Chapter 1: Functions of Management, Types of Managers, Roles & Competencies, Stakeholders

What is Management?

The art of getting things done through people. Not just doing the minimum, but pushing the limit.

The 4 Functions of Management

Planning & Strategizing

Planning is about formalizing a strategy into steps to put into effect. It’s the process of:

  1. Choosing goals (goals)
  2. Identifying actions to attain the goals (actions to goals)
  3. Delegate responsibility for actions (delegate actions to goals)
  4. Measure success by comparing results against goals (measure success)
  5. Revise plans to achieve goals or adjust goals (re-goal)

Strategy - An action that managers take to attain the goals of an organization.

Strategizing - Constantly contemplating what alternative strategies one should pursue by:

  • Analyzing competitors.
  • Being aware of external environment (government regulations & technology changes).


Organizing is the process of deciding...

  • Who will perform what? (who does what)
  • Where decisions will be made. (where authority lies)
  • Hierarchy of authority. (who reports to whom)
  • How different subunits will coordinate their activities. (how subunits coordinate)
  • Divide enterprise into subunits based on functional tasks. (divide subunits)


Controlling is the process of...

  • Monitoring performance against goals
  • Intervening when goals are not being met
  • Taking corrective action

Incentive is a factor that motivates people to pursue a particular course of action. Incentives can be unintended!

Leading & Developing Employees

Leading is the process of articulating a grand strategic vision for an organization and motivating, influencing & directing others to work productively in pursuit of that vision. It also involves listening & learning, and putting the right people in charge.

Developing Employees - The task of hiring, training, mentoring & rewarding employees, including other managers.

Human Capital - The knowledge, skills & capabilities that individuals have that may be a source of competitive advantage.

Skilled Leaders

  • Drive strategic thinking (strategizing) deep within the org while staying true to their vision
  • Plan & push others to develop plans
  • Structure the organization proactively to implement their chosen strategy
  • Exercise the appropriate amount of control (not too lenient or demanding)
  • Install effective incentives to persuade people that a task is worth the effort
  • Build a high quality managing staff

Types of Managers

3 Types of Managers in a Singular Divisional Company

  • General Manager - Responsible for overall performance of organization or subunit.
  • Functional Manager - Responsible for a particular function or subunit within a function (like accounting, marketing, sales, R&D, technology, production, etc).
  • Frontline Manager - Responsible for all non-managerial employees.

4 Types of Managers in a Multidivisional Enterprise Hierarchy

  • Corporate Level - Responsible for an entire multidivisional enterprise (General type managers)
  • Business Level - Responsible for one division (General type Managers)
  • Functional Managers - Responsible for one function within a division
  • Frontline Managers - Responsible for one team within a function

Corporate-Level General Manager

Chief Executive Officer (CEO) -

  • Principle general manager who leads the entire enterprise
  • Formulates strategies that span all the corporation’s businesses
  • Decides whether to enter new businesses (by acquisition or creation)
  • Decides when to pull out of a business (by selling or shutting down)
  • Decides how the enterprise should be organized into different divisions and signs off on major strategic initiatives proposed by division heads
  • Exercises control over divisions & monitors their performance
  • Sets the incentives for all employees and managers
  • Develops human capital
  • Managers relationship with shareholders (owners of the company)
  • Reports to board of directors, describing company strategy

Chief Financial Officer (CFO) - Responsible for overall financing of the corporation

Chief Operating Officer (COO) - Responsible for making sure operations are run efficiently

Chief Technology Officer (CTO) - Responsible for developing new products & technology

Business-Level General Managers

Business-Level General Managers lead individual divisions:

  • Responsible for motivating subordinates
  • Responsible for directing & coordinating subunits
  • Responsible for divisional performance
  • Responsible for translating overall strategic vision into plans, goals & strategies for their divisions
  • Organize operations within division, divide tasks effectively into functions & departments
  • Controls activities, monitors performance & intervenes to take corrective action
  • Develops human capital

In a singular division company, Business & Corporate-level management are the same!

Functional Managers

  • Responsible for a specific business functions (marketing, production, tech, R&D, etc.)
  • Develops functional strategy & works towards the strategic objective of organization
  • Provides information to business & corporate-level general managers so they may understand localized contexts better
  • Executes the strategy of business & corporate-level strategies
  • Divides tasks into subunits & teams
  • Controls subunits (by monitoring performance & taking corrective action)
  • Develops human capital

Frontline Managers

  • Manages all non-managerial employees
  • Deals with customers first hand
  • Responsible for teams and subunits

Mastering the Job

People who succeed at their task get promoted to manager. As long as people plan, develop strategy, organize, control, lead, & motivate via incentives, they may become a manager.

New managers must earn trust & credibility through interpersonal interactions on the job. They must set the agenda for subordinates & network among peers/supervisors to advance it.

Mintzberg’s 10 Managerial Roles

Henry Mintzberg developed a list of roles in 3 categories by looking at what managers around him did. All the following roles are integrated with each other & none are purely distinct from one another.

Interpersonal Roles

Roles that involve interacting with others both within and outside an organization. These roles are important because managers spend roughly 66% to 80% of their time interacting with others.

  • Figurehead Role - Greet people, represent company as a spokesperson/ambassador
  • Ex. Howard Schultz went on talk shows to advertise Starbucks’ initiatives
  • Leadership Role - Leaders influence, motivate, direct, strategize, plan, organize, control, develop, and provide a sense of direction/vision/purpose for their subordinates
  • Liaison Role - Network to gain information & coordinate with other managers to help further agenda

Informational Roles

Roles that involve collecting, processing & disseminating information. 40% of a manager’s time!

Monitoring Role

  • Monitor the environment outside (competitors, technology changes & regulations) & inside (checking performance)
  • Formal Channels of Information
  • Organization’s internal accounting information systems
  • Data provided by external agencies (stock analysts, research, government reports, etc.)
  • Informal Channels of Information
  • A manager’s own network of people will provide them with qualitative information

Dissemination Role

  • Spread & share information monitored to subordinates, higher-ups & others in organization
  • At the supervisory level, this is often a one-on-one conversation
  • At higher levels, this could be presenting slideshows, preparing reports, etc

Spokesperson Role

  • Delivering information your unit/division/jurisdiction to others outside your branch
  • Sales managers talk to business partners, Division heads give presentations to other division heads, CEOs meet with stakeholders, etc.

Decisional Roles

Roles involving action that move the organization towards its goals.

  • Entrepreneur - Pioneer new products & methods by innovating and adapting
  • Disturbance Handler - Deal with unanticipated problems & disturbances that might arise
  • Resource Allocation - Resources are scarce & need to be allocated to maximize achievement
  • Negotiate - Negotiating with customers, suppliers, subordinates, higher-ups to further agenda

What are Limitations of Mintzberg’s Managerial Roles?

  • Doesn’t tell us what managers should do, just tells us what they happen to do
  • Missing some important roles like playing devil’s advocate & mentoring subordinates
  • Doesn’t take context into account.
  • Ex: executives of government agencies don’t perform figurehead role because politicians do.
  • Different contexts require different emphasizes on different roles
  • Doesn’t explain how to perform these roles too well

Management Competencies

Managers must have several competencies (skills, values & motivations).

3 Managerial Skills

Conceptual Skills

  • Being able to see the BIG PICTURE & to understand how the different parts in the company affects each other.
  • Especially useful for top management positions. As you climb the management hierarchy, conceptual skills become more important.

Technical Skills

  • Skills that involve mastery of specific equipment and technical procedures
  • Especially useful for lower management positions because they work closely with technical staff.

Human Skills

  • Be able to communicate, persuade, motivate, coach, negotiate, lead & manage conflict between human beings.
  • Managers are role models, they must manage their emotions, words & deeds accordingly and lead by example.
  • Important for all managers at every position!

Managerial Values

Values are stable, evaluative beliefs that guide course of action & preference for outcomes.

2 Reasons Why Values are Important

  • Managers who act by their values are more likely to instill those values in others.
  • Values stabilize & guide managers through ambiguous circumstances.

The Right Values

  • Managers need to have values that reflect the situation they’re in.
  • Managers need to embrace ethical values (values that distinguish right from wrong).

4 Managerial Motivations

  1. Desire to compete for management jobs up the management hierarchy
  2. Desire to exercise power
  3. Should not have a personalized power orientation (seeking power for personal gain)
  4. Should have a socialized power orientation (seeking power to achieve social/org goals)
  5. Power should not come from formal authority, but rather personal traits such as ability to influence others and a stable network of allies
  6. Power also comes from having knowledge or information
  7. Desire to be different & distinct
  8. Be comfortable being different and not have a need for affiliation (to be neutral)
  9. Desire to take action, to execute & to succeed

Stakeholder Management

A stakeholder is any entity that has a stake in the operations of an organization & how it does business. All stakeholders supply an organization with resources & in exchange want satisfaction via inducements.

Managers need to take stakeholders in account, but can’t satisfy everyone. They need to prioritize by using the stakeholder impact analysis.

Most important stakeholders are CUSTOMERS, EMPLOYEES & SHAREHOLDERS. Generally speaking, customer & employees are the most important. If they’re happy, then the organization will succeed which will in turn make shareholders happy.

But all stakeholders need to be happy & can’t be ignored!

Ex. Monsanto, the public & GMOs.

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