broadly applied in the 1980s and 1990s.

COMPLEMENTARY MANAGEMENT

APPROACHES

In addition to the school approaches that dominated much of the 20th century are three other approaches to management theory and application: systems, contingency, and process. They emerged during the mid-1900s, gained widespread appeal during the latter part of the century, and continued to influence management thought and practice through the 1990s. These approaches differ from most of the schools of management thought in that they are not posited as a wrong or right ideology, but rather are complementarythey can exist and be applied simultaneously depending on the particular internal and external environment of individual organizations.

THE SYSTEMS APPROACH

The systems management approach emphasizes the importance of educating managers to understand the overall system so that they will realize how actions in their department affect other units. An organization can be likened to a mobile: if you touch one part, the entire apparatus swings into motion. For example, the hiring of a single individual into a marketing department is bound to have some degree of impact on other divisions of the organization over time. Similarly, incorporating behaviorist theory, if managers are given more autonomy and responsibility they are likely to perform at a higher level. As a result, subordinates in their departments are likely to perform better, which may cause other departments to be more effective, and so on.

The systems approach to management recognizes both open and closed systems. A closed system, such as a clock, is self-contained and operates relatively free from outside influences. In contrast, most organizations are open systems and are thus highly dependent on outside resources, such as suppliers and buyers. Specifically, systems are impacted by four spheres of outside influence: education and skills (of workers), legal and political, economic, and cultural. Management processes must be designed to adapt to these influences. This acknowledgment of outside factors represents a meaningful departure from the earliest school approaches that viewed management within the context of closed systems.

Importantly, the systems approach also recognizes that all large organizations are comprised of multiple subsystems, each of which receives inputs from other subsystems and turns them into outputs for use by other subsystems. At least five types of subsystems, according to systems theory, should be incorporated into management processes in larger organizations. Production subsystems are the components that transform inputs into outputs. In a manufacturing company this subsystem would be represented by activities related to production. In most business organizations all other subsystems are built around the production subsystem.

Supportive subsystems perform acquisition and distribution functions within an organization. Acquisition activities include securing resources, such as employees and raw materials, from the external environment. Human resources and purchasing divisions would typically be included in this group. Distribution (or disposal) activities encompass efforts to transfer the product or service outside of the organization. Supportive subsystems of this type include sales and marketing divisions, public relations departments, and lobbying efforts.

Maintenance subsystems maintain the social involvement of employees in an organization. Activities in this group include providing employee benefits and compensation that motivate workers, creating favorable work conditions, empowering employees, and other forms of satisfying human needs. Similarly, adaptive subsystems serve to gather information about problems and opportunities in the environment and then respond with innovations that allow the organization to adapt. A firm's research lab or a product development department would both be part of an adaptive subsystem. Finally, managerial subsystems direct the activities of other subsystems in the organization. These managerial functions set goals and policies, allocate resources, settle disputes, and generally work to facilitate the efficiency of the organization.

THE CONTINGENCY APPROACH

Like the systems approach, the contingency approach to management views the organization as a set of interdependent units operating in an open system. It differs from all other management approaches, though, in that it is based on the idea that every organization and situation is unique. Its situational perspective implies that there is no single best way to manage. Therefore, specific techniques and managerial concepts must be applied in different ways and in different combinations to achieve organizational or departmental effectiveness. In fact, the contingency theory has been described as a sort of amalgam of all other ideologies. Its chief contribution to modern management theory is its identification of critical internal and external variables that affect management processes.

THE PROCESS APPROACH AND THE

BASIC FUNCTIONS OF MANAGEMENT

Perhaps the most widely accepted organizational management theory is the process approach. It also serves as a descriptive overview of the various tasks and responsibilities management faces, and it draws on many of the theories contained in the five schools of management as well as the systems approach and contingency approach described above. For example, the process approach derives from Fayol's ideas, particularly his five management functions. And, like the systems approach and the later schools of management thought, the process approach emphasizes the point that management is an ongoing series of interrelated activities rather than a one-time act.

The process approach also recognizes other management theories that have gained acceptance in the late 1900s. Of import is the generally accepted management pyramid model, which is comprised of three hierarchies based on experience and education. At the top of the pyramid is top management, or the executive level that handles long-term strategy. At the center is middle management, which translates top management objectives into more specific goals for individual work units. Finally, line managers and supervisors fill the bottom of the pyramid. They handle the day-to-day management of employees and operations.

Adherents to the process approach have altered and elaborated on Fayol's original functions, usually in an attempt to incorporate behaviorist philosophies. Management theorists commonly recognize five management functions: planning, organizing, staffing, leading, and controlling. The five process management functions are linked together by communication and decision-making activities common to all of them.

PLANNING.

Planning is the development of specific strategies designed to achieve organizational goals. Forward-looking managers use planning to develop strategies, policies, and methods for achieving company objectives. Moreover, managers who rely on planning can anticipate problems before they even arise and therefore can implement solutions quickly. In addition, planning serves as the foundation for the other management functionsorganizing, staffing, leading, and controllingby providing direction for a company; and increases a company's potential for success in accomplishing its goals.

Planning occurs at all three management levels: top, middle, and line. As indicated earlier, top managers are charged with making long-term plans that define the mission and policies of the organization while lower level managers implement them. In the planning process, top-level managers concentrate on the questions of what and how much. Middle managers implement mission and policy objectives, usually by focusing on the where and when. Finally, line managers effect the specific plans of the middle managers by addressing the pressing questions of who and how.

For example, top executives at a nail factory may decide that the company should become the most productive, highest-quality, largest-volume producer in the world. Middle managers in the production division may decide that accomplishment of this goal requires that over the next 12 months they cut costs by 20 percent, decrease flaws to. 01 percent, and increase capacity 40 percent. Likewise, managers in the marketing department may decide that they need to increase sales by 80 percent during the next year. Finally, line managers would have to figure out how to achieve those goals and who would do the actual work. They might increase bonuses for salespeople who boosted volume, for instance, or lower profit margins (and prices) to increase sales. Or, production line managers might implement a new quality management program and increase investments in cost-saving automation.

Another way of viewing the planning process in an organization is by categorizing planning activities as strategic (top management), tactical (middle), or operational (bottom). The overall process usually entails at least six steps: setting goals, analyzing the external and internal environment to identify problems and opportunities, identifying and evaluating alternatives, choosing a plan, implementing the program, and controlling and judging the results of the implementation. Different stages of the process should ideally overlap management hierarchies, thus fostering organizational unity and informed planning.

In addition to the stages of the planning process and hierarchical responsibilities, most planning activities and responsibilities can be categorized, according to Corporate Planning: An Executive Viewpoint, into one of four planning roles: (1) resource allocation, (2) environmental adaptation, (3) internal coordination, (4) and organizational strategic awareness. Resource allocation entails decisions related to the distribution of funds, expertise, labor, and equipment. For instance, a chief executive officer (CEO) might decide to not pay shareholder dividends as a way to increase funds for new product development. Or, a production line manager may elect to shift laborers from one product line to another to better match fluctuating output requirements.

Environmental adaptation planning activities are those that serve to improve the company's relationship to its external environment, including such influences as governments, suppliers, customers, and public opinion. These activities address problems and opportunities that arise from such external factors. For example, gas station company managers that choose to attach point-of-sale (credit card) machines to their pumps are reacting to a public demand for convenience. Similarly, a CEO of a coal mining company might have to plan to reduce toxic emissions in an effort to satisfy government regulators or to appease public sentiment.

Internal coordination planning activities are those that respond to internal influences. They coordinate internal strengths and weaknesses in an effort to maximize profitability (in the case of for-profit companies). Finally, planning activities categorized as organizational strategic awareness strategies create systematic management development systems that allow an organization to evaluate the effects of past plans.

In order to be effective, plans and goals developed and executed at any level will generally exhibit basic characteristics. The plans should be specific and measurable, for example, meaning that they will have definite goals that can be measured against definite results. Plans should also be time-oriented, or should be devised with deadlines for accomplishing parts of the entire goal and a final deadline for completion. Plans should also be attainable. Insufficient resources or impossible goals can thwart motivation and result in underperformance. Finally, plans should be mutually supportive, meaning that plans made in or for one part of an organization should complement other plans and objectives.

ORGANIZING.

Organizing is the second major managerial function. It is the process of structuring a company's resourcesits personnel and materialsin a way that will allow it to achieve its objectives. Specifically, organizing entails a fundamental three-step process: developing tasks, labor units, and positions. First of all, managers must determine the exact actions that have to be taken to implement plans and achieve objectives. Second, they must divide personnel into teams with areas of responsibility. Third, managers must delegate authority and responsibility to individuals and establish decision-making relationships. Once management accomplishes the first step, it can take a number of different routes to organize teams and delegate authority. Most organizations are arranged by either function or division.

The most common approach to organizing teams and delegating authority in organizations is by function. Under the functional approach, activities are broken down into primary business functions, such as finance, operations, and marketing. Within each major functional group are numerous subfunctions. In the marketing division, for example, might be the sales and promotions departments. The functional approach results in a comparatively efficient division of labor and an authority hierarchy that is easy for workers to understand. It may lead, however, to internal rivalries between departments or myopia because different divisions are not aware of the goals and actions of other parts of the company.

In addition to functions, many companies are organized by division. There are several different divisional approaches to structuring teams and delegating power to managers. For example, some companies take a product line approach, whereby the company is broken down into different product or service groups. For instance, an appliance producer may break its organization down into dishwashers, clothes washers and dryers, and vacuum cleaners. Other companies might use a customer approachindustrial products, consumer products, government products, etc. The advantage of both approaches is that they allow managers and the entire company to be focused on the product or customer rather than on support functions, such as marketing. This organizational approach may result, however, in an inefficient division of labor (i.e. overlap) because each group is forced to supply their own support functions.

Another common means of organizing a company by divisions is the geographic approach, whereby activities or groups are divided by region. For instance, a multinational bank may have three major divisions: North America, Asia, and Europe. Those divisions, then, might be divided into sub-regions, such as northeast, south, and west. The geographic approach is often used by companies that specialize in marketing, finance, or some other major business function and operate in a number of different geographic areas. It allows flexibility in relation to different laws, exchange rates, and cultures, and fosters a responsiveness to local markets not attainable under other divisional approaches. The chief drawback of geographic organizations is that they can be relatively expensive to maintain.

A less conventional and increasingly popular approach to structuring organizations is known as the matrix system. In essence, a matrix system creates both functional and divisional groups to form multidisciplinary, integrated teams that combine staff and line authority. The main advantage of the matrix is that it reduces myopia in an organization, fosters cooperation, and promotes a free flow of information. But the matrix approach may also create an ambiguous power structure and may have limitations for many types of companies.

In addition to the basic structure, management authority and responsibility will also be dictated by the level of centralization in a company. In general, companies with more centralized management will be figuratively tall, meaning that power flows down through a chain of command. Decisions are made by a few people and handed down to the masses. In contrast, decentralized, or flat, organizations push management authority down. In flat organizations, many managers (and subordinates) are empowered to independently make decisions within their area of expertise in the company. Because of the trend toward flatter organizations during the 1980s and 1990s, traditional middle levels of management have become obsolete in many companies. Effectively, all workers become managers to some degree in the flattest organizations.

STAFFING.

Staffing, the third major organizational function, encompasses activities related to finding and sustaining a labor force that is adequate to meet the organization's objectives. First, managers have to determine exactly what their labor needs are and then go into the labor force to try and recruit those skills and characteristics. Second, managers must train workers. Third, they have to devise a method of compensating and evaluating performance that complements objectives. This includes designing pay and benefits packages, conducting performance appraisals. and promoting employees. Finally, managers usually must devise a system of firing ineffective employees or reducing the workforce . In addition, management duties related to staffing often entail working with organized labor unions and meeting federal and state regulations.

LEADING.

Leading, or motivating, is the fourth basic managerial function identified by the process approach to management. It is defined as the act of guiding and influencing other people to achieve goals. Leading involves leadership, communication, and motivation skills. In addition, the leadership role for most managers entails four primary duties: educating, evaluating, counseling, and representing. Educating includes teaching skills and showing workers how to function within the company and how to perform their assigned tasks. They do so through both formal and informal means. Examples of informal education are attitudes, work habits, and other behavior that sets an example for subordinates to follow.

Evaluating activities that are part of a manager's leadership responsibilities include settling disputes, creating and enforcing standards and policies, evaluating output, and dispensing rewards. In fact, much of the respect and esteem that a manager gets from subordinates is contingent upon the ability to evaluate effectively.

A manager's ability to counsel will also impact his or her effectiveness. Counseling involves giving advice, helping workers solve problems, soliciting feedback from subordinates, and listening to voluntary input or employee problems. Finally, managers lead through representation by voicing the concerns and suggestions of their subordinates to higher authorities. In other words, managers must show a willingness to back their workers and represent their needs and goals.

Numerous theories have been posited to explain the leadership function and to describe the traits of successful leaders. For example, John P. Kotter, author of The Leadership Factor, identified six traits considered necessary for managers in large organizations to be effective leaders: (1) motivation, (2) personal values, (3) ability, (4) reputation and track record, (5) relationships in the firm and industry, and (6) industry and organizational knowledge. Contrary to traditional beliefs about leadership, which hold that leadership ability is innate, these trait groups are acquired through combinations of early childhood experiences, education, and career experiences.

In addition to developing leadership traits, effective managers must adopt a style of leadership that complements their position, personality, and environment. In general, managers practice some combination of four recognized leadership styles: directive, political, participative, and charismatic. The directive leadership style emphasizes the use of facts, sound strategy, and assertiveness. This type of manager focuses on gathering information, establishing objectives through a careful assessment of data, devising strategies to accomplish goals, and then directing subordinates and coworkers to achieve those ends. Managers who subscribe to a directive leadership style are less concerned about building a consensus for their vision than they are about motivating others to achieve it. They are more likely to confront resistance to their goals and to have less patience in pursuing objectives than other types of leaders.

In contrast, managers who embrace a political leadership style believe that their ability to lead requires the power to manipulate forces within the entity toward common objectives. Importantly, they assume that the company is a political arena fraught with deception, in-fighting, and selfish goals. Therefore, they often must push, bargain, and manipulate to advance the interests of their departments and themselves. Although such leaders may be well-intentioned, honest, and acting in the best interests of the company, they may be willing to deceive others and act selfishly in order to achieve a desired result. Common tactics include keeping goals flexible or vague, advancing their agendas patiently, and manipulating channels of influence and authority.

The participative, or values-driven, style of leadership emphasizes joint decision making, decentralization, the sharing of power, and democratic management. Managers who are participative leaders assume that their subordinates are highly motivated by work that challenges them, builds skills, and is accomplished with teams of people that they respect. Thus, unlike directive leadership, the participative style focuses on building a consensus during the decision-making process. It also stresses bottom-up managementinformation and expertise is gleaned from workers in lower levels of the organization and used to direct decisions and goalsand the empowerment of subordinates to make decisions.

The fourth basic managerial style of leadership, charismatic leadership, differs from the other three styles in that it is more suited to realizing radical visions or handling crises. It is less concerned with influencing behavior toward the attainment of long-term goals or day-to-day management activities. Charismatic leadership in business organizations is a style often used by entrepreneurs who are starting new companies, or by transformational managers seeking to revitalize established organizations.

CONTROLLING.

The fifth major managerial function, controlling, is comprised of activities that measure and evaluate the outcome of planning, organizing, staffing, and leading efforts. Controlling is an essential part of management because it helps managers determine the fruitfulness of the other functions (planning, organizing, etc.); helps guides employee efforts towards company goals; and helps a company distribute its resources efficiently and effectively. Controlling is typically viewed as an ongoing management process that ensures that the organization is moving toward its goals. The process includes establishing performance standards, evaluating ongoing activities, and correcting performance that deviates from the standards.

Managers begin by establishing specific criteria outlining how they want a company's tasks performed. Based on company objectives, managers determine the performance standards in order for the company to attain its goals. Performance standards may take the form of qualitative and quantitative criteria. Examples of performance standards are budgets, projections, pro forma statements, and production, sales, or quality initiatives. Successful managers usually rely on a feedback system to see how employees are responding to performance standards; this allows managers to identify problems before they develop into crises.

During the second stage of the control process, evaluation, managers determine how closely their subordinates' or department's performance matched up with preset standards. Of import is the manager's acceptable range of deviation, or the degree to which actual performance can vary from the standard before corrective action is necessary. In addition, managers must factor into the performance comparison influences outside of the control of their unit. They must also devise a means of communicating results to subordinates in a constructive manner.

If measured results deviate outside of an acceptable range, the manager must take corrective action. Corrective action may mean simply readjusting the preset standards to reflect more realistic goals. Or, the manager may have to analyze the process that lead to the deviation and then act to make changes. For instance, if a production line fails to meet quality goals the manager may choose to rearrange work teams or change the financial incentive system to emphasize quality. The manager may also determine that the departmental budget needs to be revised to increase spending on quality control.

To be effective, managers must design control systems that are based on meaningful and accepted standards. If standards are too high, subordinates are likely to lose motivation or become frustrated. Standards should also be based on the overall goals of the organization rather than on the narrow objectives of one department or division. The control process should emphasize two-way communication so that controls are understood by subordinates and managers are able to effectively set standards and evaluate performance, taking into account the workers' perspective. In addition, standards and controls should be flexible enough to accommodate emerging problems and opportunities. Most importantly, controls should be used only when necessary so that they don't unnecessarily obstruct creativity and drive.

MANAGERIAL ROLES AND SKILLS

In addition to the five basic managerial functions defined by the process approach, a number of ancillary roles can be identified (depending on the position and responsibilities of individual managers) that are necessary to perform the functions. These roles take the form of interpersonal roles, information roles, and decision maker roles. As part of their interpersonal roles, managers are generally expected to act as figureheads and leaders for their units or organizations, which entails performing ceremonial duties or entertaining associates. Managers also act as liaisons, working with peers in other departments or contacts outside of the organization. The liaison role requires managers to have contact with peers, customers, executives, and others.

As part of their information role, managers monitor the business environment and gather information that affects their departments. In addition to gathering information, managers also distribute it among their employees. Managers play the information role by acting as spokespersons by providing information about the company to the public. Furthermore, top-level managers often must interact with the government, consumer groups, industry associations, and other organizations.

As part of the decision maker role, managers constantly oversee and observe their units, resolving problems and disturbances, and developing a big picture of the department and its place in the organization. Likewise, managers must be negotiators to help secure resources for their team or group and to elicit cooperation from other groups or individuals inside and outside the company. As decision makers, managers also allocate resources, determining how to distribute limited resources within specific units to achieve maximum effectiveness. This role also involves entrepreneurial skills, because managers must generate ideas about improving their units' performance.

To succeed in their various roles, managers must possess a combination of skills from three broad groups: technical, conceptual, and relationship. Technical skills refer to knowledge of processes, tools, and techniques particular to a company or industry. For instance, sales managers who have never worked as field representatives might lack knowledge that would be important in setting sales goals and compensations systems. Conceptual skills allow managers to view each unit as part of the entire organization, and the company as part of a larger industry. Conceptual skills are particularly important for developing long-range goals and solving problems. Finally, relationship skills are those that the manager uses to communicate effectively and work with others.

Effective managers at all levels typically possess an advanced set of relationship skills, particularly in management structures that stress communication and cooperation (e.g. matrix). In general, managers at the top of the management pyramid require a higher degree of conceptual skills. In fact, as managers assume more responsibility and become less involved with day-to-day activities, technical knowledge becomes secondary. Middle managers, on the other hand, usually must possess a roughly equal amount of conceptual and technical knowledge. Finally, line managers near the bottom of the pyramid depend primarily on technical, rather than conceptual, skills.

CONTEMPORARY ISSUES IN

MANAGEMENT

In the 1990s, two different types of senior manager began to emerge in response to the general trend toward specialization and downsizing: the specializing generalist and the generalizing specialist. Because of the stock market crash in 1987, companies in the 1990s sought upper-level specializing generalist managers, that is, general managers who specialized in one area, corporate restructuring and cost cutting, in particular. These managers focused largely on implementing policies that led to reducing costs, such as closing plants and laying off workers. Entrepreneurs who launch multiple businesses sometimes are referred to specializing generalists. Entrepreneurs often learn an array of general business skills because they perform a variety of tasks during the company start-up phase.

Alternatively, generalizing specialist managers generalize an area of expertise across the various management functions. For example, a senior manager with a marketing background might generalize the marketing management approach across an entire company. As a consequence, for example, such a manager might allocate funds only for research projects that have a proven potential market.

Moreover, with the globalization of many industries in the 1980s and 1990s, managers increasingly must possess a global perspective as well as the skills to work with managers and employees from other countries. More and more managers must be able to collaborate with companies from other countries when U.S. companies form multinational alliances with other companies. Consequently, managers must be able to perform their five basic functionsplanning, organizing, staffing, leading, and controllingin multinational settings. Economic globalization makes skills such as influence, negotiation, and conflict resolution indispensable.

Other contemporary issues in management include productivity, quality, innovation, and ethics, some of which also stem from globalization. Since other countries such as Japan have surpassed the United States in productivity, managers of companies of all sizes must address the problem of productivity in order to remain competitive. International competition also has caused renewed concern for quality, forcing managers of a variety of companies, such as automobile, computer, and electronics manufactures, to strive for greater quality. In addition, innovation became a key issue in management in the 1990s in response to a host of factors, including changes in the economy, various industries, consumer preferences, and international relations. Finally, because of the growing demand from customers and workers that companies act in a socially responsible manner, managers must make sure that a company's actions and policies are ethical, particularly in the areas of the environment and human rights.

updated by Karl Heil ]

FURTHER READING:

Bolman, Lee G. and Terrence E. Deal. Modern Approaches to Understanding and Managing Organizations. San Francisco: Jossey Bass, 1984.

Cherrington, David J. Organizational Behavior: The Management of Individual and Organizational Performance. 2nd ed. Boston: Allyn and Bacon, 1994.

Kotter, John P. John P. Kotter on what Leaders Really Do. Cambridge, MA: Harvard Business School Press, 1999.

Plunkett, Warren R. and Charles R. Greer. Supervision: Diversity and Teams in the Workplace. 9th ed. Upper Saddle River, NJ: Prentice Hall, 1999.

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