The Five Functions of Management
Creative Problem Solving
Planning
Organizing
Staffing
Directing
Controlling
The Foundation of ManagementExcel
Bernard L. Erven
Department of Agricultural Economics
Ohio State University Extension
Our Management Excel student:
A manager who happens to manage a farm or horticultural business.
A manager challenged to make efficient use of resources.
A manager challenged with getting things done through people.
A manager who has opportunity to use of all the tools of management that any other
manager uses.
A manager who has a way of life like any other manager.
Management Excel is about changing people not about changing businesses. We change
people by helping them improve their management skills. Our expectation is that with
these tools, they are then likely to change their businesses.
Management
In Management Excel, we start with an assumption of the universality of management.
Management is management. Management is generic. Management principles are general
rather than specific to a type of firm or organization. However, management is universal
only if the manager has become familiar with the specific situation in which it is applied.
Production technology, customer characteristics and the culture of the industry are
examples of specifics that managers need to learn to be effective in applying their generic
management skills.
A definition:(1)
Management is creative problem solving. This creative problem solving is accomplished
through four functions of management: planning, organizing, leading and controlling. The
intended result is the use of an organizations resources in a way that accomplishes its
mission and objectives. (Figure 1.1, From Higgins, page 7)
In Management Excel, this standard definition is modified to align more closely with our
teaching objectives and to communicate more clearly the content of the organizing
function. Organizing is divided into organizing and staffing so that the importance of
staffing in small businesses receives emphasis along side organizing. In the management
literature, directing and leading are used interchangeably. (Note figure of Management
Excel wheel)
Planning is the ongoing process of developing the business mission and objectives and
determining how they will be accomplished. Planning includes both the broadest view of
the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a
specific goal.
Organizing is establishing the internal organizational structure of the organization. The
focus is on division, coordination, and control of tasks and the flow of information within
the organization. It is in this function that managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the business.
Recruiting, hiring, training, evaluating and compensating are the specific activities
included in the function. In the family business, staffing includes all paid and unpaid
positions held by family members including the owner/operators.
Directing is influencing peoples behavior through motivation, communication, group
dynamics, leadership and discipline. The purpose of directing is to channel the behavior of
all personnel to accomplish the organizations mission and objectives while simultaneously
helping them accomplish their own career objectives.
Controlling is a four-step process of establishing performance standards based on the firms
objectives, measuring and reporting actual performance, comparing the two, and taking
corrective or preventive action as necessary.
Each of these functions involves creative problem solving. (Figure 4.2 from Higgins, page
118) Creative problem solving is broader than problem finding, choice making or decision
making. It extends from analysis of the environment within which the business is
functioning to evaluation of the outcomes from the alternative implemented.
An Important Qualification to Success
Management success is gained through accomplishment of mission and objectives.
Managers fail when they do not accomplish mission and objectives. Success and failure
are tied directly to the reasons for being in business, i.e., mission and objectives. However,
accomplishing mission and objectives is not sufficient. Success requires both effectiveness
and efficiency. Managers who accomplish their mission and objectives are said to be
effective. Efficiency describes the relationship between the amount of resources used
(input) and the extent to which objectives were accomplished (output). If the cost of
accomplishing an objective is prohibitive, then the objective is not realistic in the context
of the firms resources. Additional planning is necessary.
Management Skills
Management Excel concentrates on building management skills. There are three basic
management skills: technical, human and conceptual. A technical skill is the ability to use
tools, techniques, and specialized knowledge to carry out a method, process, or procedure.
(Higgins, page 13) Much of the technology that farmers know and can use so well comes
under this management skill. Human skills are used to build positive interpersonal
relationships, solve human relations problems, build acceptance of ones co-workers, and
relate to them in a way that their behavior is consistent with the needs of the organization.
Conceptual skills involve the ability to see the organization as a whole and to solve
problems in a way that benefits the entire organization. (Higgins, page 15) Analytical,
creative and intuitive talents make up the managers conceptual skills.
Introductory Management Excel programs (Managing for Success) pay little attention to
technical skills. Most managers in attendance have developed these skills far beyond their
human and conceptual skills. In some advanced Management Excel programs, e.g., animal
nutrition and financial management, the emphasis is on integration of technical, human
and conceptual skills rather than on a more traditional technical approach.
The relative importance of conceptual, human and technical skills changes as a person
progresses from lower, to middle, to top management. (Figure 1.4, Higgins, page 20)
Although all three management skills are important at all three levels of management,
conceptual skills become relatively more important at the top level of management. The
consistently high level of importance of human skills helps us understand why people
problems are so often cited as a core cause of business failure.
A Guarantee of Success?
Management Excel does not and can not guarantee management success. As excited as we
may be about the progress being made by some Management Excel graduates, the reality
is, “Sometimes the Dragon Wins!” (Note figure.) Both factors external to the firm
uncontrollable by managers and internal factors not perfectly controllable frustrate a
managers use of her or his management skills. Nevertheless, Management Excel remains
firmly grounded on the teaching of five functions of management with the conviction that
these functions define well what it is a manager must do to maximize the chances of
success.
________________________________________
Footnote: 1. This discussion of the functions of management draws on the basic reference
for Management Excel teaching: James Higgins, The Management Challenge, Second
edition, Macmillan, 1994.
Back to ManagementExcel Home Page
Planning
Bernard L. Erven
Department of Agricultural Economics
Ohio State University Extension
Planning is concerned with the future impact of todays decisions. It is the fundamental
function of management from which the other four stem. The need for planning is often
apparent after the fact. However, planning is easy to postpone in the short-run.
Postponement of planning especially plagues labor oriented, hands on managers.
The organizing, staffing, leading and controlling functions stem from the planning function
(Higgins, Figure 6.1.) The manager is ready to organize and staff only after goals and plans
to reach the goals are in place. Likewise, the leading function, influencing the behavior of
people in the organization, depends on the goals to be achieved. Finally, in the controlling
function, the determination of whether or not goals are being accomplished and standards
met is based on the planning function. The planning function provides the goals and
standards that drive the controlling function.
Planning is important at all levels of management. However, its characteristics vary by
level of management. (Figure 6.2) Note in this figure that the characteristics of the world
being simple, certain, structured and short-term often become rationalizations for top
managers not to plan. Top managers acting as if they are lower level managers plagues
planning.
Planning Terminology
Basic planning terminology is illustrated in Figure 6.3. The order from general to specific
is: vision-mission-objectives-goals (Figure 6.4.) (Note–>In ManagementExcel practice
established before the use of Higgins as the basic reference, we adopted the order:
vision-mission-objectives-goals. The Higgins text switches the order of objectives and
goals. In reading the Higgins text, simply substitute the term objective for goal and the
term goal for objective.) The key terms are defined as follows:
Vision Nonspecific directional and motivational guidance for the entire organization. Top
managers normally provide a vision for the business. It is the most emotional of the four
levels in the hierarchy of purposes.
Mission An organizations reason for being. It is concerned with scope of the business and
what distinguishes this business from similar businesses. Mission reflects the culture and
values of top management.
Objectives Objectives refine the mission and address key issues within the organization
such as market standing, innovation, productivity, physical and financial resources,
profitability, management and worker performance and efficiency. They are expected to be
general, observable, challenging, and untimed.
Goals Goals are specific statements of anticipated results that further define the
organizations objectives. They are expected to be SMART: Specific, Measurable,
Attainable, Rewarding, and Timed.
Development of tactics is a fifth level of planning. Tactics, the most specific and narrow
plans, describe who, what, when, where and how activities will take place to accomplish a
goal.
Strategic Planning
Strategic planning is one specific type of planning. Strategies are the outcome of strategic
planning. An organizations strategies define the business the firm is in, the criteria for
entering the business, and the basic actions the organization will follow in conducting its
