Chapter 1

Management and Managers

Function rather than power has to be
the distinctive criterion and
the organizing principle.
Peter F. Drucker

1.1. Basic concepts

1.1.1. Activity
An activity is something we do in order to obtain a certain result. Reading
a book. Talking by telephone. Driving a car. Welding two metal objects. Selling a
pair of shoes. Writing a report. Making a decision. Performing a laboratory test.
Climbing a mountain. Playing tennis. All of these above are activities. Each
activity can be characterized by a beginning and an end, some inputs and outputs, a
certain transformation of the inputs into outputs and a final result. The end points
that represent the completion of a given activity are generally called events.
Activities differentiate one from another with respect to their complexity, length of
time and the final results. They may be performed by a single person or by a group
of persons. Activities are considered usually the smallest identifiable entities which
can be recognized due to their specific results. Some authors consider that
activities can be broken into smaller entities called tasks. However, this structuring
is used generally in a work environment, since tasks have an extrinsic source.
Sometimes, the concept of task is used to specify a piece of work that somebody
has to do, especially a hard or unpleasant one. Also, task is considered an oriented
action developing alongside a line force, within a given force field. For instance,
Peter F. Drucker writes frequently about management tasks (Drucker, 1993a).
Differentiating between work and play is an old problem. The activity itself
might be the same, down to the details. Yet psychologically and socially, the two
are quite different. The work is generated by an extrinsic field of forces with
respect to an individual, and from this point of view it is objective and impersonal.

It has a result that is outside of the worker. The play is generated by the
individuals intrinsic forces, that means his own motivation, and the final result
will satisfy some of his needs. For instance, tennis can be played as a hobby or in a
professional competition like Wimbledon or Roland Gaross. Climbing a mountain
by a tourist is a result of his own wish. It is a play activity. However, climbing the
same mountain by his paid guide is considered to be work. Business management
refers to specific activities developed only within a working environment.

1.1.2. Process
Activities are building blocks for economical, social, technological and
political processes. A process represents a series of activities which are integrated
into a larger enterprise with the purpose of creating value for society. That means
goods, services and knowledge. A car is produced as a result of a complex
technological process, a theory is elaborated as a result of a scientific process, a
law is produced as a result of a parliamentary process, and obtaining a university
degree is a result of a learning process. A process can be the result of a series of
tangible activities, intangibles activities or it can be a combination of both tangible
and intangible activities. From semantics point of view, we associate activity and
work with a human action, and operation and mechanical work with a machine
functioning.
Since producing goods and services involves both people and machines,
most processes combine human activities with machines operations. They
transform raw materials, energy and knowledge inputs into final products in order
to create value for consumers, by satisfying some of their needs. Due to the
multidimensional scale used for work and production, and because there is no
definite semantic boundary between activity and process, both concepts have a
relative meaning. That means that from a practical point of view a process can be
broken down into several sub-processes, which can be called processes or
activities. We shall use the word which is best adequate to the given context. For
instance, we would refer to the management as a process and not as an activity,
although each managerial process can be considered as an integration of many
activities and tasks. A process is usually the result of an organizational integrator.
In our view, An integrator is a powerful field of forces capable of combining two
or more elements into a new entity, based on interdependence and synergy. These
elements may have a physical or virtual nature, and they must posses the capacity
of interacting in a controlled way (Bratianu, Jianu & Vasilache, 2007).

1.1.3. Business
Business consists of all profit-seeking activities and enterprises that
provide goods and services necessary to an economic system (Boone & Kurtz,
2006). Some businesses produce tangible goods, such as computers, books, food,
buildings, and automobiles; others provide services such as medical care,
education, travel, and a large spectrum of entertainment shows. Profits represent
reward for businesspeople who take the risks involved in creating the goods and
services for the market. From a quantitative point of view, profits are considered by
accountants as being the difference between a companys revenues and the
expenses it incurs in generating these revenues (Boone & Kurtz, 2006).
Although profit and profitability are crucial for doing any business, Peter F.
Ducker showed that profitability should not be the purpose of any business activity.
Instead, it should be considered as a limiting factor on business enterprise.
Actually, the profit is not the explanation, cause, or rationale of business behavior
and business decision, but the test of their validity. The first test of any business
should not be the maximization of its profit but the realization of sufficient profit to
cover the risks of the economic process (Drucker, 1993a). The maximization of
profit is a myth. Actually it is irrelevant to the function of a business, the purpose
of a business and to the business management. It is a result of an isolated and short
term thinking, which creates a permanent conflict with the social responsibility of
any company. Many ecological disasters and mistakes of public policies have been
generated by companies which transformed this idea of profit maximization into a
governing principle. Think of a chemical plant in which profit maximization is a
living principle. According to it, the company will never invest money in high
technologies able to filter all the effluents going into the external environment,
unless the legislation imposes clear limits on the concentration of different
pollutants.
In order to understand what a business is we must start with its purpose.
The purpose is not within the company (i.e. profit maximization), but from outside
it. The purpose is to create value for society by satisfying some identifiable needs
coming from customers. As Peter Drucker said: There is only one valid definition
of business purpose: to create a customerThe customer is the foundation of a
business and keeps it in existence. He alone gives employment. To supply the wants
and needs of a consumer, society entrusts wealth-producing resources to the
business enterprise (Drucker, 1993a, p.61).
These ideas have been incorporated into the strategic management, whose
goal is to create a competitive advantage by creating value for society. The profit is
a result of this new thinking and not a purpose in itself.

1.1.4. Structure
A structure represents a certain arrangement of elements in a given context
and their interactions. Think about the human body structure, the atom structure,
the watch structure, the car structure etc. There is always a specific way in which
the component elements are connected together, based on some physics laws or
functional requirements. Structures can be static or dynamic. Static structures are
generally used in civil engineering constructions (i.e. buildings, bridges, towers,
etc.), and dynamic structures are generally used in mechanical and electrical
engineering (i.e. engines, plant equipments, electricity generators etc.), and found
in all biological formations from elementary cells to complex human bodies. Also,
there are different types of social structures reflecting different kind of relations
between people involved (i.e. family, school, church, company, political party etc.).
These social structures are the most complex and dynamic structures since they
imply both formally and informally, rational and emotional, compulsory and
optional, temporal and permanent relations. Structures can be tangible, intangible
or hybrid. Tangible structures contain physical objects and connections based on
physical, chemical or biological laws. Think for instance at a car engine structure
and how its constituent elements are related based on some physical laws.
Intangible structures contain concepts, ideas, emotions and values, and they are
connected by rational or emotional relations and past experiences.

1.1.5. System
A system is an assemble of interconnected elements designed to perform a
given task. A system is not a simple collection of different objects put together, but
an integral result of all these interconnections which yield synergy effects. A
system can be tangible or intangible. A human body can be considered as a tangible
system, thinking of all the bones, muscles, blood vessels and other organs
integrated functionally. However, the thinking power can be considered as an
intangible system (Keeney, 1992; Senge, 1990). A scientific theory, or a
mathematical theorem can also be considered as intangible systems. A system can
be considered also as a cognitive model that represents organized knowledge about
a given piece of reality. For instance, a scientific theory is a cognitive
approximation of some natural phenomena.
A system is always defined by an internal environment and an interface
with respect to the external environment. If there are no fluxes of materials, energy
or information exchanged between the internal and external environments crossing

the interface, the system is considered to be closed. When there such fluxes
crossing the interface, the system is open with respect to those fluxes. A system can
be closed with respect to some fluxes and in the same time open with respect to
other fluxes. For instance, a computer is closed with respect to material fluxes and
open with respect to energy and information fluxes. The internal environment is
characterized by a certain structure and a specific process. However, for a given
system can be designed different structures and processes. There is no unique
solution. Think of the variety of cars or airplanes as technical systems, and of the
endless spectra of wild animals, fishes, birds and insects as biological systems.

1.1.6. Organization
A company, a charity foundation, a university, a public administration
institution can be represented by the generic concept of organization. An
organization is a social system designed to performed one or several tasks. It has a
certain structure and develops a certain process in order to accomplish a given
mission. The organization is a human invention which made possible to assemble a
large number of people and to put them to accomplish something that would have
been impossible just for a single person. Think about the Roman armies or the
Catholic Church as very old examples of functional organizations. More recently,
the development of management and its study began with the sudden emergence of
large organizations business, governmental civil service, the large standing army
which was the novelty of late the 19 th century society. And from the very
beginning more than a century ago, the study of organization has rested on the
assumption that there is, or there should be, one right organization (Drucker, 1999).
Experience shows that the pattern for the right organization has changed more than
once, as business environment changed itself. Actually, there is no such thing as the
one right organization. There are only organizations, each of which has distinct
strengths, distinct limitations and specific applications.
The concept of organization has no absolute meaning, since an
organization is only a tool for making people productive in working together. It has
a relative meaning. Actually, this is reflected in the origins of the word
organization, which derives from the Greek organon, meaning a tool or instrument.
That means that an organization is not an end in itself, but an instrument conceived
to perform some kind of goal oriented process.
Every organized human activity or production process gives rise to two
basic and conflicting requirements: the division of labor into various tasks to be
performed, and the coordination of these tasks in order to accomplish the given

activity or process. The structure of an organization can be defined simply as the

pattern of the way in which its labor is divided into distinct tasks and then its
coordination is achieved among these tasks (Mintzberg, 1997).
Interface

External Environment

Input

Internal
Environment

People
Finance
Materials
etc.

Output
Goods
Services
Reputation
etc.

Figure 1.1. Illustration of a generic organization

The structure of a given organization must fit certain tasks in certain

conditions and at certain times. Any given structure can be improved, but there is
no single solution for the best structure. It has to fit the mission of the organization,
in a given business environment. However, regardless of their size or specific
structure, an organization can be illustrated in a very simple way, as in fig.1.1.
Companies or firms are profit making organizations, and from this point of
view they distinguish themselves from the public administration institutions or the
not for profit organizations.

1.1.7. Capabilities
A capability represents an organizational capacity to integrate tangible and
intangible resources and to use them efficiently in performing different
organizational tasks (Hill & Jones, 1998; Hitt, Ireland & Hoskisson, 1999). The
integration process is based on the information and knowledge flows within
organization and all cumulative experience of managers. That means to develop an
organizational culture that stimulate knowledge processes and decreases all
organizational barriers developed in time as a result of the industrial era
management. Also, it means to change the vertical and centralized information
system with a very little contribution of the informal communication with the
horizontal and decentralized information system a large contribution from the
informal communication between people all over the company. Also, it means to
develop necessary skills for employees to use more efficiently the resources they

have. For instance, in many situations the company invested heavily in buying very
sophisticated information technology, yet it did not organized special training
programs for the users of this technology. Thus, expensive and powerful resources
remain unused at their functional value. The following are examples of
organizational capabilities:
Motivating, empowering, and retaining employees.

Effective use of logistics management techniques.

Effective and efficient control of inventories through point-of-purchase

data collection methods.
Effective promotion of brand-name products.

Design and production of reliable products.

Miniaturization of components and products.

Using efficiently the teamwork and cooperation between different

departments of the company.
Gillettes capability to combine efficiently several technologies in designing and
manufacturing well known products in the wet-shaving industries has been one of
its strengths in obtaining a competitive advantage. These technologies includes its
expertise concerning the physiology of facial hair and skin, the metallurgy of blade
strength and sharpness, the dynamics of the cartridge, and the physics of a razor
blade severing the hair. This capability allowed Gillette to develop innovative
products such as Excel, Sensor Excel, and Mach 3 shaving systems (Dess,
Lumpkin & Eisner, 2006). Imitating the capabilities of a given company is much
more difficult than imitating its resources. Firstly, because capabilities are often
invisible to outsiders due to their intangible nature. Secondly, because a capability
is a result of a combination of several tangible and intangible resources, and skills
which it is hard to identify and copy. Thus, for examples, outsiders may have
trouble identifying precisely why Gillette or 3M are so successful in developing
new products (Hill & Jones, 1998; Thompson & Strickland, 2001).

1.1.8. Core competencies

Considering the tasks an organization have in fulfilling its mission, we may
identify a series of competencies in performing these tasks. A company
competence is the product of learning and integrating efficiently resources and
capabilities in performing a given process. A company competence is a result of a
conscious effort of doing something very well. It consists of a mix of resources,
skills, know-how, and technologies at the organization level. Among all

competencies a company may have, some of them are very well performed and
thus, they contribute essentially in obtaining the competitive advantage with
respect to other companies. They are called core competencies. A core competence
is something that a company does very well relative to other internal activities.
When this kind of comparison is done with respect to other companies we have a
distinctive competence. That means that a core competence becomes a basis for
competitive advantage only when it is a distinctive competence (Thompson &
Strickland, 2001; Dess, Lumpkin & Eisner, 2006).
From a practical point of view, the question for the company is how to
select those capabilities which can effectively contribute to creating core and
distinctive competences. There are four criteria used for determining strategic
capabilities based on the following characteristics (Hitt, Ireland & Hoskisson,
1999): valuable, rare, costly to imitate and being non-substitutable.
Valuable capabilities are those that create value for a company by
exploiting opportunities and/or neutralize threats in its external environment. For
example, Sony Corporation has used its valuable capabilities dealing with the
design, manufacturing, and selling of miniaturized electronic technology to satisfy
new needs of consumers. Rare capabilities are those possessed by few, if any,
current or potential competitors. A practical question for the top management
would be, how many competitors possess these valuable capabilities. Same
capabilities developed in many companies cannot be a source of competitive
advantage. It can be obtained only when companies develop and exploit
capabilities that differ from those they share with competitors. Costly to imitate
capabilities are those that other companies cannot develop easily, because of the
financial costs. From this point of view, intangible resources are more difficult to
be imitated than the tangible ones. Organizational knowledge, intelligence and
culture are among the most difficult resources to be imitated by other companies,
and thus, they become strategic resources. Non-substitutable capabilities are those
that do not have strategic equivalents. Two or more capabilities are considered to
be substitutable when each of them can be used separately to implement the same
strategy. In general, the strategic value of a capability increases when the
possibility of substitution decreases.

1.1.9. Stakeholders
Stakeholders are interested parties in the development and success of a
given organization, although the concept is used more frequently with respect to
companies. There are internal stakeholders and external stakeholders. Regardless

of their position they try to guide the organization behavior through the decision
making process. Customers, consumers, and service users cant be ignored without
risking the existence of the organization. Suppliers are sometimes so integrated in
the value chain of the organization, that their failure or lack of cooperation can stop
the production process. On the other hand, owners and shareholders are the
financing decision makers for their organization. Their lack of confidence in the
feasibility of some new programs may compromise them. Skilled staff members
are hard to attract and retain. They are the engine of the organization. Thus, the
organization is under a continuous pressure from these stakeholders and its
management should take care of their interests and their influencing power.

1.2. Models of organizations

1.2.1. The mechanical model
The development of the industrial era made machines the most important
factor of progress. The use of machines has radically transformed the structure and
the nature of production processes, increasing manifold the efficiency and the
productivity of labor. Since the economic performance has been so much related to
the technology performance, the brain power of society concentrated on these
machines trying to expand the knowledge universe. Scientists have produced
mechanistic interpretations of the natural universe, and psychologists developed
mechanistic theories of human mind and behavior. Learning how to design, build
and use efficiently machines, became for us a way of thinking. Thus, we have
developed for ourselves a mechanical model of thinking.
Factories became a model for shaping any organization and organizational
life. Processes and activities have been structured according to mechanical
principles and workers life has been organized with the precision of a clock. For all
the people in a given organization the daily program begins at the same time, ends
at the same time and people perform a predetermined set of activities, rest at
appointed hours, and then resume their tasks until work is over. Often, the work is
very mechanical and repetitive, like in a mass-production factory. It is the case of
public administration institutions, banks and many financial companies. They
became a kind of office factories, processing paper forms.
The German sociologist Max Weber, who observed the parallels between
the industrial work and the office work developed the concept of bureaucracy. In
his view, bureaucracy is a mechanical model of an organization that emphasizes
precision, speed, clarity, regularity, reliability, and efficiency. All of these can be

achieved by means of a functional structure based on a fixed division of tasks,

hierarchical supervision, and detailed rules and regulations (Morgan, 1997). It
results that the main characteristics of the mechanical model of a generic
organization are the following:
A well defined and rigid organizational structure, with clear boundaries for
departments and detailed job descriptions.
A vertical hierarchy for management with a clear chain of command, such that
each individual should have only one superior from whom to receive orders.
Elaborate and detailed rules for organizational behavior and standard operating
procedures that governed activities, specified in written documents and files.
Bureaucracy put more importance on respecting these internal rules then on
professional accomplishments.
However, this mechanical model of the organization offered some advantages. The
mechanical structure of the organization was based on a linear and deterministic
thinking (Brtianu & Murakawa, 2004), which enhances the predictability and the
reliability of the organization behavior. One of the main reasons for the
bureaucratic emphasis on rules, standard procedures, and clearly specified fields of
responsibility was to produce what Max Weber called an impersonal system, that
did not differentiate its outcomes and procedures according to individual
differences or favoritism. The mechanical model of the organization has been
successful for a static external environment. All of these above strengths of this
model become weaknesses when there are changes in the external environment,
because the mechanical system is rigid and unable to adapt to the new business
requirements.

1.2.2. The biological model

Basically, this model emphasis flexibility of the internal structure, more
individual autonomy for employees and capacity to adapt easily to the
environmental changes. The organizational structure can be well defined, but it is
not anymore rigid. It can be changed partially or totally to fit the new tasks. The
managerial hierarchy is loosing its clearly defined lines of authority and some of
the middle levels of management. The organization becomes flat. Flattening the
organization means also empowerment of the operating levels, such that the
decision-making process is pushed down to the front line of the company, so that
the unit of the organization responsible for implementing any decision also has the
power to make it, or at least participate in making it. The overall advantages of the
biological model are the following:

The organizational structure of the company becomes flat and flexible.

Departments become open systems and their boundaries are permeable to
informal information fluxes.
Matrix structures of the internal environment break the unique line of authority
principle, since a worker may have two superiors from which to receive orders.
Implementing the Total Quality Management (TQM) systems, organizations
accept changes and become proactive in continuous improvement of their
products quality.
Implementing the Just-In-Time system lead to building close relationship
with suppliers. They are closely integrated into the manufacturing process,
delivering small lots of materials as they are needed for production.
Putting people in some functional areas in direct contact with certain
consumers, without the classical interface departments, in order to increase the
receptivity to change of the company.
Increasing communication between people and departments as a result of new
powerful information technology systems.
The biological model distinguishes itself from the mechanical model due to its
internal flexibility and external adaptability. This internal flexibility allows for
continuous improvement using the principles of TQM, and contributes to
increasing the competitiveness of the company, through innovation and quality.
The external adaptability is necessary in a turbulent business environment and
markets globalization.

1.2.3. The social model

The social model is developing as a reaction to the new economy, which is
based on knowledge and intelligence. For organizations that means to put the
emphasis on people and their knowledge and not anymore on machines. Actually
the first element of this social model was the organizational culture, or the
corporate culture. When a group of people live and work together for any lengths
of time, they share their cultural values and beliefs and develop specific patterns of
behavior beyond the formal regulations of the organization. The integral of all
these values, beliefs, ways of thinking and feeling constitutes the organizational
culture. As many authors showed, culture is at the heart of all strategy creation and
implementation (Thompson, 1997; Johnson & Scholes, 1999). Successful
companies developed culture of excellence, stressing the need for values,
innovation and learning capacity. Actually, excellent companies are learning

organizations (Peters & Waterman, 1982; Haberberg & Rieple, 2001), and
knowledge-creating companies (Nonaka & Takeuchi, 1995; Gamble & Blackwell,
2001). The main characteristics of this social model are the following:
There is a flexible organizational structure, based on teams and teamwork. Job
description files lost their power in favor of more individual liberty and
creativity within a team.
The management hierarchy is flat and the autocracy has been replaced by
democracy and leadership. The organization responds now more rapidly and
more flexibly to changes in their markets.
Instead of searching for the one best way of performing tasks, the management
is looking for a diversity of approaches and viewpoints, which increases
chances for innovation and creativity.
There is more value put on knowledge and more transparency for information
and knowledge diffusion. Knowledge dynamics gains more attention from the
top management and the organization becomes a knowledge-creating company.
There is more value put on training people and learning in order to increase the
organizational knowledge and the organizational intelligence. There is a certain
awareness of the intellectual capital of the company.
There is a vision and a shared mission of the company. Profit maximization
principle has been replaced by the strategic advantage principle. There is a well
defined market orientation of the company and a customer relationship
management.
There is a corporate ethics and a social responsibility of the organization.
Internal and external communication is highly developed, as well as the public
relations of the company.
The social model is an extension of the brain model at the level of society,
integrating in the same time the cultural model of the organization. It places a
crucial role on values, knowledge, intelligence and creativity. Thus, the social
model dismantled most of the mechanical model myths concerning efficiency and
productivity, which were about a hundred years ago golden rules for profit
maximization.

1.2.4. The virtual model

There is a complete new pattern of organizations based on internet
facilities and new technology developments concerning information processing
and communication. Amazon.com and eBay.com are only some successful

examples of this new pattern of organizations performing e-business. This virtual

model replaces the physical location and the tighten structure of the organization
with a virtual location and a network configuration. This new pattern contains a
certain fragmentation and incoherence which challenges everything we have
learned so far about organizations. The physical work is transformed into digital
workflow, top-down decision-making is transformed into a neural system of
decision-making, and formal communication procedures are transformed into
intranet and common shared information basis (Ohmae, 2000).
The virtual model of the enterprise.com is still a developing model which
may generate many new ideas and management patterns. For this model the main
operating concepts are unstructured distribution, complexity and coherence.
Unstructured distribution refers to time and space distribution of people and
events. There is no more a rigid and well defined organizational structure
characterized by departments, compartments and job positions, and a linear
functional structure characterized by deterministic and predictable events. There
are only interconnections between different organization components and between
people performing different jobs. Events are generated randomly and their
prediction is base on probabilistic models of thinking. Complexity means a huge
number of interconnections and a continuous dynamics of their existence.
Coherence means an alignment of context, viewpoint, purpose and action that
enables further oriented action (Stacey, Griffin & Shaw, 2000).

1.3. The management process

1.3.1. Management as a general human activity
John Massey is a graduate student at Georgia Tech, Atlanta, Georgia. He
loves canoeing and is an active member of the Canoeing Club. He plans a trip with
his friends for the next weekend in the Blue Mountains of Georgia, famous for
their white waters. Planning means a lot of activities for him: defining the right
period of time for the trip, checking the forecast for place they plan to go,
preparing necessary maps and information materials for that region since it is the
first time he will canoeing there, making necessary arrangements at the Club to
have two canoes prepared for the group, evaluating necessary expenses and so on.
Then he studies the mountain and the road maps to compute distances, on the
ground and on the water. Since the trip is planned for two days, he must decide
where to spend overnight in the tents. He is asking each of his friends to do
something for the trip and to meet to his house the evening before the trip. The

group is composed of four students, and they prepared two cars and two canoes for
this trip. They try to organize this trip very well since the region is totally new for
them and canoeing is a rather dangerous sport. Also, they have some old maps and
take into consideration some possible surprises. Each member of the group took a
training course from the Club and is able to swim. They are optimistic about
having fun and a good chance to relax. During the trip, John pays attention to each
detail of the river and especially to the possible rapids which can be very
dangerous. He learned how to read the water such that a new rapid to be
anticipated. The weather is fine and the trip is wonderful. All of them are tired but
fully refreshed.
Analyzing the trip as a process and its component activities, one can
remark that each of these activities has two complementary parts: an executive part
whose purpose is to do something, and an organizational part whose purpose is to
show how to do it. The same activity can be done in several ways. Which way is
the most adequate for getting the job done, in a given context and with some given
resources ? Regardless of the content of the first part, the second part is always a
management activity. Thus, management refers to the activity or the process of
getting things done, effectively and efficiently, through or with other people. At the
limit, it can be done by a single person. Consider for instance the case of a writer
who is working on a new novel. The way in which the writer is planning,
organizing and running effectively his work is management. Thus, we may say that
management is a general human activity we perform in everything we do. It is
responsible for the success of our work and for the way we are using our resources.
Also, it is responsible for the degree of satisfaction people obtains in getting things
done. Management as a general human activity occurs whenever people take
responsibility for an actively and consciously try to shape its progress and
outcome. Parents manage children, elderly dependants and households.
Good management is concerned with both attaining goals and doing so as
efficiently as possible. For measuring how close is one in attaining the proposed
goal, we use the concept of effectiveness or efficacy. Effectiveness means doing the
right tasks, in order to attain the goal. For measuring how well resources are used
for a certain activity or process, one uses the concept of efficiency. It means doing
the task correctly, with respect to some known procedures. Efficiency measures the
value of output with respect to the input used. The purpose is to perform a certain
task with a high efficiency, which means to get a highest possible output value for
a given input value. When efficiency is law it means a large waste of resources.
That is, in order to make activities more efficient one should reduce the waste of
the available resources. Although efficiency and effectiveness are different terms,
they are interrelated. If we consider also the final satisfaction of the virtual

consumer of a certain activity, then we may introduce also the concept of quality. It
does not refer to a certain physical characteristic of products, but to a relation
between the producer, the product and the consumer. Quality measures the degree
to which a given product or service is able to satisfy the end user. Thus, good
management is concerned with attaining goals as efficiently as possible, and
delivering end results at high quality standards.

1.3.2. Management as a general organizational process

Now, we are going to generalize the previous ideas to organizations, which
means to take into consideration many people and many activities structured in
coherent processes.

Management
Process

Resources

Information

Decisions

Products

Production Process

Figure 1.2 Interdependence between the management and

the production processes

In fig.1.2 there is a schematic view of the interdependence between the

management process and the production process. All activities and processes
within any organization can be grouped into these large categories of processes.
The concept of production used here is generic, which means any kind of process
designed to produce the organization end results as products and services. People
working in this process are called usually operatives or executives. They work
directly on a job or task and have no responsibility for overseeing the work of
others. In contrast, managers direct the activities of other people in the
organization. Managers cannot exists without a production process, and operatives
need the managerial environment created by managers. Management divorced

from the organization it serves is not management. As Peter Drucker showed, what
people mean by bureaucracy is a management that has come to misconceive itself
as an end and the institution as a means. This is a degenerative disease to which
management is prone, especially when it does not operate under the market test, as
it is in public administration (Drucker, 1993a). Business exists to supply goods and
services to customers, rather than to supply jobs to workers and managers, or even
dividends to stockholders. The hospital does not exist for the sake of doctors and
nurses, but for the sake of patients whose desire is to leave the hospital cured. The
university does not exist for the sake of professors, but for the students. For a
management to forget this is mismanagement. There is a tension, therefore,
between two realities: that of performance and that of work. Precisely because
work is general and generic, there is essentially no difference among work the end
product of which is a thing, work the end product of which is information, and
work the end product of which is knowledge. To resolve this tension, or at least to
make it productive, is the constant task of management.

1.3.3. The tasks of management

Henry Fayol defined for the first time the management functions or tasks:
planning, organizing, commanding, coordinating and controlling (Fayol, 1966).
These basic tasks have been compressed during time into four: planning,
organizing, leading and controlling. An organization has a mission and thus there
are goals to be attained. Planning deals with the overall direction of the work to be
done. It includes forecasting future trends, assessing actual and potential
resources , and defining objectives and targets for future performance. Picking the
right target is a skill in itself. For each defined target management develops
directions of action, methodologies and practical ways for deploying the available
resources. Organizing means to prepare the organization for plans implementation,
by deciding how to allocate time and effort. It includes determining what tasks to
be done, who is in charge to do them, how the tasks are to be grouped, who reports
to whom, and where decisions are to made. At the company level, organizing
means also to establish the adequate organizational structure and the functional
structure. That means to establish who is responsible for which activities, and how
their work links to that of others. At more detailed levels, it includes matters like
selecting staff, revising payment systems, or choosing suppliers. Leading is
directed to people. It is the activity of generating effort and commitment towards
meeting objectives. Leading includes motivating employee, directing the activities
of others, performing efficient communications and resolving conflicts. While the

first two tasks are primarily concerned with the content of jobs to be done and thus
they are process oriented, leading is concerned with people engaged in performing
the jobs and thus it is people oriented. Controlling is the task of monitoring the job
progress and performance, comparing it with goals, and correcting any significant
deviations. Thus, any job - no matter how well it has been conceived must be
monitored and evaluated with respect to the plan and performance indicators
established in the planning and organizing tasks. If there is any significant
difference between the plan and the actual situation decisions should be taken to
improve the situation. It is important to underline the fact that control also provides
an opportunity to learn from past events. The ability of managers to learn from
their direct experience is critical to their performance.
In practice, these tasks are not performed for each activity and process in a
linear and sequential way. Any manager can perform several tasks simultaneously
and they can be aggregated in different sequences. However, it is important to
stress that for any activity and any process there is a need for planning, organizing,
leading and controlling. These are kernel activities for operational management,
i.e. the process of management run everyday within an organization in order to get
things done. It is a process which faces the present time and the current activities
and processes. The span of time in making decisions is usually less than one year.
Each of these management tasks or kernel activities developed into new fields of
management, as shown in table 1.2.
Table 2.1. Operational management and new fields of management

Kernel tasks of management

Planning
Organizing
Leading
Controlling

New fields of management

Strategic Management
Change Management
Organizational Dynamics
Human Resources Management
Leadership
Team Management
Quality Management
Control Management

In essence, management is a process of making decisions about how

activities should be run such that things should be done. For operational
management, decision-making process is based on a short-term thinking since all
are current activities. Their span of time is at the most one year. Long-term
thinking is characteristic for strategic management, where long-term thinking

encompasses a large number of activities projected into the unknown future.

Modern management should integrate short-term thinking for solving current
problems with long-term thinking for organizational development into the future.

1.3.4. Managers and their skills

All humans are managers in some way. But some of them also take on the
formal occupational work of being managers. A manager is someone involved in
the process of management. Thus, we may say that a manager is someone who gets
things done effectively and efficiently with the aid of other people. In large and
complex organizations the process of management becomes very well structured
and due to many kinds of activities senior managers create specialized functions
for managers. One of the most general classification of managers is the following:
top managers, middle managers and first-line managers. Top managers are
performing their activities at the top of organization. They are individuals who are
responsible for making decisions about the direction of the organization and
establishing policies that affect all organizational members. Top managers typically
have titles such as vice president, president, chancellor, managing director, chief
operating officer, chief executive officer, chief knowledge officer, or chairperson of
the board. Middle managers are those who operates somehow in the middle of the
management hierarchy. They are individuals at levels of management between the
first-line managers and top management. Middle managers are typically
responsible for translating the goals set by top management into specific details
that lower-level managers can perform. In organizations, middle managers have
such titles as department or agency head, project leader, unit chief, district
manager, dean, bishop, or division manager. The number and the functions of
middle managers depend of the size of organization. The old management
developed vertical managerial structures with many middle levels. The new trends
are for flat managerial hierarchies with very few intermediate managerial levels.
First-line managers are usually called supervisors, team leaders, coaches, or unit
coordinators. The are responsible for directing the day-to-day activities of
operating employees. In a university, for example, the head of a certain
administrative department or the head of a faculty chair play the role of a first-line
manager. Regardless of the level of operating within a given organization, all
managers perform the same basic tasks or kernel activities. However, the relative
importance of each task is dependent of level of managerial operating level. For
instance, for the top managers planning and leading are the most significant tasks,
while for first-line managers organizing and controlling become more important.

There are many studies concerning the necessary skills managers must have. There
are general skills and specific skills (Robins & DeCenzano, 2005).
General skills. For general skills, there seems to be overall agreement that
effective managers must be proficient in conceptual, interpersonal, technical, and
political skills Conceptual skills reflect the mental ability to analyze, understand
and diagnose complex situations. These are situations characterized by many
variables, interdependencies, random distributions and uncertainty. Handling these
kind of situations requires good thinking models and a high degree of professional
education. Interpersonal skills reflect the ability to work with people and to
motivate them for performing well. Since managers must get things done working
with other people, they must be able to understand both the rational and the
emotional side of each individual, to communicate efficiently with individuals and
groups, and to motivate all of them. Since the management process exists only as a
complementary part of a given production process, all managers must understand
the technical aspects of the production. Technical skills refer to a managers ability
to use the tools, procedures, and techniques of a specialized field. However, the
degree of knowledge for the production process increases toward first-line
managers. Political skills reflect a managers ability to build a power base and
establish the right connections. Organizations might be considered political arena
where people compete for resources. Good managers are those who are able to
obtain a better support from their superiors and to get the best connections in
solving their problems. In the same time, they are able to create a better image for
their department and themselves, such that chances are for them to get better
evaluations and promotions.
Specific skills. Among the most important specific skills are the following
Controlling the organizations environment and it resources.
Organizing and coordinating.

Handling information.

Providing for growth and development.

Motivating employee and handling conflicts.

Strategic problem solving.

However, the most recent approach to defining the managers job focuses on
management competences. These are defined as a cluster of knowledge, skills, and
attitudes related to management performance. There are competences defined for
top management, middle management and first-line management, known as
Management Charter Initiative Competencies. In table 1.2 there is an example of
such a charter for middle managers (Robins & DeCenzo, 2005, p.17).

Table 1.2. Management Charter Initiative Competencies for Middle Managers

Basic competence

Specific associated elements (sample)

Initiate and implement change

and improvement in service,
products, and system.
Monitor, maintain, and improve
service and product delivery.

Identify opportunities for improvement in

service, products, and systems. Negotiate and
agree on the introduction of change.
Establish and maintain the supply of resources
into the organization/department. Establish and
agree on customer requirements.
Control costs and enhance value. Monitor and
control activities against budgets.
Justify proposals for expenditures on projects.
Negotiate and agree on budget.

Monitor and control the use of

resources.
Secure effective resource
allocation for activities and
projects.
Recruit and select personnel.

Develop teams, individuals, and

self to enhance performance.
Plan, allocate, and evaluate
work carried out by teams,
individuals, and self.
Create, maintain, and enhance
effective working relationships.
Seek, evaluate, and organize
information for action.
Exchange information to solve
problems and make decisions.

Define future personnel requirements.

Determine specifications to secure quality
people.
Develop and improve teams through planning
and activities. Identify, review, and improve
developmental activities for individuals.
Set and update work objective for teams and
individuals. Allocate work and evaluate teams,
individuals, and self against objectives.
Establish and maintain trust and support of
ones employees. Identify and minimize
interpersonal conflict.
Obtain and evaluate information to aid decision
making. Record and store information.
Lead meetings and group discussions. Advise
and inform others.

Experience showed that good managers can transform weak organizations into
strong and competitive ones. Poor managers can do the reverse. This is why
managers tend to be bettered paid than operatives. Many organizations offer
extremely lucrative compensation packages to get and keep good managers.