Chapter 06 - The Nature of Management

M BUSINESS 4TH EDITION

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OBJECTIVES

LO 6-1 Define management, and explain its role in the achievement of organizational objectives.
LO 6-2 Describe the major functions of management.
LO 6-3 Distinguish among three levels of management and the concerns of managers at each level.
LO 6-4 Specify the skills managers must have to be successful.
LO 6-5 Describe the different types of leaders and how leadership can be used to empower
employees.
LO 6-6 Summarize the systematic approach to decision making used by many business managers.

KEY TERMS AND DEFINITIONS

administrative Those who manage an entire business or a major segment of a business; they
managers are not specialists but coordinate the activities of specialized managers.

agenda A calendar, containing both specific and vague items, that covers short-term
goals and long-term objectives.

analytical skills The ability to identify relevant issues, recognize their importance, understand
the relationships between them, and perceive the underlying causes of a
situation.

conceptual skills The ability to think in abstract terms and to see how parts fit together to form
a whole.

controlling The process of evaluating and correcting activities to keep the organization
on course.

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Chapter 06 - The Nature of Management

crisis management or An element in planning that deals with how to respond to potential disasters
contingency planning such as product tampering, oil spills, fire, earthquake, computer virus, or
reputation crisis.

directing Motivating and leading employees to achieve organizational objectives.

employee When employees are provided with the ability to take on responsibilities and
empowerment make decisions about their job.

downsizing The elimination of a significant number of employees from an organization.

financial managers Managers who focus on obtaining the funds needed for the successful
operation of an organization and using those funds to further organizational
goals.

first-line managers Managers who supervise both workers and the daily operations of an
organization.

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Chapter 06 - The Nature of Management

human relations skills The ability to deal with people, both inside and outside the organization.

human resources Managers who handle the staffing function and deal with employees in a
managers formalized manner.

information Managers who are responsible for implementing, maintaining, and

technology (IT) controlling technology applications in business, such as computer networks.
managers
leadership The ability to influence employees to work toward organizational goals.

management A process designed to achieve an organization’s objectives by using its

resources effectively and efficiently in a changing environment.

managers Those individuals in organizations who make decisions about the use of
resources and who are concerned with planning, organizing, leading, and
controlling the organization’s activities to reach its objectives.

marketing managers Managers who are responsible for planning, pricing, and promoting products
and making them available to customers through distribution.

middle managers Managers who are responsible for the tactical planning that implements the
general guidelines established by top management.

mission The statement of an organization’s fundamental purpose and basic

philosophy.

networking The building of relationships and sharing of information with colleagues who
can help managers achieve the items on their agendas.

operational plans Very short-term plans that specify what actions individuals, work groups, or
departments need to accomplish in order to achieve the tactical plan and
ultimately the strategic plan.

organizing The structuring of resources and activities to accomplish objectives in an

efficient and effective manner.

planning The process of determining the organization’s objectives and deciding how
to accomplish them; the first function of management.

production and Managers who develop and administer the activities involved in transforming
operations managers resources into goods, services, and ideas ready for the marketplace.

staffing The hiring of people to carry out the work of the organization.

strategic plans Those plans that establish the long-range objectives and overall strategy or
course of action by which a firm fulfills its mission.

tactical plans Short-range plans designed to implement the activities and objectives
specified in the strategic plan.

technical expertise The specialized knowledge and training needed to perform jobs that are

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Chapter 06 - The Nature of Management

related to particular areas of management.

top managers The president and other top executives of a business—e.g., the chief
executive officer, chief financial officer, chief operating officer, chief
privacy officer—who have overall responsibility for the organization.

LECTURE OUTLINE AND NOTES

(PPT notations below refer to the instructor slides.)

PPT 6.4 LO 6-1

I. The Importance of Management
A. Any organization, small or large, public or private, needs managers to plan,
organize, staff, direct, and control the work that goes on.
1. In short, managers help organizations achieve their objectives.
B. Management is a process designed to achieve an organization’s objectives by
using its resources effectively and efficiently in a changing environment.
1. Effectively means having the intended result.
2. Efficiently means accomplishing the objectives with a minimum of
resources.
C. Managers make decisions about the use of the organization’s resources, and
are concerned with planning, organizing, leading, and controlling the
organization’s activities so as to reach its objectives.
PPT 6.5
D. Every organization, in the pursuit of its objectives, must acquire resources
(employees, suppliers, and financial resources) and coordinate their use to turn
out a final good or service.
1. Employees are one of the most important resources, and successful
companies foster employee loyalty.
2. Suppliers are another important consideration because a good supplier
maximizes efficiencies and reduces costs.
3. Financial resources pay for essential activities.
a. Primary funding comes from owners and shareholders, banks, and
other financial institutions.
4. Managers must carefully coordinate and control all of these resources in
order for the organization to meet its objectives.
E. Management is universal. It takes place not only in business, but also in
government, the military, labor unions, hospitals, schools, and religious groups
– any organization requiring the coordination of resources.
1. For example, Sergio Marchionne, the CEO of Fiat, saved the company from
bankruptcy and, after acquiring Chrysler, saved them as well.
PPT 6.6 LO 6-2
II. Management Functions
A. To harmonize the use of resources so that businesses can develop, produce, and
sell products, managers engage in a series of activities:
B. Planning
1. Planning is the process of determining the organization’s objectives and
deciding how to accomplish them.
a. Designs the map that is the groundwork for all other functions

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Chapter 06 - The Nature of Management

b. Involves forecasting events and determining the best course of action

from a set of options or choices.
c. The plan specifies what should be done, by whom, where, when, and
how.
d. All organizations need to develop plans, but before an organization can
plan a course of action, it must first determine what it wants to achieve.
2. An organization’s mission is the statement of an organization’s
fundamental purpose and basic philosophy.
a. Answers the question: What business are we in?
b. Clear and concise statement that describes an organization’s reason for
existence.
3. A goal is the result that a firm wishes to achieve.
a. Companies usually have multiple goals
b. A goal has three key components: An attribute sought, a target to be
achieved, and a time frame in which the goal is to be achieved.
4. Objectives.
a. Objectives, the ends or results desired by the organization, derive from
the organization’s mission.
b. Can be simple or elaborate. Profit, competitive advantage, efficiency,
and growth are examples of objectives.
c. The principal difference between goals and objectives is that objectives
are generally stated in such a way that they are measurable.
d. Objectives provide direction for all managerial decisions and establish
criteria by which performance can be evaluated.
PPT 6.7
5. There are three general types of plans for meeting objectives.
a. Strategic plans are long-range plans developed by top-level managers.
1) Strategic plans generally cover periods ranging from one year or
longer, and may relate to plans to add products, purchase
companies, sell unprofitable segments of the business, issue stock,
and/or move into new markets.
2) Strategic plans must take into account the firm’s capabilities and
resources, the changing business environment, and organizational
objectives.
a. For example, Southwest Airline’s strategic plan was to expand
operations by acquiring AirTran.
b. Tactical plans are short-range plans designed to implement the
activities and objectives specified in the strategic plan.
1) They usually cover a period of one year or less and help keep the
organization on the course established in the strategic plan.
2) Because tactical plans allow the organization to react to changes in
the environment while continuing to focus on the company’s
overall strategy, management must periodically review and update
them.
3) Because of their short-term nature, tactical plans are easier to adjust
or abandon if changes in the environment or the firm’s
performance so warrant.
c. Operational plans are very short term and specify what actions
specific individuals, work groups, or departments need to accomplish
in order to achieve the tactical plan and ultimately the strategic plan.

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Chapter 06 - The Nature of Management

1) They apply to details in executing activities in one month, week,

or even day.
d. Another element in planning is the idea of crisis management or
contingency planning, which deals with potential disasters such as
product tampering, oil spills, fire, earthquake, computer virus, or
airplane crash.
1) Companies that have contingency plans tend to respond more
effectively when problems occur than do firms that lack such
planning.
2) Many businesses do not have updated contingency plans to handle
the types of crises that their companies might encounter.
a. A recent study reveals that more than 85 percent of small or
midsized businesses have ineffective or outdated emergency
recovery plans.
3) Crisis management plans cover two elements: maintaining
business throughout a crisis and communicating with the public,
employees, and officials about the problem and the company’s
response.
PPT 6.8
C. Organizing
1. Organizing is the structuring of resources and activities to accomplish
objectives in an efficient and effective manner.
a. Structure helps organizations accomplish goals. Rarely are individuals
in an organization able to achieve common goals without some form of
structure.
2. Managers organize by reviewing plans and determining what activities are
necessary to implement them.
3. Managers divide the work into small units and assign it to specific
individuals, groups, or departments.
a. As companies reorganize for efficiency, they are organizing work into
teams to handle core processes such as new product development
instead of the more traditional departments.
b. Organizing is continuous because change is inevitable.
4. Organizing is important for the following reasons.
a. Helps create synergy.
b. Establishes lines of authority
c. Improves communication
d. Helps avoid duplication of resources
e. Improves effectiveness by speeding up decision making
PPT 6.9
D. Staffing
1. Staffing is hiring people to carry out the work of the organization. Once
managers have determined what work is to be done and how it is to be
organized, they must ensure the organization has enough employees with
appropriate skills to do the work
2. Requires:
a. Recruiting people for positions within the firm
b. Determining what skills are needed for specific jobs
c. How to motivate and train employees to do their assigned jobs
d. How much to pay employees
e. What benefits to provide

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Chapter 06 - The Nature of Management

f. How to prepare employees for higher-level jobs in the firm at a later

date
PPT 6.10
3. Some companies choose to recruit new people through online job websites
like Monster.com, one of the world’s largest. This falls under the staffing
function of management.
PPT 6.11
4. Another aspect of staffing is downsizing, the elimination of significant
numbers of employees from an organization.
a. Production, sales, and technical positions can be outsourced to
countries with lower labor costs.
b. Staffing itself can be outsourced to companies who focus on hiring and
managing employees.
c. Can help firms reduce costs quickly and become more profitable in a
short period of time.
d. Has painful consequences for those who lose their jobs and for morale
among remaining employees
e. Effective managers will promote optimism and positive thinking and
minimize criticism and fault-finding after downsizing occurs.
PPT 6.12
E. Directing
1. Directing is motivating and leading employees to achieve organizational
objectives. Managers tell their employees what to do and when to do it
using deadlines, then encourage them to do their work.
2. All managers are involved in directing, but it is especially important to
lower-level managers.
3. Directing also involves determining and administering rewards and
recognition.
4. Managers motivate employees with incentives and in allowing employees
to participate. Recognition and appreciation are often the best motivators.
PPT 6.13
F. Controlling
1. Controlling is the process of evaluating and correcting activities to keep
the organization on course.
2. Controlling involves five activities:
a. Measuring performance.
b. Comparing present performance with standards or objectives.
c. Identifying deviations from the standards.
d. Investigating the causes of deviations.
e. Taking corrective action when necessary.
3. Controlling and planning are closely linked: Planning establishes goals and
standards for performance, while controlling helps firms ensure that
performance toward those goals is achieved.
4. The control process also helps managers deal with problems arising from
outside of the firm.

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Chapter 06 - The Nature of Management

LO 6-3
III. Types of Management
A. Levels of Management
PPT 6.14
1. There are usually three levels of management, which form a pyramid—
top management, middle management, and front-line or supervisory
management.
PPT 6.15
a. Managers at all three levels perform all five management functions,
but the amount of time they spend on each function varies.
b. For top managers, the most important management function is
planning.
c. For middle managers, the most consuming function is organizing.
d. For front-line managers, the most consuming function is controlling.
PPT 6.16-6.17
2. Top managers include the president, the chief executive officer, the chief
financial officer, the chief operations officer, and other top executives, such
as the chief privacy officer, who have overall responsibility for the
organization.
a. In publicly owned corporations, the CEO’s boss is the board of
directors.
b. Top managers also represent their company to the public and to
government regulators.
c. Top managers generally have many years of experience and
command top salaries. In addition to top salaries, top management
typically gets bonuses, long-term incentive awards, stock, and stock
options.
1) Executive compensation has been criticized
2) Compensation committees and boards of directors are now
seeking ways to keep compensation commensurate with
performance.
a. Not all managers receive high compensation. In 2012
Facebook CEO Mark Zuckerberg announced he would go
from his current salary of $600,000 to $1 per year.
d. Workforce diversity is also an important issue in today’s
corporations, and effective managers have found that diversity is
good for workers and for the bottom line.
1) A diverse workforce is better at making decisions regarding
issues related to consumer diversity.
2) The five rules of successful diversity recruiting include get
everyone involved, showcase your diversity, work with diversity
groups within your community, spend money, and sell, sell,
sell—and measure your return on investment.
PPT 6.18
3. Middle managers are responsible for tactical planning to implement the
general guidelines established by top management (e.g., plant managers,
division managers, and department managers).
a. Responsibility is more narrowly focused than top managers
b. Middle managers are involved in the specific operations of the
organization and spend more time organizing than other managers.
c. The ranks of middle managers have been shrinking as more companies

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Chapter 06 - The Nature of Management

downsize to be more productive.

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Chapter 06 - The Nature of Management

PPT 6.19
4. First-line managers supervise workers and day-to-day operations of the
organization.
a. They spend most of their time directing and controlling.
b. Foremen, supervisors, and office managers are examples of first-line
management.
PPT 6.20
B. Areas of Management
1. At each level of management, managers specialize in the areas of finance,
production and operations, human resources, marketing, and
administration.
2. Financial manager focuses on obtaining the funds needed for the
successful operation of the organization and using those funds to further
organizational goals.
PPT 6.21
3. Production and operations manager develops and administers the
activities involved in transforming resources into goods, services, and
ideas ready for the marketplace.
PPT 6.23
4. Human resources manager handles the staffing function and deals with
employees in a formalized manner.
PPT 6.24
5. Marketing manager is responsible for planning, pricing, and promoting
products and making them available to customers through distribution.
PPT 6.25
6. Information technology (IT) manager is responsible for implementing,
maintaining, and controlling technology applications in business, such as
computer networks.
PPT 6.26
7. Administrative manager manages an entire business or a major segment
of a business; does not specialize in a particular function.
PPT 6.27 LO 6-4
IV. Skills Needed by Managers
A. Managers are typically evaluated using the metrics of how effective and
efficient they are. Necessary skills include technical expertise, conceptual
skills, analytical skills, and human relations skills.
B. Technical expertise, the specialized knowledge and training needed to
perform jobs that are related to particular areas of management.
1. Technical skills are most needed by first-line managers and are least
critical to top-level managers.
C. Conceptual skills, the ability to think in abstract terms and to see how parts
fit together to form the whole.
1. Top management must be able to evaluate continually where the company
will be in the future.
2. Conceptual skills also involve the ability to think creatively.
D. Analytical skills refer to the ability to identify relevant issues, recognize their
importance, understand the relationship between them, and perceive the
underlying causes of a situation.
1. All managers need to think logically, but this skill is probably most
important to the success of top-level managers.
E. People skills, or human relations skills, are the ability to deal with people,

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Chapter 06 - The Nature of Management

both inside and outside the organization.

1. People skills are especially important in hospitals, airline companies,
banks, and other organizations that provide service.
PPT 6.28 LO 6-5
2. Leadership is the ability to influence employees to work toward
organizational goals.
1. There are three basic styles of leadership.
a. Autocratic leaders make all the decisions and then tell employees what
must be done and how to do it.
b. Democratic leaders allow their employees to get involved in decisions.
Employees involved in decision making generally require less
supervision.
c. Free-rein leaders let their employees work without much interference.
2. The effectiveness of each leadership style depends on several factors.
a. An autocratic style is generally needed to stimulate unskilled,
unmotivated employees.
b. Highly skilled, trained, and motivated employees may respond better
to democratic or free-rein leaders.
c. Other considerations are the manager’s abilities and the situation
itself.
1) When a situation requires a quick decision, for example, an
autocratic style of leadership may be best because the manager
does not have to consider input from a lot of people.
d. The “best” style depends on specific circumstances, and effective
managers strive to adapt their style as warranted.
3. Tips for successful leadership include building effective relationships,
communicating effectively, building the team and enabling employees to
collaborate effectively, understanding the financial aspects of business,
knowing how to create an environment of positive morale and
recognition, leading by example, and helping people to grow and develop.
a. Some of the “best” managers are listed on Fortune magazine’s
America’s Most Admired Companies and their CEOs.
PPT 6.29
3. Technical expertise is the specialized knowledge and training required to
perform jobs related to an area of management
a. Important for managers
b. Technical skills are most needed by first-line managers and least critical
to top-level managers.
c. Increasingly, computer expertise is essential for being a good manager.
4. Conceptual skills involve the ability to think in abstract terms and to see how
parts fit together to form a whole. It is an important skill for top-level
managers.
1. Top management must be able to evaluate continually where the company
will be in the future.
PPT 6.30
5. Analytical skills refer to the ability to identify relevant issues and recognize
their relative importance, understand the relationships between them, and
perceive the underlying cause of a situation.
1. All managers need to think logically, but this skill is probably the most
important to the success of top-level managers.
2. Managers should be able to process a broad range of issues and to weigh

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Chapter 06 - The Nature of Management

different options before taking action.

3. Resolving ethical dilemmas requires analytical skills.
6. Human relations skills are the ability to deal with people.
1. Those who can relate to others, communicate well with others, understand
the needs of others, and show a true appreciation for others are generally
more successful than managers who lack such skills.
2. HR skills are especially important in high-contact service industry jobs
(hospitals, airlines, etc.).
3. For example, Southwest Airlines has excellent human relations skills.
PPT 6.32
G. Where do Managers Come From? Managers are made three ways:
1. Promoting from within
2. Hiring externally from other organizations
3. Hiring straight out of universities

PPT 6.33 LO 6-6

H. Decision Making: Decision making is important in all management functions
and all levels, whether the decisions are on a strategic, tactical, or operational
level. A systematic approach includes a six-step process.
PPT 6.34
1. Recognizing and Defining the Decision Situation
1) The first step in decision making is recognizing and defining the
situation—whether the situation is positive or negative.
2) Situations calling for small-scale decisions often occur without
warning; situations requiring large-scale decisions generally occur
after some warning signals.
3) Once a situation has been recognized, managers must define it.
PPT 6.35
2. Developing Options
a. The next step is to develop a list of possible courses of action.
b. Creativity is very important.
3. Analyzing Options
a. Next, managers should analyze the practicality and appropriateness of
each option.
b. When assessing appropriateness, a decision maker should consider
whether the proposed option adequately addresses the situation.
4. Selecting the Best Option
a. Selection is often a subjective procedure because many situations do
not lend themselves to mathematical analysis.
b. It may be possible to select a combination of several options.
PPT 6.36
5. Implementing the Decision
a. Implementation can be fairly simple or very complex, depending on
the action.
b. Managers should be ready to deal with unexpected consequences.
6. Monitoring the Consequences
a. Without proper monitoring, the consequences of decisions may not be
known quickly enough to make efficient changes.
b. If the desired result was not achieved, managers may discover that the
situation was incorrectly defined, or the decision was good even though
the desired result has not yet shown up, or that implementation was

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Chapter 06 - The Nature of Management

flawed.
PPT 6.38
I. The Reality of Management
A. Management is not a cut-and-dried process.
B. John P. Kotter says that management functions can be condensed into two basic
activities:
1. Figuring out what to do despite uncertainty, great diversity, and an
enormous amount of potentially relevant information.
2. Getting things done by a large and diverse set of people without having
direct control over most of them.
C. Managers spend as much as 75 percent of their time working with others.
1. Managers spend a lot of time establishing and updating an agenda of vague
and specific items that pertain to short-term goals and long-term objectives.
2. Managers also spend a lot of time networking—building relationships and
sharing information with colleagues.
a. Networks are not limited to immediate subordinates and bosses; they
include other people in the company as well as customers, suppliers,
and friends.
b. Networking helps managers carry out their responsibilities.
c. Websites like LinkedIn are helping managers and employees network
with one another to achieve their professional goals.
D. Managers spend a great deal of time confronting the complex and difficult
challenges facing business today.
E. It is only through creativity and imagination that managers can make effective
decisions that benefit their organizations.

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Chapter 06 - The Nature of Management

BOXED TEXT DISCUSSION QUESTIONS

Changing Management Styles: Looking Through Apple-Colored Lenses

Tim Cook was Apple’s corporate operations officer for many years before becoming CEO, so his
focus has been on operational and financial strategies. He still maintains the secretive nature of the
company but also has the human relations skills that Jobs seemed to lack. Yet although Cook seems to
possess the technical expertise and analytical skills necessary for the CEO position, some fear that he
lacks the conceptual skills that made Jobs such a visionary. A major concern is that Cook might
emphasize the business side of Apple over creatively designed products, leading to fears that Cook’s
leadership might change Apple’s culture for the worse. On the other hand, others feel that Cook might
bring Apple into a new era of competitiveness.

1. How does Tim Cook’s management style differ from Steve Job’s?
His focus has been on operational and financial strategies. Unlike Jobs, Cook has taken a more
traditional approach in his management style by prioritizing project and supply chain
management over creative engineering, attending investor meetings, being accessible to the
media, and paying out dividends to stockholders, among other activities. He still maintains the
secretive nature of the company but also has the human relations skills that Jobs seemed to
lack.

2. What skills does Tim Cook possess that gives him an advantage as a manager?
His focus has been on operational and financial strategies. Cook seems to possess the technical
expertise and analytical skills necessary for the CEO position. He also has the human relations
skills that Jobs seemed to lack.

3. Do you think Tim Cook will be as effective at running Apple as Steve Jobs?
Students’ answers will vary.

Successful Leaders Not Limited by Leadership Styles

Leadership is a dynamic and complex skill that can be separated into three categories: autocratic,
democratic, and free-rein. However, within these categories are a number of leadership styles and
characteristics. For instance, Microsoft founder Bill Gates was an autocratic leader who, according to
psychoanalyst Michael Maccoby, had a narcissistic leadership style. Herb Kelleher of Southwest
Airlines and Carlos Ghosn of Nissan are in the democratic leadership category. Free-reign or laissez-
faire leadership is rarer, but one good example is Google’s CEO Eric Schmidt. Schmidt’s idea of
leadership is allowing every employee to be a leader within the company. More than half of the most
successful CEOs are considered to be creative builders or visionaries who can inspire others.

1. Why might an autocratic style be suitable for certain organizations?

Large organizations that are spread out or divided into many groups could benefit from a strong
autocratic leader to make decisions quicker than a more democratic leader. Organizations where
the employees do not care to give input could benefit from an autocratic leader.

2. Why do you think Google has more of a free-rein style of leadership?

Google employees many independent, creative, self-motivated people who do not need strong
handed leadership, but instead prosper from being able to lead themselves.

3. What are the similarities that many successful leaders share despite differences in leadership
styles?

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Chapter 06 - The Nature of Management

More than half of the most successful CEOs are considered to be creative builders or visionaries
who can inspire others.

SUPPLEMENTAL LECTURE

The Mystique of Leadership

The textbook defines leadership as the “ability to influence employees to work toward organizational
goals.” The text also indicates that there are different kinds of leadership styles that are effective at
particular times and places and in the hands of certain leaders.

There is a mystique about the very word leadership. Leadership abilities may very well be in the eye of
the beholder. Why are some individuals considered to be leaders? These individuals exhibit charisma,
courage, charm, intelligence, and inspiration. Yet, people very close to the leader may know of many
weaknesses possessed by the distinguished leader.

Prime Minister Winston Churchill is an example of a leader who was able to obtain the respect and
loyalty of the British people during the six long years of war. Churchill had the ability to perk up the
spirits of the people; his speeches, broadcast over the BBC, are considered classics. In Churchill’s words,
there was a strong, quiet confidence that Great Britain would prevail against all enemies and that this
would be for all time referred to as “her finest hour.”

Despite the horrendous burden of government weighing heavily on his shoulders, Churchill found time
to be out among the people and when he did so, he was an inspirational model for those lucky Britons
who actually saw him. Winston Churchill appeared to be the perfect example of a leader.

John Colville was a personal secretary to Churchill for a long period, including the years from 1939 to
1945, during World War II. He kept a diary during those years, and in 1985 Colville’s notes were
published by W. W. Norton and Company as the Fringes of Power, 10 Downing Street Diaries 1939-
1955. Colville’s references to Churchill make his diary compelling reading.

Colville was aware of how popular Churchill was with the public. It should be noted that Colville
admired Churchill. Nevertheless, Colville witnessed—at extremely close range—some traits that
showed Churchill to be very much a normal human with normal failings. In fact, some of Churchill’s
behavior would appear to be the opposite of that which would influence others to work toward the
achievement of organizational goals. For example, there were times when Churchill could be extremely
inconsiderate of those who worked for him. Churchill often worked until 2:00 or 3:00 in the morning
and expected his staff to do the same. There is the example in which Churchill told his staff that they
would need to rise at 5:00 in the morning so the prime minister and his party could be off to their next
assignment by 7:00. The staff arose as told, but the prime minister proceeded to sleep very late without
giving so much as a fleeting thought to notifying his staff of the change in his plans, causing his entire
staff to lose some three hours of sleep. If the prime minister came to realize that he had been
inconsiderate, he would never apologize. Instead, he would be overly friendly to those he had wronged;
they were supposed to get the message.

Churchill, according to Colville, could be very petty and would hold grudges against political enemies
far beyond normal lengths of time. In private conversation, Churchill would say frightful things about
those political foes. If an idea came from the wrong person, Churchill would immediately criticize it.
There were times when his staff and even Mrs. Churchill had to step in and show the prime minister the
error of his ways.

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Chapter 06 - The Nature of Management

In the early days of his prime ministership, Churchill got personally involved in far too many things,
sending memos to numerous people in the government and the military on small matters that a good
sergeant could have taken care of. There were days when the staff surrounding Churchill felt that the
government was operating in a well-advanced state of confusion because of Churchill’s apparent lack
of administrative skill. Some felt that Churchill drank too much.

Despite the incidents that Colville reveals in his masterful diary, Churchill is still classified by most
historians as a great leader. And Colville—despite all he knows about the real Churchill—also concludes
that he was a truly great man. The mystery of the secret of leadership remains. How many faults can one
possess and still be effective at leading others? And can one be an effective leader in certain times and
places? It should be noted that shortly after the war ended, the British voted against Churchill’s party,
and he left his position of prime minister.

Discussion Questions:

1. Can you think of other well-known individuals who were perceived as great leaders, persons
also known for personal faults or frailties that could have led to a loss of leadership? What
made these individuals great leaders?
Student responses will vary.

2. Which leadership style did the great leaders mentioned above exhibit? Autocratic style?
Democratic style? Free-rein style?
Responses will vary depending on what the students wrote for Question #1. Churchill’s style would
most likely be autocratic.

CONTROVERSIAL ISSUE

Conflicting Communications of Managers

Managers need good human relations, or people, skills. They must be able to communicate goals, and
they have to understand their employees’ needs so that they can motivate them to perform. Managers
must also provide appropriate leadership.

Managers are not always very good at their jobs. Usually, poor management results from poor
communication or interpersonal skills. Typical of some employees’ experience is this one, told by David
Manning, a college student who worked as a radio announcer for a small station in a college town. The
manager-owner of the radio station, Greg Smith, had often told the members of his staff: “I want you to
know that my door is always open. Come in anytime if you have a suggestion to make our station the
best on the air. Come see me.”

The young announcer took the manager at his word. David noticed that the music staff gave the
announcer a list of numbers (such as 88745, 98432, 72341, etc.) of CDs to be pulled from the files and
played on a classical music program. The announcer observed that it would take the music staff just a
few more seconds to type after each number a notation, such as “Symphony #4 by Beethoven, Chicago
Symphony Orchestra, Bruno Walter conducting.” Such notations would save David (and other
announcers) a lot of time and would make the classical music program sound much better on the air.
David decided to make his suggestion to the manager. He went through the manager’s “open door” and
presented his ideas. Greg Smith, the manager, replied: “I don’t want you kids coming in here
complaining. If you can’t do the work, then quit. Your nitwit ideas are of no value to my radio station.”

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Chapter 06 - The Nature of Management

The manager went on and on for several minutes. At the conclusion of his tirade, the manager said to
David: “My door is always open; come back and see me with an idea anytime!”

Needless to say, David never returned to the manager’s office with any more suggestions.

Discussion Questions:

1. Did the manager give mixed signals to his employees? Why?

The manager definitely gave mixed signals to his employees. He probably wanted his leadership
style to appear democratic, but he had no idea how to do it. He didn’t want to give up control, even
though he wanted to appear to be a fair manager.

2. Can managers improve their management styles? How?

Students’ answers may vary.

SO YOU WANT TO BE A MANAGER—WHAT KIND OF MANAGER DO YOU WANT

TO BE?

What factors are leading to the increasing difficulty of management jobs?

The requirements for management jobs become more demanding with every passing year—with the
speed of technology and communication increasing by the day, and the stress of global commerce
increasing pressures to perform. There is also the consideration of restructuring and downsizing, which
has changed where jobs are available and has in some cases reduced the number of available positions.

CHECK YOUR PROGRESS

1. Why is management so important and what is its purpose?

Management is the process of coordinating human, physical, and financial resources to achieve an
organization’s objectives. Management is important because people in an organization must work
together to achieve some stated or implied objective. Management takes place in any organization
calling for the coordination of resources.

2. Explain why the American Heart Association would need management, even though its goal
is not profit-related.

All organizations whether profit or nonprofit organizations are involved with the process of
coordinating human, physical, and financial resources to achieve their objectives. Managers and
employees of nonprofit organizations work together to achieve the objectives of their organizations.

3. Why must a company have financial resources before it can use human and physical
resources?

An organization must have financial resources in order to purchase human resources (hire people)
and to purchase physical resources.

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Chapter 06 - The Nature of Management

4. Name the five functions of management and briefly describe each function.

The five functions of management include planning, organizing, staffing, directing, and controlling.
Planning is the process of selecting a course of action to achieve organizational objectives.
Organizing consists of structuring all resources and activities to accomplish objectives in an efficient
and effective manner. Staffing is hiring people to carry out the work of the organization. Directing
is motivating and leading employees to achieve organizational objectives. Controlling is evaluating
and correcting activities to keep the organization on course.

5. Identify the three levels of management. What is the focus of managers at each level?
The three levels of management include top management, middle management, and first-line
management. Top management includes the president and other top executives who have overall
responsibility for the organization. Middle management includes plant managers, division
managers, and other managers who have a narrower focus under top managers. First-line
management includes all the managers who supervise workers. These managers are involved in the
everyday operations of the organization.

6. In what areas can managers specialize? From what area do top managers typically come?

The areas of management include financial management, production and operations management,
human resources (personnel) management, marketing management, information technology
management, and administrative management. Financial managers deal primarily with an
organization’s financial resources. Production and operations managers are concerned with the
transformation of an organization’s resources into goods, services, and ideas. Human resources
managers deal with employees in a formalized manner as related to hiring, training, and benefits.
Marketing managers are responsible for planning, pricing, and promoting products and making them
available to customers. Information technology managers deal primarily with establishing,
maintaining, and controlling computer networks. Administrative managers do not specialize in any
particular area but manage an entire business or major segment of a business.

Many top executives come from financial management, production and operations management, or
marketing management. Most top managers are actually administrative managers.

7. What skills do managers need? Give examples of how managers use these skills to do their
jobs.

Skills needed by managers include leadership, technical expertise, conceptual skills, analytical
skills, and human relations skills. Leadership is the ability to influence and motivate employees to
work toward the achievement of organizational goals. Technical expertise is the specialized
knowledge needed to perform a job, such as managing an auto production line. Conceptual skills
are the ability to think in abstract terms so that a manager can fit parts together to form a whole
perspective of a business operation. Analytical skills are the ability to identify relevant issues and
recognize their importance, understand the relationships between them, and perceive their
underlying causes. Human relations skills involve dealing with people both inside and outside the
organization.

8. What are three styles of leadership? Describe situations in which each style would be
appropriate.

There are three styles of leadership: autocratic, democratic, and free-rein.

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Chapter 06 - The Nature of Management

Autocratic leaders make all decisions and then tell employees what must be done and how to do it.
Autocratic leaders work best when dealing with lower-level employees who are poorly motivated
and require more supervision to accomplish the task.

Democratic leaders allow their employees to get involved in decision making. Democratic leaders
work well in organizations that allow people to participate in decisions, such as accounting firms,
consulting agencies, middle- and upper-management areas, or corporations.

Free-rein leaders let their employees work without much interference. Free-rein leaders work well
in research and development firms where employees are highly educated and need freedom to
conduct research projects.
9. Explain the steps in the decision-making process.

Decision making is a six-step process that occurs at all management levels. The first step involves
recognizing and defining the situation. Step two involves developing possible courses of action,
both standard and creative ones. Step three involves analyzing the feasibility, appropriateness, and
consequences of each option. Step four involves selecting the best option from the list of options.
The decision is implemented in step five. Step six requires the monitoring of the decision’s
consequences. These steps in decision making should be viewed only as a broad framework to help
people in their approaches to decision making.

10. What is the mathematical formula for perfect management? What do managers spend most
of their time doing?

There is no mathematical formula for perfect management. Most management decisions are largely
subjective.

Most managers spend as much as 75 percent of their time working with others. They also spend a
lot of time establishing and updating an agenda of goals, networking with their colleagues, and
confronting the complex and difficult challenges in the business world today.

TEAM EXERCISE

Students will form groups and assign the responsibility of locating examples of crisis management
implementation for companies dealing with natural disasters (explosions, fires, earthquakes, etc.),
technology disasters (viruses, plane crashes, compromised customer data, etc.), or ethical or legal
disasters. They should ask themselves the following questions: How did these companies
communicate with key stakeholders? What measures did the company take to provide support to those
involved in the crisis? Report your findings to the class.

TERM PAPER OR PROJECT TOPICS

These topics can be assigned as individual or collaborative projects:

1. The Team Concept in Management
2. Management Training
3. The Importance of Computers for Modern Managers
4. Frederick Smith, CEO of Federal Express (or some other CEO)
5. Frederick Taylor, Father of Scientific Management

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Chapter 06 - The Nature of Management

GUEST SPEAKER SUGGESTIONS

1. A professor or teacher to talk about careers in management.

2. A manager from a local firm representing top-level management, middle management, or first-line
management.

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Chapter 06 - The Nature of Management

TEACHING SUGGESTIONS

1. Use the “Lecture Outline and Notes” and PowerPoint slides to highlight the main points of the
chapter.

2. Discuss the opening vignette and other boxed material. Use the “Boxed Text Discussion Questions”
to review some of this boxed material. Ask students how the boxed material relates to the major
functions of management, the three levels of management, and the skills managers need to be
successful.

3. Go over the “Check Your Progress” in the textbook.

4. Divide the class into six teams. (Large sections may require more than six teams.) Using the “Build
Your Skills” exercise in the textbook, assign each team one managerial function. The team should
decide on some examples of activities for which the managers might be involved. Have a team
representative report or write the examples on the chalkboard.

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