Principles Of Management

Principles Of Management

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Principles Of Management


This section is about management , which can be defined as the art of getting things done through people in organizations. As we will see, management can be an enormously creative endeavor. Managers are not bureaucrats. They do more than just keep the trains running on time.

Managers can also give organizations a sense of purpose and direction. As Wal-Mart’s founder Sam Walton was fond of saying, they can motivate “ordinary people to do extraordinary things.” They can transform organizations; they can create new ways of producing and distributing goods and services; and they can change how the world works through their actions.

Think about what some of the greatest managers of this era have done. Sam Walton built Wal-Mart from scratch into the largest retailer in the world. Lou Gerstner repositioned IBM from a troubled manufacturer of mainframe computers into the dominant provider of computer software services in the world. Jack Welch reenergized General Electric, transforming a tired engineering conglomerate into an efficient, vibrant, entrepreneurial enterprise that set the standard for excellence in many industries in which it competed.

In the late 1970s Steve Jobs of Apple Computer gave the world the first mass marketed, easy-to-use personal computers; today Apple under Jobs’s management is still driving innovation with its iPod music player. Meg Whitman provided the leadership that helped eBay become the world’s first and most successful online auction house, revolutionizing the auction industry.

Throughout here will discuss how great managers like these work through people to do remarkable things. First, however, we must better understand the basic functions of management, where you can find managers in an organization, how one becomes a manager, the nature of managerial work, the roles managers adopt to get things done through people, and the different competencies that are required to become a good manager.

The Functions of Management

In the early 20th century a French industrialist named Henri Fayol stated that management had five main functions: planning, organizing, commanding (that is, leading), coordinating, and controlling. A lot of water has passed under the bridge since Fayol wrote about management, and we have learned much about the theory and practice of management; but in a testament to the robustness of Fayol’s original formulation, a modified version of Fayol’s list is still widely used.

This list identifies four management functions: planning, organizing, controlling, and leading (Fayol’s fifth function, coordinating, is now treated as an aspect of organizing). In this book we focus on these four main functions of management, but we have broadened the definition of those functions somewhat to better represent the realities of management practice in the 21st century. The four functions that we discuss are

  1. planning and strategizing,
  2. organizing,
  3. controlling, and
  4. leading and developing employees.


Planning is a formal process whereby managers choose goals, identify actions to attain those goals, allocate responsibility for implementing actions to specific individuals or units, measure the success of actions by comparing actual results against the goals, and revise plans accordingly. Planning takes place at multiple levels in an organization and is an ingrained part of a manager’s job.

Planning is used by senior managers to develop overall strategies for an organization (a strategy is an action that managers take to attain the goals of an organization). Planning, however, goes beyond strategy development to include the regulation of a wide variety of organizational activities.

Managers plan expenditures every year in a budgeting process. Managers draw up plans for building new factories, opening new offices, implementing new information systems, improving inventory control systems, introducing new products, launching new marketing campaigns, rolling out employee benefits programs, dealing withcrises, and so on. To be sure, many of these plans are linked to the strategy of the enterprise.

The allocation of financial resources specified in an organization’s budget for the comingyear, for example, should be driven by the strategy of the organization. However, planning isoften about formalizing a strategy that has already been selected and documenting the stepsthat managers must follow within the organization to put that strategy into effect.

Although planning is a useful process for generating strategies, strategizing involves more than planning. Strategizing is the process of thinking through on a continual basis what strategies an organization should pursue to attain its goals.

Strategizing involves being aware of and analyzing what competitors are doing; thinking about how changes in the external environment, such as changes in technology or government regulations, impact the organization; weighing the pros and cons of alternative strategies; anticipating how competitors might respond to these strategies; and choosing a course of action. When Rose Marie Bravo decided to reposition Burberry as a hip, high-end fashion brand, she was strategizing.

Whereas planning is a formal process for generating the strategies of an organization, strategies can also arise in the absence of planning. For example, anyone who has walked into a Starbucks store may have noticed that in addition to various coffee beverages and food, the company also sells music CDs.

Most Starbucks stores now have racks displaying about 20 CDs. Reports suggest that when Starbucks decides to carry a CD, it typically ranks among the top four retailers selling it. The interesting thing about Starbucks’ entry into music retailing is that it was not the result of a formal planning process.

The company’s journey into music retailing started in the late 1980s when Tim Jones, then the manager of Starbucks’ store in Seattle’s University Village, started to bring his own tapes of music compilations into the store to play. Soon Jones was getting requests for copies from customers. Jones told this to Starbucks’ CEO Howard Schultz and suggested that Starbucks start to sell its own music. In other words, Jones was strategizing .

At first Schultz was skeptical, but after repeated lobbying by Jones he eventually took up the suggestion. Today Starbucks not only sells CDs; it is also moving into music downloading with its Hear Music Starbucks stores, where customers can listen to music from Starbucks’ 200,000-song online music library while sipping their coffee and burning their own CDs.

Starbucks’ strategy to enter the music retailing business emerged from the grass roots of the organization in the absence of planning. It was the result of strategizing by an individual store manager, and only after some time was the strategy adopted by senior managers. As we will see later, strategy often develops in this way. Managers at all levels in an organization spend a lot of time strategizing. It is an important aspect of their jobs.

Sometimes they do this as part of a formal planning process, but strategic thinking also goes on without planning. This is not to belittle the importance of planning, which has an important role in organizations. However, strategizing is more than just planning—it involves constantly thinking through strategic alternatives.


Organizing refers to the process of deciding who within an organization will perform what tasks, where decisions will be made, who reports to whom, and how different parts of the organization will coordinate their activities to pursue a common goal.

In a business, organizing typically involves dividing the enterprise into subunits based on functional tasks—such as procurement, R&D, production, marketing, sales, customer service, human resources, accounting, and finance—and deciding how much decision-making authority to give each subunit.

Organizing is part of planning and strategizing:

As we discuss later, strategy is implemented through organization. For example, to implement the decision to expand Starbucks’operations into online music, Howard Schultz set up a separate unit within Starbucks called Hear Music; placed an executive, Don MacKinnon, in charge of that unit; and gave him the task of rolling out Hear Music in Starbucks’ stores across the country. MacKinnon, together with his unit, is thus responsible for implementing the strategy of growing Starbucks music business.


Controlling is the process of monitoring performance against goals, intervening when goals are not met, and taking corrective action. Controlling is just as important as planning, strategizing, and organizing. Without control systems to verify that performance is hitting goals, an organization can veer off course. Controlling is also linked to planning and strategizing and to organizing. Drafting plans is the first step in controlling an organization.

Controlling requires managers to compare performance against the plans to monitor how successful an organization is at implementing a strategy. Thus at Starbucks, Don MacKinnon has been given goals related to the rollout and sales of Hear Music, and his success at implementing the strategy will be assessed by comparing actual performance against the goals.

An important aspect of controlling is creating incentives that align the interests of individual employees with those of the organization, helping to ensure that everyone is pulling in the same direction. An incentiveis a factor, monetary or nonmonetary, that motivates individuals to pursue a particular course of action. Starbucks, for example, has a long history of giving stock-based compensation to employees. The thinking here is that stock-based incentive pay will induce employees to look for ways to improve the performance of the organization, thus increasing the company’s stock price and their own wealth.

So perhaps it is no surprise that Tim Jones, who was not only a store manager but also a stockholder, actively lobbied senior management to persuade them to sell music in the stores. With the right incentives in place, employees will work productively and control their own behavior, which reduces the need for close personal supervision and other intrusive control methods.


Leading is the process of motivating, influencing, and directing others in the organization to work productively in pursuit of organization goals. Leading also entails articulating a grand strategic vision for an organization and becoming a tireless advocate for that vision.

Rose Marie Bravo was thought of as a great manager in part because she was good at persuading other employees to accept her transformational strategic vision for Burberry, and she excelled  at motivating, influencing, and directing people. As in the case of Rose Marie Bravo, leading also involves listening to others, learning from them, and empowering them to pursue actions that benefit the organization.

An important aspect of leading is developing employees. Developing employees refers to the task of hiring, training, mentoring, and rewarding employees in an organization, including other managers. It is often said that people are the most important asset of an organization.

Academics talk about the value of the human capital of an enterprise, by which they mean the skills and motivations of its employees; they assert that human capital can be a source of competitive advantage. Rose Marie Bravo recognized the importance of human capital when she took on the top management position at Burberry.

One of her first actions was to recruit a top-notch team of managers and creative designers through which she could get things done. Management expert Peter Drucker has emphasized that hiring and promoting the right people are among the most important management tasks because they have lasting consequences for the organization and are difficult to reverse. Unfortunately Drucker also estimates that many managers are not good at this function.

According to Drucker, about one in three selection and promotion decisions is only minimally effective. The legendary former CEO of General Electric, Jack Welch, seen by many as one of the best managers of the 20th century, estimated that he spent 70 percent of his time as CEO developing and selecting other managers, mentoring them, and evaluating their performance.

Leading and developing employees are in many ways the core connection among planning and strategizing, organizing, controlling, and creating incentives. Skilled leaders

  • Drive strategic thinking (strategizing) deep within the organization while articulating their own vision for the organization.
  • Have a plan for their organization and push others to develop plans.
  • Proactively structure the organization to implement their chosen strategy.
  • Exercise control with a deft hand, never seeming too overbearing or demanding, while at the same time never taking their eyes off the ball.
  • Put the right kinds of incentives in place.
  • Get the best out of people by persuading them that a task is worthy of their effort.
  • Build a high-quality team of other managers and employees through which they can workto get things done.

Without skilled leaders strategy may fail. The organization may become bureaucratic; control may be lost; employees will lack incentives and motivation; and the organization may suffer insufficient human capital.

Types of Managers

Managers are found at multiple levels in an organization. They may lead an entire organization as Rose Marie Bravo did at Burberry; or they may head functions, departments, or units. There are three main types of managers: general managers, functional managers, and frontline managers. General managers are responsible for the overall performance of an organization or one of its major self-contained subunits or divisions.

Functional managers lead a particular function or a subunit within a function. They are responsible for a task, activity, or operation such as accounting, marketing, sales, R&D, production, information technology, or logistics. Frontline managers manage employees who are themselves not managers. They are found at the lowest level of the management hierarchy.

For illustration, consider a large diversified enterprise like General Electric. General Electric is active in many different businesses: Among other things, it makes jet engines, power plants, medical equipment, railway locomotives, and lighting products. GE also sells insurance, owns NBC, and offers a wide range of financial services, particularly to industrial customers. GE is organized into different business divisions, and each division has its own functions, such as R&D, production, marketing, sales, and customer services.

GE is thus known as a multidivisional enterprise. Multidivisional enterprises like GE have four main levels of management: the corporate level, the business level, the functional level, and frontline managers. General managers are found at the corporate and business levels. Functional managers are found within the divisions where they manage functions or subunits within those functions. Frontline managers are found deep within functions managing teams of nonmanagement employees.


The principal general manager at the corporate level is the chief executive officer (CEO), wholeads the entire enterprise. In a multidivisional enterprise the CEO formulates strategies that span businesses—deciding, for example, whether to enter new businesses through acquisitions or whether to exit a business area. The CEO decides how the enterprise should be organized into different divisions and signs off on major strategic initiatives proposed by the heads of divisions. The CEO exercises control over divisions, monitoring their performance and deciding what incentives to give divisional heads. Finally, the CEO helps develop the human capital of the enterprise.

At General Electric Jeffery Immelt has been the CEO since 2001. Immelt has articulated a grand vision that includes pushing GE into environmentally friendly technologies. Immelt is doing this because he thinks it makes good business sense. He believes that tighter environmental standards are inevitable, that environmentally friendly technologies are also cost-efficient, and that customers will increasingly demand them.

Thus GE is investing in more fuel-efficient locomotives and jet engines; coal-based power plants that use technologies to strip almost all pollutants out; technologies for sequestering carbon dioxide emissions; water purificationsystems; and power-generating windmills. Under Immelt GE is also exiting some businesses  that do not fit his strategic vision, including GE’s insurance business, which he sold to Swiss Reinsurance Co. in 2006 for $6.8 billion.

The CEO of a corporation also manages relationships with the people who own the company— its shareholders. The CEO reports to the board ofdirectors, whose primary function is to make sure the strategy of the company is consistent with the best interests of shareholders. The CEO also normally sits on the board and spends considerable time describing company strategy to shareholders.

Members of the top management team help the CEO in all of this. The team normally includes a chief financial officer (CFO), who is responsible for the overall financing of the corporation. It may also include a chief operating officer (COO), who makes sure operations are run efficiently within the company; and in some high-technology enterprises a chief technology officer (CTO) is responsible for developing new technologies and products within the corporation.


With a multi divisional enterprise such as General Electric, business-level general managershead the different divisions. GE has general managers running its power generation business, medical equipment business, lighting business, and so on. These general managers report directly to Jeffery Immelt. Within an organization that is active in just one line of business, such as Burberry or Starbucks, the business and corporate levels are the same.

Business-level general managers lead their divisions—motivating, influencing, and directing their subordinates—and are responsible for divisional performance. Business-level general managers translate the overall strategic vision for the corporation into concrete strategies and plans for their units. Thus the head of GE’s locomotive business, together with that team, has formulated strategies for making locomotives more environmentally friendly.

These include the development of diesel locomotives with lower emissions and hybrid diesel–electric engines. Business-level managers often have considerable latitude to develop and implement strategies that they believe will improve the performance of their divisions, so long as those strategies are consistent with the overall goals and vision for the entire corporation.

 Businesslevel general managers organize operations within their division, deciding how best to divide tasks into functions and departments and how to coordinate those subunits so that strategy can be successfully implemented. Business-level general managers also control activities within their divisions, monitoring performance against goals, intervening to take corrective action when necessary, and developing human capital.


Below general managers we find functional managers, who are responsible for specific business functions that constitute a company or one of its divisions. Thus a functional manager’s sphere of responsibility is generally confined to one organizational activity (purchasing, marketing, production, or the like), whereas general managers oversee the operation of the entire company or a self-contained division.

The head of each function leads that function. Functional managers motivate, influence, and direct others within their areas. Although they are not responsible for the overall performance of the organization, functional managers nevertheless have a major strategic role: to develop functional strategies and draft plans in their areas that help fulfill the strategic objectives set by business- and corporate-level general managers.

In GE’s aerospace business,for instance, manufacturing managers develop manufacturing strategies consistent with the corporate objective of producing environmentally friendly products and generating high performance.

They might, for example, decide to implement process improvement programs to improve quality and boost employee productivity. Moreover, functional managers provide most of the information that makes it possible for business- and corporate-level general managers to formulate realistic and attainable strategies. Indeed, because they are closer to customers than are typical general managers, functional managers themselves may generate important ideas that subsequently may become major strategies for the company.

Thus it is important for general managers to listen closely to the ideas of their functional managers. An equally great responsibility for managers at the functional level is strategy implementation: the execution of corporate- and business-level strategies.

The heads of functions are responsible for developing human capital within their organizations. They also organize their functions into subunits such as departments or teams; exercise control over those subunits; set goals; monitor performance; provide feedback; and make adjustments if necessary. Thus the manufacturing function might be further subdivided into departments responsible for specific aspects of the manufacturing process.

There might be a procurement department, a production planning department, an inventory management department, and a quality assurance department. Each department will have its own managers, who report to their superiors, the functional heads; those managers will be responsible for leading their units, organizing and controlling them as necessary, strategizing for the tasks under their control, and developing employees within their units.


Furthest down the management hierarchy are frontline managers, who manage employees who are themselves not managers. A frontline sales manager might manage 10 salespeople; a frontline manager in manufacturing might manage a work group of employees who physically assemble a product; and a frontline engineering manager in a software company might manage a group of developers writing computer code.

Most complex organizations have many frontline managers. For example, the oil and energy company BP has some 10,000 frontline managers who oversee 80 percent of the organization’s 100,000 employees.

They work in every part of the company— from solar plants in Spain to drilling rigs in the North Sea and marketing teams in Chicago. Their decisions, in aggregate, have an enormous impact on BP’s performance. 13 Most successful managers begin their managerial careers as frontline managers. In this job they encounter the realities of management, which as we will see in the next section often differ from their expectations.

Frontline managers are critical to maintaining the performance of an organization. They lead their teams and units. They strategize about the best way to do things in their units and about the best strategies for their functions and the company. They plan how best to perform the tasks of their units. They organize tasks within their teams, monitor the performance of their subordinates, and try to develop the skills of their subordinates.

As we saw in the case of Tim Jones at Starbucks, who was a frontline manager responsible for the performance of an individual store, frontline managers can have an impact significantly beyond their jobs. In some cases they can influence the destiny of an entire organization.

Becoming a Manager

As we have just seen, managers are found at multiple levels within an organization. Although their precise roles and responsibilities vary depending on their levels in the organization, all managers have to lead and develop other employees, plan and strategize for their units, organize their units, and apply controls and incentives. How do people become managers, and what is the job like?


The journey into management typically begins when people are successful at a specialist task for which they were initially hired. For example, Microsoft hires many software engineers. Initially these people are recruited for their ability to write computer code; but if they succeed at this job, they may find themselves in charge of other software engineers, becoming development leads (a frontline position at Microsoft). At this point their management skills are just as important as their technical skills in fulfilling their responsibilities. People who cannot get things done through other people will not advance further.

If they are successful, they may be promoted again and one day become general managers. A relevant case is John DeVaan, who was hired to write computer code after finishing an undergraduate computer science program at Oregon State University in 1985. Initially he worked on Excel. DeVaan’s technical success soon brought him to the attention of his superiors, and he was promoted, becoming a development lead.

He managed this successfully too, and further promotions followed. He directed software development for Office 95 and Office 97 and was ultimately promoted to lead Microsoft’s Desktop Applications Business (the unit responsible for Office), growing that to a $7 billion business.

DeVaan then became the general manager of Microsoft’s TV division. Today he is senior vicepresident of engineering excellence at Microsoft and part of the business leadershipteam. To be sure, DeVaan was valued and promoted for his technical skills; but he would not have advanced had he not also been a great manager who excelled at leading and developing employees, planning and strategizing, organizing, and controlling.

More generally, whatever people’s disciplinary backgrounds and initial functional assignments, if they are successful they may find themselves promoted into managerial roles. Accountants and finance professionals may manage other accounts and finance professionals; engineers working in production may manage other engineers; scientists in R&D may manage other scientists; and salespeople might find themselves managing part of the sales force.

In these new roles technical skills remain important, but now people also have to manage. If they succeed, like John DeVaan they may find themselves promoted to general management positions, running entire divisions of an organization where their ability to lead, plan, develop strategy, organize, control, and motivate through incentives become  paramount importance. So the art of management is relevant to almost anyone who joins an organization with ambition and the ability to succeed, whatever his or her disciplinary background.


Harvard Business School Professor Linda Hill wanted to discover what work life was like for functional specialists who had been newly appointed to management positions, so she followed 19 newly appointed frontline managers through their first year as managers. These managers had all been star performers as functional specialists, and their promotions to management positions were seen as rewards and an opportunity for career advancement.

Hill documented the enormous difference between their expectations as they entered the job and the reality they soon encountered. Initially the new managers believed that their job was to exercise formal authority, making decisions and telling others what to do—in effect, to be the “boss.” They also thought they would be able to continue doing the technical work they had been doing, “only with more power and control.” These expectations were shattered by reality.

After six months the new managers found themselves struggling with the fast-paced nature of the job. The managers found that they were in constant demand from subordinates, peers, and their own bosses. There was little time for quiet reflection. The workload was heavier than they had anticipated, and the job was more fragmented with many issues requiring attention during a typical day. Some yearned for the “simple days” when all they had to do was focus on their functional tasks. Now they had to process a significant amountof mail, deal with personal issues, and meet with peers and their own bosses, customers, suppliers, and so on.

These observations echoed work by Henry Mintzberg, who followed managers around and found that on average they processed 36 pieces of mail each day, attended eight meetings, and took a tour through the building or plant. Recent work by Mintzberg confirms the impression that a day in the life of an average manager is fragmented, full of different tasks, and characterized by constant interruptions and involves significant interpersonal networking.

Before long most of the new managers in Linda Hill’s study discovered that formal authority was a limited source of power: Their subordinates didn’t necessarily listen to them! Moreover, they found out that to get things done, they had to work closely with peers and their bosses—people over whom the new managers had no formal authority. Hill noted that the most demanding issues managers encountered in their first year on the job all had to do with“people challenges.”

They had to learn how to influence subordinates, peers, and their ownbosses to get things done, and they had to establish trust and credibility with their subordinates,peers, and bosses before they could influence them. Being known as a star individualcontributor is rarely enough; managers earn trust and credibility largely through interpersonalinteractions on the job.

Over time the managers in Hill’s study discovered that they had two sets of responsibilities: agenda setting for their teams and network building within the organization. Most new managers grasped the importance of agenda setting quickly, but the importance of building networks took longer to sink in. Managers must realize that to get things done and to help their own team succeed, they must work closely with a network of peers and superiors, persuading them to buy into the agenda of the manager’s team.

They have to be network builders, good at managing relationships. Hill concluded that new managers go through a psychological change during their first year on the job. They learn through experience to see themselves not as technical experts or functional specialists, but as leaders and network builders—not as bosses who get things done through command and control, but as people who get things done through their ability to influence and persuade others.

Managerial Roles

Managerial roles are specific behaviors associated with the task of management. Managers adopt these roles to accomplish the basic functions of management just discussed—planning and strategizing, organizing, controlling, and leading and developing employees. One of the earliest and most enduring descriptions of managerial roles comes from Henry Mintzberg,who (as we have already noted) shadowed managers observing what they did during the day.

Mintzberg developed a list of roles that he grouped into three categories: interpersonal roles, informational roles, and decisional roles. Mintzberg emphasized that managing is an integrated activity, so these roles are rarely distinct. Visiting clients, for instance, usually relates to two or more roles simultaneously.

Mintzberg’s work has been replicated many times. Most researchers have found similar sets of roles (although there are some variations in labels and categories).  The roles that Mintzberg identified flesh out the richness of managerial work and tell us how managers behave and what they do when trying to perform the main functions of management.


Interpersonal roles are roles that involve interacting with other people inside and outside the organization. Management jobs are people-intensive: Research suggests that managers spend somewhere between 66 and 80 percent of their time in the company of others. 20 Seldom do managers work alone for long periods without outside communication. As Linda Hill noted, managers get things done through their network of interpersonal relationships. Mintzberg identified three types of interpersonal roles: a figurehead role, a leader role, and a liaison role.

Managers at all levels are figureheads . They greet visitors, represent the company at community events, serve as spokespeople, and function as emissaries for the organization. For example, when Atlanta-based Chick-fil-A opens a new restaurant, it gives a year’s worth of free meal coupons to the first 100 customers. This incentive draws big crowds, who camp outside the restaurant before opening day in the hope of being among the first 100 customers.

The chain’s president, Dan Cathy, joins them, camping outside the night before the opening, chatting with them, and then signaling the grand opening by playing his trumpet. By doing this, Cathy is acting as a figurehead for Chick-fil-A. At lower levels in a company, functional and frontline managers perform a variety of figurehead roles. They welcome new staff, help their teams celebrate performance milestones, give performance awards to employees, accompany senior executives or outside visitors on tours through the work area, and so on.

Earlier we noted that leadership is one function of management, and it is perhaps the most pivotal. However, leadership is more than a function that managers must fulfill.Managers also take on a leadership role to get things done within organizations. Managers behave as leaders to influence, motivate, and direct others within organizations and to strategize, plan, organize, control, and develop. A central task of leaders is to give their organizations a sense of direction and purpose.

They do this by identifyand articulating strategic visions for the organizations (by strategizing) and then by motivating others to work toward this vision. This is exactly what Rose Marie Bravo did at Burberry: She gave the organization a strategic vision, repositioning it as a hip, high-end brand, and she engaged Burberry’s employees in that vision.

In their liaison role managers connect with people outside their immediate units.These may be the managers of other units within the organization or people outside the organization,such as suppliers, buyers, and strategic partners. An important purpose of suchliaisons is to build a network of relationships.

Managers can use their networks to help coordinatethe work of their units with others, to gain access to valuable information, andmore generally to get things done and further their own agendas within the organization. AsLinda Hill observed in her research, building a network is one of the most important tasksthat new managers face.


Informational roles are concerned with collecting, processing, and disseminating information. Managers collect information from various sources both inside and outside the organization, process that information, and distribute it to others who need it. Mintzberg found that managers 40 percent of their time in these tasks. Mintzberg divided the information roles of management into three types: monitor, disseminator, and spokesperson.

As monitors managers scan the environment both inside and outside the organization. At Microsoft, for example, CEO Steve Ballmer is constantly reviewing competitive, technological, and regulatory trends in the markets in which Microsoft competes. He also monitors the performance of the different units within Microsoft, assessing, for example, how well the Windows, Office, and Xbox businesses are performing against targets.

Managers rely on both formal and informal channels to collect the information required for effective monitoring. Formal channels include the organization’s own internal accounting information systems and data provided by important external agencies.

Managers at Microsoft, for example, can access through the company’s intranet a vast electronic library of research reports produced by external consulting companies and stock analysts that profilecompetitive trends and competitors in all the relevant markets. Informal channels include the manager’s own personal network, which can be a great source of qualitative information and useful gossip.

By monitoring the external competitive and internal organizational environment for information, managers try to gain knowledge about how well the organization is performing and whether any changes in strategy or operational processes are required. At Seattle-based retailer Nordstrom, for example, the first thing President Blake Nordstrom does when he gets to his desk every day is review sales figures from all company stores for the previous day.

He compares these figures against targets; looks for trends; and if there is variance considers whether the company should take corrective action. In this respect the monitoring role of management is part of the controlling function. In addition, the information collected from monitoring can help managers think more clearly about the company’s strategy.

One thing managers do with this information is disseminate it to direct reports and others inside the organization. In their dissemination role managers regularly inform staff about the company’s direction and sometimes about specific technical issues. At the supervisory level, the disseminator role often takes the form of one-to-one informal conversations with specific employees about particular matters.

In their spokesperson role, managers deliver specific information to individuals and groups located outside their department or organization. Sales managers communicate with business partners regarding new sales strategies. Division heads give presentations to their colleagues in other divisions about strategies and resource requirements.

CEOs meet with investors, government officials, community leaders, and others to convey information about company developments of interest to those stakeholders. These are more than figurehead activities: They communicate valuable information to important constituencies, and in doing so they can help to shape their perception of the organization and the way they interact with it.

For example, if by sharing information the CEO of a company can successfully persuade investment analysts that his company is pursuing a good strategy, they may write a favorable investment report. In turn, this might lead to an increase in the company’s stock price, making it easier for the company to raise additional capital from investors in the future by issuing new stock.


Management guru Peter Drucker once wrote that whatever managers do, they do through making decisions. The information collected through monitoring is directed toward discovering problems or opportunities, weighing options, making decisions, and ensuring that those decisions are put into action. Whereas interpersonal roles deal with people and informational roles deal with knowledge, decisional roles deal with action.

They translate the people and information into processes with the purpose of moving the organization toward its strategic goals. Mintzberg identified four decision roles: entrepreneur, disturbance handler, resource allocator, and negotiator.

To survive in competitive markets, firms must be entrepreneurial. They must pioneer new products and processes and quickly adopt those pioneered by others. In their role as entrepreneurs, managers must make sure that their organizations innovate and change when necessary,developing or adopting new ideas and technologies and improving their own products and processes. They must make decisions that are consistent with such entrepreneurial behavior.

If they do not, their organizations will be quickly outflanked by more nimble competitors. Rose Marie Bravo is a good example of what happens when a manager successfully adopts the entrepreneur role. She made decisions that encouraged creativity within Burberry, leading directly to the development of new product offerings that appealed to a wider customer base.

Managing is full of paradoxes, and this is partly apparent when we contrast the proactive entrepreneurial role with the reactive disturbance handler role. Disturbance handling includes addressing unanticipated problems as they arise and resolving them expeditiously. In managerial work unanticipated problems arise often. Sales may grow more slowly than anticipated; excess inventory may accumulate; production processes may break down; valuable employees might leave for jobs elsewhere; and so on. Managers must decide what to do about these unanticipated problems—often quickly.

An important class of management decisions involves resource allocation . Organizations never have enough money, time, facilities, or people to satisfy all their needs. Resources are scarce and can be used in many different ways. A crucial decision responsibility of managers is to decide how best to allocate the scarce resources under their control between competing claims in order to meet the organization’s goals.

As a resource allocator, a manager in charge of product development, for example, may have to assign people, money, and equipment to three different product development teams. A marketing manager may apportion money between media advertising and point-of-sale promotions. A production manager may havelimited funds for new equipment. In general, resource allocation decisions should be guided by the strategy of the organization.

Negotiating is continual for managers. They negotiate with suppliers for better delivery, lower prices, and higher-quality inputs. They negotiate with customers over the pricing, delivery, and design of products and services. They negotiate with peers in their own organization over shared resources and cooperative efforts. They negotiate with their superiors for access to scarce resources, including capital, personnel, and facilities.

They even negotiate with subordinates in their own work unit, trying to allocate employees between tasks to meet the goals of both the organization and individual employees. Managers who are successful when making negotiation decisions can lower input costs, strike better deals with customers, gain access to more high-quality resources within the organization, and better organize their own subordinates. Skilled negotiators are more likely to successfully implement strategy and raise the performance of their organizations.


Mintzberg’s work is useful for what it tells us about the nature of managerial work and the behaviors managers must adopt to execute successfully the functions of management. Nevertheless, his model of managerial roles has limitations. First, the model tells us what managers do, but it does not tell us what they should do. Remember, the model was derived by watching managers at work. Simply because managers routinely engage in an activity does not mean that they should pursue that activity.

As a practical matter, all of the roles described in Mintzberg’s model seem important, and most successful practicing managers probably engage in all of them at least occasionally. However, some roles may be more important than others and more deserving of management time and effort. The leader role, for example, is probably far more important than the figurehead role for managerial success.

Second, Mintzberg does not mention some important roles of managers. For example, evidence shows that managers can improve strategic thinking and decisions within their organization by taking on the role of devil’s advocate , questioning the logic underlying proposed decisions to expose flawed thinking. Similarly, many successful managers adopt a mentoring role with their subordinates. As mentors, managers draw on their own experiences to offer important insights to their subordinates, coaching them on how to become better managers.

A further limitation of Mintzberg’s managerial roles model is that it is context dependent. The managerial roles model tries to describe what all managers do in all situations. The reality, of course, is that what managers do depends partly on the situation. For instance, one study noted that chief executives in local government agencies do not perform the public figurehead role because it is assigned to politicians. Similarly, some decision-making roles are limited for managers in government agencies because key decisions are made by politicians. Other studies have reported that the size of an organization has an impact on management roles.

One study reported that managers of small growth-oriented businesses experience more brevity and fragmentation in their work than do managers in large companies. The absence of formal structure in these companies also changes the amount of time spent on some roles versus others.Studies also report that the importance of specific managerial roles varies across cultures.

A final limitation of the model is that it does not reveal much about how to perform these different roles. To be sure, it is interesting to know that managers engage in negotiations all the time, that they have an important monitoring role, and that they allocate resources between competing claims. But what a practicing manager really wants to know is how to improve the performance of these tasks. This is precisely the focus here.

Management Competencies: Do You Have What It Takes?

To fulfill the roles that were just described, managers need to have the “right stuff.” They must possess several competencies —skills, values, and motivational preferences—that allow them to perform their jobs effectively and become proficient at planning and strategizing, organizing, controlling, developing, and leading. We might be gifted with some competencies at birth, but most are developed through upbringing, education, and experience. No single set of competencies represents the perfect combination for successful management. Instead managers can be equally effective with different combinations of these personal characteristics.


Management is a challenging and complex task, and performing it effectively requires a variety of skills. These skills are organized into three categories: conceptual, technical, and human.They apply in varying degrees of importance to managers at all levels in an organization. Conceptual Skills When 3,600 managers at 250 companies in several regions of the world ranked the importance of 24 competencies for midlevel managers, two of the top five categories in every culture studied were “analyze issues” and “sound judgment.”

These categories fall under the domain of conceptual skills —the ability to see the “big picture,” understand how the various parts of the organization affect each other, and conceptualize how those partscan be organized to improve the performance of the overall organization. In other words, conceptualskills are the foundation for strategizing and organizing.

A common misunderstanding is that conceptual skills for managers are all about the capacity for structured analysis. Rational, logical thinking is certainly important; but managers also require conceptual skills to think outside the box. Many issues on managers’ desk are exceptions with no existing solutions. Thus managers must be able to creatively figure out the real problem (or opportunity), the variety of options available to solve that problem, and the best choice in the context of that novel situation.

Managers at all levels require conceptual skills, but they are paramount in top management positions. This makes sense because CEOs and vice presidents have more scope to understand. They also face more novelty and uncertainty, which require plenty of creative thinking. In general, managers further down in an organization, such as frontline managers, face narrowly focused tactical issues as opposed to bigger strategic issues, and the problems they confront tend to be routine rather than exceptional.

Technical Skills Technical skills enable managers to perform specific activities involving methods, processes, or techniques. These skills include mastery of specific equipment (such as configuring intranet servers) or correctly following procedures (such as conducting an accounting audit). Frontline managers work directly with employees with technical expertise, sothey typically require some of this expertise themselves to monitor employee performance, provide meaningful feedback, and help employees solve unusual problems.

As an example, call center managers spend up to half of their time monitoring customer calls and giving employees feedback about how to improve their dialogue in the future. These managers would be ineffective in this mentoring role if they lacked sufficient knowledge about the product and the correct procedures for handling customer calls.

The general rule is that technical knowledge and skills are more important for frontline managers than for more senior management positions. The reasoning is that managers in the lower part of the hierarchy work directly with technical staff, whereas managers further up the hierarchy work more with other managers. Studies of management careers report that managers need to shift away from reliance on technical skills to more reliance on conceptual skills as they advance within an organization. The breakpoint occurs when a manager is responsible for people across functional units, such as managing a plant where employees have various forms of expertise.

Although the demand for technical skills diminishes as a manager is promoted up the hierarchy, they remain important for managers at all levels. In fact, higher-level managers usually require technical knowledge and skills across a broader spectrum of functional areas (marketing, production, accounting, and so on) than is necessary for lower-level managers operating within one functional area. For instance, consider Ed Dunlap, the chief financial officer of Wild Oats Markets, a health food supermarket chain based in Boulder, Colorado.

Dunlap had acquired considerable financial expertise throughout his career and retained many of those technical skills as chief financial officer. However, Dunlap’s promotion to chief operating officer required him to learn technical skills beyond finance and accounting, such as in-store operations. “One thing I still need experience in is merchandising, so I’m working very closely with our merchandising staff to develop an eye for that side of the business,” says Dunlap. “That starts to give me all the pieces to take on even greater responsibility if it’s presented to me.”    

Human Skills Star employees are often promoted into management jobs due to their technical prowess, but many soon get into trouble because they lack the requisite human skills. Several years ago this began to emerge as an endemic problem at Microsoft, where great software programmers, once promoted into management positions, often exhibited poor human skills.

Many subordinates complained that their managers had poor communication skills and organization capabilities, that they engaged in micromanagement, that they could be abrasive and arrogant, and that they demoralized rather than motivated team members. To fix this problem, for more than a decade Microsoft has devoted a great deal of attention to training its new managers, teaching them how to be more effective in their new role.

The human skills that managers need include the abilities to communicate, persuade, manage conflict, motivate, coach, negotiate, and lead. Effective managers understand the needs of their subordinates and act on this knowledge to improve employee well-being whilealso achieving organizational objectives. Human skills include working with other units, not just with employees within the manager’s own unit. In other words, successful managers use their human skills to reconcile the needs and goals of their own team members with people in other work units, as well as with the needs of customers, suppliers, and others outside the organization.

Human skills go beyond interacting effectively with others. They include the manager’s self-awareness and self-management. Good managers know how to manage themselves, which lets them manage others more effectively. They are mindful of their own needs, emotions, and impulses and can control or apply them at appropriate times and places. After all, managers are role models, so they must manage their emotions, words, and deeds accordingly. They must be able to lead by example.

Human skills are important whether you are a night manager at a 7-Eleven store, a development manager at Microsoft, or the chief executive officer at Bank of America. This makes sense when we recall that, by definition, managers accomplish organizational goals through others. You cannot get employees to work together toward common goals if you lack the ability to manage yourself and others.

A recent study of thousands of managers at IBM, Lucent, PepsiCo, British Airways, and hundreds of other diverse organizations revealed that human skills are more important than technical and conceptual skills for managers across a wide range of levels.35 The analysis showed that people get promoted into management, and promoted from lower to higher levels of management, by demonstrating acceptable levels of technical and cognitive skills. However, these skills are secondary to human skills when it comes to distinguishing between successful and mediocre managers

Another important characteristic of successful managers is the values they hold and the strength of those values. Values are stable, evaluative beliefs that guide our preferences for outcomes or courses of action in a variety of situations. They are perceptions about what is good or bad, right or wrong. Values tell us what we “ought” to do. They serve as a moral compass that directs our decisions and actions.

People organize the dozens of values that exist into a hierarchy of importance. Values at the top take priority over values further down the hierarchy. Some individuals value new challenges more than they value conformity. Others value generosity more than frugality. We are referring here to the values that actually guide behavior ( enactedvalues ), not what people say is important to them ( espoused values ).

Values have gained a lot of respect in business circles over the past decade. Top executives in most Fortune 500 companies have carefully identified the core values that they believe employees should embrace in the workplace. These shared values —values held by several people—are important because they create a sense of collective purpose, which increases loyalty and satisfaction within the team and organization. Equally important, when employees embrace and follow shared values, their actions are more consistent with team or organizational objectives.

This point brings us to the two reasons why values represent an important characteristic of successful managers. Across all levels of the organization, managers are ultimately responsible for forming, strengthening, and, where necessary, reprioritizing the shared values of their staff. To accomplish this, they must personally hold the values that steer the team and organization in the right direction.

“You can’t lead other people unless you have a strong set of beliefs,” advises former New York mayor Rudy Giuliani. 39 Managers who act by their values are more likely to instill those values in others. Thus the personal values of middle and frontline managers need to echo and amplify the values that top management wants to spread throughout the organization.

The other reason why values represent an important characteristic of successful managers is that they stabilize and guide managers through ambiguous circumstances. Managers are constantly buffeted by many forces, some of which are strong enough to steer them toward ineffective or unethical results. Values serve as beacons that keep managers steadfastly on course under these conditions.

“I’ve always thought that values are a core part of leadership,” says Richard Brajer, CEO of LipoScience, a diagnostic testing and analytical company headquartered in Raleigh, North Carolina. “Why? … Because, quite frankly, the stresses of a leadership role are very strong. You need to have a solid foundation.” The stabilizing effects of values not only steer managers clear of bad decisions; they also improve the consistency of their decisions and actions. Through this consistency, employees learn that managers have integrity and can be trusted.

Managing with the Right Values Managers don’t just require strong values; they require the right values. What are these? The answer to this question has two parts. First, managers need to embrace values that are consistent with the situation in which they work. If precision and accuracy are critical, then managerial values should emphasize conformity and tradition more than stimulation and change. If the company’s success is threatened by a shortage of talent,then managers need values that place employee well-being near the top of the priority list.

The second part of the answer is that all managers in all situations must always engage in ethical behavior, so they must embrace ethical values. Ethical values are values that society expects people to follow because they distinguish right from wrong in that society.

These values are unwavering across time and, according to various studies, are similar across most cultures. For example, when 70,000 respondents located on six continents were asked what values theylook for and admire in a leader, well over 80 percent included honesty in their lists. Honesty remained the most often identified value in three sets of surveys over 15 years. It was also at the top of the list in most cultures and was in the top four traits (out of 225 traits) in others.


Along with the right combination of managerial skills and values, truly great managers also possess needs that motivate them to manage others effectively. Several specific managerial motivations have been discussed over the years, but the four discussed here stand out.

Desire to Compete for Management Jobs Managers are more successful when they are motivated to compete for their jobs. Even in collegial firms, managers vie for promotion to positions further up the hierarchy. These tournaments are so pronounced for top-level jobs that we often read about executives leaving the company because they lost the fight. For example, Jeffery Immelt, the current CEO of General Electric, was one of three managers groomed by Jack Welch to succeed him as CEO.

When Immelt won the competition to become CEO, the other two managers left GE. Effective managers thrive rather than wither in the face of this competition. The desire to compete for managerial jobs is so important that one expert warns that if this motivation declines, the United State could face a shortage of high-performance leaders in the future.

Desire to Exercise Power Successful managers are motivated to seek power. However, they don’t want this power for personal gain or for the thrill they might experience from wielding power over others (called personalized power orientation ). Instead good managers have a socialized power orientation . They do not seek power for its own sake; rather they accumulate power to accomplish organizational objectives.

Management theorist Jeffery Pfeffer has argued that organizations are political entities characterized by differentcenters of power and influence. To get things done in such a setting, Pfeffer argues that managers need to accumulate power and use that power in a constructive way. 46 Power comes not just from formal authority: It also comes from personal traits, such as ability to influence others through communication; from a network of allies; and from control over crucial information or resources. According to Pfeffer, the wise and constructive use of power is an important characteristic of successful managers.

Desire to Be Distinct or Different Successful managers need to be—or at least feel comfortable being—different from the people they lead. Why? One reason is that managers need to broker the interests of many stakeholders, so the need to be distinct or different from others allows them to act neutrally. This is consistent with studies reporting that effective managers have a moderately low need for affiliation —they have less concern about being liked and are less sensitive to the pressure others impose to conform to their wishes.

The other reason for the need to be different is that managers need to take center stage to communicate and symbolize the organization’s or work unit’s future direction. Employees look to managers as guides and role models of future behavior. Managers who feel uncomfortable with standing out from the group have difficulty leading people in new directions.

Desire to Take Action One of the most important challenges for managers is to create momentum— motivating employees (as well as suppliers and other stakeholders) to achieve the organization’s ambitions for the future. A recent survey of 3,600 bosses identified the “drive for results” as one of the five most important competencies of effective managers. This evidence is backed up by Larry Bossidy’s experience leading thousands of managers.

“When assessing candidates, the first thing I looked for was energy and enthusiasm for execution,” says the former CEO of Honeywell and Allied Signal. Bossidy says that this bias for action is so important that “if you have to choose between someone with a staggering IQ…and someone with a lower IQ who is absolutely determined to succeed, you’ll always do better with the second person.”