HAWASSA INFOLINK UNIVERSITY COLLEGE

CHAPTER I
Management Fundamentals (Introduction)
1) Meaning And Definition Of Management
There are several definitions of Management; but they all are fundamentally the same.
Among the many, some are:
a) Management is the process of coordinating all resources through the five major
functions of planning, organizing, staffing, directing /leading and controlling to
achieve organizational goals/desired objectives.
b) It is the process of achieving organizational goals through engaging in the five
major functions of planning, organizing, staffing, directing/leading and controlling.
In the above definition there are three key concepts
i) Coordination of all resources – managers should coordinate the resources of
an organization. These resources may be human or non human.
ii) The five managerial functions – To coordinate the resources of an
organization a manager should employ/use the five managerial functions.
iii) Objectives – are the reason for the establishment of organizations and
management is useful for achieving these goals. Managing/management is
concerned with productivity: effectiveness and efficiency.
All organizations establish a variety of goals and direct their energies and resources to
achieve them.
All organizations also have resources that can be used to meet these objectives. Such
resources can be classified into: human and non-human, and management is the force that
unifies these resources. It is the process of bringing them together and coordinating them
to help accomplish organizational goals.
c) Management is the art of getting things done through other people by making the
atmosphere conducive for others.
d) It is the process of getting things done through others.
→ an effective manager focuses on both work and people.
→ the job of every manager is to achieve organizational goals through the
combined efforts of people.

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e) Management is the utilization of scientifically derived principles to examine and

improve collective efforts or production.
- Hospital → Patient care
- Educational institution → Teaching, research & community
service
d) Management is the process of achieving organizational goals through engaging in the
five major functions of planning, organizing, leading, staffing and controlling. This
definition recognizes that:
- Management is an ongoing activity
- Involves knowing how to perform the five major functions of
management.
Characteristics of Management
1. Goal Oriented
2. Dynamic
3. Decision Making
4. Universal
5. A Continuous Process
6. Working with and through people
7. Multi – Disciplinary
8. Not Absolute Principles
2) Managerial Functions
Regardless of the type of firm and the organizational level, all managers perform certain
basic functions. These managerial functions are Planning, organizing, staffing,
directing/leading/ and controlling.
I. PLANNING: is making decisions today about future actions. It involves
selecting missions and objectives and the actions to achieve them; it requires
decision making that is, choosing future courses of action from among
alternatives.
 Planning bridges the gap between where we are to where we want to be in a
desired future.
 Planning identifies goals and alternatives.

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 It maps out courses of action that will commit individuals, departments and the
entire organization for days, months and years to come.
Planning is the first managerial function that all managers engaged in because it lays
the groundwork for other managerial functions.
Planning achieves these ends after setting in motion the following processes:
(1) Determination of what resources will be needed
(2) Identification of the number and types of personnel the organization will need
(3) Development of the foundation for the organizational environment in which work
is to be accomplished.
(4) Determination of standard against which the progress toward the objectives can
be measured so that corrections can be made if necessary

II. ORGANIZING: is concerned with assembling the resources necessary to achieve

organizations’ objectives and establishing the activity authority relationship.
 It is the management function that focuses on allocating and arranging human and
non-human resources so that plans can be carried out successfully.
 Resources are allocated on the basis of major company goals.
 Planning has established the goals of the company and how they are to be achieved;
organizing develops the structure to reach these goals.
It is through organizing function that managers determine which tasks are to be done,
how tasks can best be combined into specific jobs, and how jobs can be grouped into
various units that make up the structure of the organization. It involves creating job
positions with assigned duties and responsibilities, arranging positions into hierarchy by
establishing authority–reporting relationship, determining the number of subordinates
each manger should supervise, determining the number of hierarchical levels etc and
thereby create an organization. Organizing is not done once and then forgotten. As the
objectives of the company change, they will influence the structure of managerial and
organizational relationship.
III. STAFFING: As it has been pointed out, organizing involves creating job positions
with assigned duties and responsibilities. Staffing involves filling and keeping filled the
positions in the organization structure. It is concerned with locating prospective

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employees to fill the jobs created by the organizing process. It basically deals with
inventorying the people available, announcing vacancies, accepting, identifying the
potential candidates for the job, recruiting, selecting, placing, orienting, training and
promoting both candidates and existing employees.
Remember
Many aspects of staffing function are the responsibility of personnel department.
iv. Directing/LEADING: has been termed as motivating, influencing, guiding,
stimulating, actuating or directing. It is aimed at getting the members of an organization
move in the direction that will achieve its objectives.
Leading/leadership is the heart and soul of management. It involves influencing others to
engage in the work behavior necessary to reach organizational goals; i.e., it is influencing
people so that they will contribute to organization and group goals; it has to do
predominantly with the human/interpersonal aspect of management.
Leading is the most complex managerial function because it deals with complex human
behavior; and because most problems in organizations arise from people, their desire and
behavior. It includes communicating with others, helping to outline a vision of what can
be accomplished, providing direction, and motivating organization members to put forth
the substantial effort required.
v. CONTROLLING: is the measuring and correcting of activities of subordinates to
ensure that events conform to plans. It deals with establishing standards, measuring
performances against established standards and dealing with deviations from established
standards.
 Controlling is the process through which mangers assure that actual
activities conform to planned activities.
 It is checking current performances against predetermined standards
contained in the plan. Control activities generally relate to the measurement of
achievement. Significance Of Management
All the development that has taken place in the world is due to efficient management.
The points below bring out the significance or importance of management.
1. Encourages Initiative

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Management encourages initiative. Initiative means to do the right thing at the right time
without being told or influenced by the superior. The employees should be encouraged to
make their own plans and also to implement these plans. Initiative gives satisfaction to
employees and success to organization.
2. Encourages Innovation
Management also encourages innovation in the organization. Innovation brings new
ideas, new technology, new methods, new products, new services, etc. This makes the
organization more competitive and efficient.

3. Facilitates growth and expansion

Management makes optimum utilization of available resources. It reduces wastage and

increase efficiency. It encourages team work and motivates employees. It also reduces
absenteeism and labor turnover. All these result growth, expansion and diversification of
the organization.

4. Improves life of workers

Management shares some of its profits with the workers. It provides the workers with
good working environment and conditions. It also gives the workers many financial and
non-financial incentives. All this improves the quality of life of the workers.

5. Improves corporate image

If the management is good, then the organization will produce good quality goods and
services. This will improve the goodwill and corporate image of the organization. A good
corporate image brings many added benefits to the organization.

6. Motivates employees

Management motivates employees by providing financial and non-financial incentives.

These incentives increase the willingness and efficiency of the employees. This results in
boosting productivity and profitability of the organization.

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7. Optimum use of resources

Management brings together the available resources. It makes optimum (best) use of
these resources. This brings best results to the organization.

8. Reduces wastage

Management reduces the wastage of human, material and financial resources. Wastage is
reduced by proper production planning and control. If wastage is reduced then
productivity will increase.

9. Increases efficiency

Efficiency is the relationship between returns and cost. Management uses many
techniques to increase returns and to reduce costs. Higher efficiency brings many benefits
to the organization.

10. Improves relations

Management improves relations between individuals, groups, departments and between

levels of management. Better relations lead to better team work. Better team work brings
success to the organization.

11. Reduces absenteeism and labour turnover

Absenteeism means the employee is absent without permission. Labor Turnover means
the employee leaves the organization. Labor absenteeism and turnover increases the cost
and causes many problems in the smooth functioning of the organization. Management
uses different techniques to reduce absenteeism and labor turnover in the organization.

12. Encourages Team Work

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Management encourages employees to work as a team. It develops a team spirit in the

organization. This unity bring success to the organization.

Levels Of Management
Is management the same throughout an organization? Yes and No
Yes: because all managers perform the five managerial functions.
No: because despite the fact that they perform all managerial functions, they perform it
with different emphasis and scope.
Managers – are those persons in the position of authority who make decisions to commit
(use) their resources and the resources of others towards the achievement of
organizational objectives.
 Everybody is the manager of his/her time, energy and talents.
Managers can be divided based on two criteria. These are:
1) Levels of management (vertical difference)
2) Scope of responsibilities (horizontal difference)

I. Types of Managers based on levels of management

Based on levels of management or hierarchy we do have three types of managers.
i. Top Level Managers
Top-level managers are managers who are at the top of the organizational hierarchy and
are responsible for the entire organization. They are usually few in number and the actual
title may vary from organization to organization. They establish companywide objectives
or goals & organizational policies. Furthermore, top management:
- Develop overall structure of the organization.
- Direct the organization in accordance with the environment.
- Develop policy in areas of Equal Employment Opportunity &
employee development.
- Represent the organization in community affairs, business
deals, and government negotiations.
- Spent much of their time in planning and dealing with middle
level managers and other subordinates.

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- Work long hours and spend much of their time in meetings and
on telephone.
- Are persons who are responsible for making decisions and
formulating policies that affect all aspects of the firm’s operations.
- Provide overall leadership of the organization towards
accomplishment of its objectives.
 Top-level managers take the credit or blame for organizational success and failures
respectively.
 Top level management includes the board of directors, executive committee, and
chief executive, general manager ( the organization’s most important managers) or
the president and his/her immediate subordinates usually called vice-presidents etc, of
an organization.
ii. Middle Level Managers
Middle level managers occupy a position in an organization that is above first-line
management and below top management. They interpret and implement top
management directives and forward messages to and from first-line management.
- Their subordinates are managers.
- Often coordinate and supervise the activities of lower level
managers.
- Receive broad/overall strategies from top managers and
translate it into specific objectives and plans for First-Line Mangers/operating
managers.
- Are responsible for the proper implementation of policies and
strategies defined by top-level managers.
- Their principal responsibility is to direct the activity that
implement the policies of the organization.
- Coordinating inputs, productivity and outputs of operating
level managements.
- Middle level management includes heads of the different areas
and their assistants, divisional heads, department managers, section heads, plant
managers, branch managers, etc.

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iii. First Level Managers/Supervisory Level managers

- Are those at the operating level or at the last level of management
- Their subordinates are non-managers(workers).
- They are responsible for overseeing and coordinating the work of operating
employees.
- Assign operating employees to specific tasks.
- - Are directly responsible for the production of goods and services.
- Motivate subordinates to change or improve their performance.
- Serve as a bridge between managers and non-managers.
- Spent much of their time in leading and little in planning (Planning daily and
weekly activities and accomplishments based on the monthly, quarterly, and
yearly plans).
- Operating level managers direct a small team of workers
- Are in charge of carrying out the day-to-day activities within the various
departments to ensure that short-term goals are met.
E.g. Department Heads, supervisory personnel, Sales managers, Loan officers,
Foreman.
All managers carry out managerial functions. However, the time spent for each function
varies according to their managerial hierarchy. Top-level managers spend more time on
planning and organizing than lower-level managers. Leading, on the other hand, takes a
great deal of time for first-line managers. The difference in time spent on staffing and
controlling varies only slightly for managers at various levels.

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Planning

Organizing

Controlling
Staffing

Directing
Top

Middle

First-line

Organizational Hierarchy Time spent on carrying out managerial

functions
Fig. 1.1 The relative importance of the managerial functions at different levels
II. Types of Managers based on scope of responsibility
Based on the scope of responsibility/activities they manage, managers are divided into
two:
i. Functional Managers
Functional managers are managers who are responsible for a department that performs a
single functional task and has employees with similar training and skills. They are
responsible for only one organizational activity; such as accounting, personnel, finance,
marketing, and production or sales etc. All these functions are necessary for the success
of the organization. Their responsibility is limited to their specialization/specification.
ii. General Managers
General Managers are managers who are responsible for several departments that
perform different functions. They are responsible for the entire operations of the
organization without being specific.
A small company may have only one general manager – its president or executive vice
president – but a large organization may have several, each at the head of a relatively
independent division.
12. Managerial Roles

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Role is an organized set of behaviors that is associated with a particular office or position.
A role is any one of several behaviors a manager displays as s/he functions in the
organization
Managers perform the basic managerial functions by playing a variety of managerial
roles. Henry Mintzberg studied or identified 10 a variety of managerial roles which are in
turn grouped into three categories: interpersonal roles, informational roles, and
decisional roles.
I. Interpersonal Roles involve developing and maintaining positive relationships with
significant others in the organization. It is communication oriented. It includes:
i. Figurehead Role: managers perform symbolic duties of a legal or social nature.
The manager is the head of his work unit, division, section or department. Because of
this “lead person” position the manager represents his work unit at ceremonial or
symbolic functions.

The top level managers represent the company legally and socially to those outside of
the organization..
E.g. Signing documents, presiding at a ceremonial event, greeting visitors, attending a
subordinate’s weeding, taking a customer to lunch, university president hands out a
diploma for graduates – in all these cases the manager is representing his/her
organization.
ii. Leadership Role: The manager is the environment creator – s/he makes the
environment conducive for work by improving working conditions, reducing
conflicts, providing feedback for performance and encouraging growth. The leader
builds relationship and communicates with employees, motivates & coaches them. As
a leader, the manager is responsible for hiring, training, motivating and encouraging
employees/subordinates.
→ The leadership role is evident in the interpersonal relationship between manager
and his/her subordinates.
iii. Liaison Role/Coordinator role: The liaison maintains a network of contacts
outside the work unit to obtain information. The manager serves as a link between the
organization and the informants who provide favors and information. S/he fulfills this

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role through community service, conferences, social events, etc, participation is

meetings with representatives of other divisions.
Refers to dealing with the member of the organization superiors, subordinates, peer
level managers in other departments, staff specialists and outside contacts such as clients
II. Informational Roles focuses on the transmission of important information to and
from internal and external sources. It involves the following activities:
i. Monitor role: is also called information gathering role. This role refers to seeking,
receiving, screening and getting information. The manager is constantly monitoring
the environment to determine what is going on. The monitor seeks internal and
external information about issues that can affect the organization. S/he seeks and
receives wide variety of special information to develop through understanding of the
organization and the environment.
Information is gathered from news reports, trade publications, magazines, clients,
associates, and a host of similar sources, attending seminars & exhibitions.
ii. Disseminator Role: what does the manager do with the information collected? As
the disseminator, the manager passes on to subordinates some of the information that
would not ordinarily be accessible to them. After the information has been gathered
(by monitor role), it has to be disseminated to superiors, subordinates, peers and
other concerned clients. The types of information to be forwarded to members could
be facts, opinions, interpretations, and influences.
iii. Spokesperson/representative Role: the spokesperson transmits information
about the organization to outsiders. The manger is the person who speaks for her/his
work unit to people outside the work unit.
One aspect of this role is to keep superiors well informed and a second aspect is to
communicate outside the organization like press, government agencies, customers
and labor unions. Although the roles of spokesperson and figurehead are similar,
there is one basic difference between them. When a manager acts as a figurehead, the
manager’s presence is as a symbol of the organization, whereas, in the spokesman
role, the manager carries information and communicates it to others in a formal sense.
III. Decisional Roles: involve making significant decisions that affect the organization

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i. Entrepreneur Role: (initiator of change) the manager acting as an entrepreneur

recognizes problems and opportunities and initiates actions that will move the
organization in the desired direction. In the role of entrepreneur, the manager tries to
improve the unit. ii. Disturbance Handler Role: solution seeking role. In the role of
disturbance handler, the manager responds to situations over which s/he has little control.
The disturbance handler is responsible for taking corrective action when the organization
faces important, unexpected difficulties.
ii. Resource Allocator Role: deciding on the allocation of the organization’s
physical, financial and human resources. As a resource allocator, the manager is
responsible for deciding how and to whom the resources of the organization and
the manager’s own time will be allocated. This involves assigning work to
subordinates, scheduling meetings, approving budgets, deciding on pay increases,
making purchasing decisions and other matters related to the firm’s human,
financial, and material resources. The resource allocator distributes resources of
all types, including time, funding (finance), equipment and human resources.
iii. The Negotiator Role: representing the organization in all important/major
negotiations. Managers spend a great deal of their time as negotiators, because
only they have the information and authority that negotiators require.
E.g. negotiations to buy firms, to get credit, with government, with suppliers, etc.
The Ten Managerial Roles
Category Role Activity
Interpersonal Figurehead Perform ceremonial and symbolic duties such as greeting visitors, signing
legal documents
Leader Direct and motivate subordinates; training, counseling, and communicating
with subordinates.
Liaison Maintain information links both inside and outside organization; use mail,
phone calls, meetings.
Informationa Monitor Seek and receive information, scan periodicals and reports, maintain
l personal contacts.
Disseminator Forward information to other organization members; send memos and
reports, make phone calls.
Spokesperson Transmit information to outsiders through speeches, reports, memos.
Decisional Entrepreneur Initiate improvement projects; identify new ideas, delegate ideas, delegate

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responsibility to others.
Disturbance handler Take corrective action during disputes or crises; resolve conflicts among
subordinates; adapt to environmental crises.
Resource allocator Decide who gets resources; scheduling, budgeting, setting priorities
Negotiator Represent department during negotiation of union contracts, sales,
purchases, budgets; represent departmental interests.

13. Managerial Skills And Their Relative Importance

A manager’s job is diverse and complex and it requires a range of skills. Skills are
specific abilities that result from knowledge, information, practice, and aptitude.

 Effective managers are essential to the performance of all organizations, whether they
have the ability to plan, organize, staff, lead and control business operations effectively
can determine a firm’s ultimate success or failure.
 Management success depends both on: a fundamental understanding of the principles
of management and the application of technical, human and conceptual skills.
 Modern businesses are dynamic and complex, and competition in the market place is
fierce. Consequently, managers must be highly skilled to succeed. The skills managers
need can be classified as:
o Technical skill
o Human Relations skill
o Conceptual skill
o Decision making skill
o computer skill

1. Technical Skills – involve process or technique, knowledge and proficiency. It is the

ability to use the tools, procedures, or techniques of a specialized field. It includes
mastery of the methods, techniques, and equipment involved in specific functions, such
as engineering, manufacturing, or finance. Technical skill also includes specialized
knowledge, analytical ability, and the competent use of tools and techniques to solve
problems in that specific discipline.

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- Technical skills are most important at the lower levels of

management. It becomes less important as we move up the chain of command
because when they supervise the others (workers), they have to show how to
do the work.
E.g. A surgeon, an engineer, a musician, a quality controller or an accountant all
have technical skill in their respective areas.

2. Human Relations /Interpersonal Skill – the ability to interact effectively with

people. It is the ability to work with, understand and motivate other people, either as
individuals or as groups. Managers need enough of human relationships skill to be able to
participate effectively and lead groups. These skills are demonstrated in the way a
manager relates to other people, including the way s/he motivates, facilitates, coordinates,
leads, communicates, and resolves conflicts. A manager with human skills allows
subordinates to express themselves without fear of ridicule and encourages participation.
A manager with human skills likes other people and is liked by them. This skill is a
reflection of the manager’s leadership ability.

Managers who lack human skills often are abrupt, critical, and unsympathetic toward
others. The results are often abrupt, critical, and unsympathetic response from workers to
management.
Because all work is done when people work together, human relation skills are equally
important at all levels of management.

3. Conceptual skills – it is visualizing the different parts of an organization as one

big whole and involves the formulation of ideas. It refers to the ability to see the big
picture – to view the organization from a broad perspective and to see the interrelations
among its components. It includes recognizing how the various jobs in an organization
depend on one another and how a change in any one part affects all the others. It also
involves the manager’s ability to understand how a change in any given part can affect
the whole organization, ability to understand abstract relationships, solve problems
creatively, and develop ideas.

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Conceptual skills are more important in strategic (long range) planning; therefore, they
are more important to top-executives than middle managers and supervisors.

Although all three of these skills are essential to effective management, their relative
importance to specific manager depends on his/her rank in the organization. Technical
skill is of greatest importance at supervisory level; it becomes less important as we move
up the chain of command. Even though human skill is equally important at every level of
the organization, it is probably most important at the lower level, where the greatest
number of management–subordinate interactions is likely to take place.
On the Other hand, the importance of conceptual skill increases as we rise in the rank of
management. For top management, which is responsible for the entire organization,
conceptual skill is probably the most important skill of all.
 Technical skill deals with things, human skill concerns people and conceptual skill
has to do with ideas.

Conceptual Skills
Technical Skills

Human Skills

Top

Middle

First-line

Managerial Levels Managerial Skills

Fig. 1.2 Variation of skills necessary at different management levels

4. Decision making skill

It is the ability to choose the best alternative among alternatives. In order to make
a decision there must be alternative and before making the choice gathering data,

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analyzing it and understanding all alternatives is important. The whole process

requires the manager to have the decision making skill.
Remember
This is relatively more important at the top level management than at lower level
management.
5. Computer Skill
It is a conceptual understanding of computers, in particular, knows how to use
the computer and software to perform many aspects of their job.
4. Management: Science or Art?
Science: - It is an organized/systematized body of knowledge constituting concepts,
theories, and principles concerning a particular field of study. Especially, it is knowledge
obtained from observation, test, and experimentation of facts; and it is universally true;
and applied in any country, organization, etc. Besides, it exploits mathematical models.
1) Its principles are systematized body of knowledge.
2) Its principles are universally applicable:
3) It is based on scientific inquiry, observation, test, and experiment:
4) It explains the cause and effect relationships among/between various
variables:
5) Its validity can be verifiable and can serve as a reliable basis for predicting
future events
Art:
Art implies the application of knowledge and skills to bring about the desired results. Art
is characterized by using common sense, personal feeling, beliefs, impulses, etc. It is
doing things in light of the existing realities of a situation. It is concerned with the
application of know-how and skill to the specific time, place, and condition tactfully,
creatively and wisely. The essential elements of arts are:
 Practical knowledge
 Personal skill
 Result oriented approach
 Creativity
 Improvement through continuous practice

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Management as a profession

Mr. Louis Allen defined profession as "a specialized kind of work practiced through and
by use of classified knowledge, a common vocabulary, and requiring standards of
practice and code of ethics established by a recognized body like medicine, law,
accountancy, etc.,

1. Systematic Knowledge: Every profession has a well defined area of organized

knowledge. Management also deals with distinct area of knowledge which is developed
around functions of management.

2. Formalized method of acquiring knowledge: For present day managers, formal

education and training is an important source of knowledge.
3. Performance-based status: Manager's status in the present day organization is linked
to its performance rather than other extraneous factors like family or political
connections.

4. Code of ethics: Professionals must be governed by a strict code of ethics formulated

and enforced by professional bodies to protect their members integrity.

5. Dedication and commitment: True professionals through dedication and commitment

serve their clients interest. Financial reward is not the measure of their success. Managers
today are expected to serve the long-run interest of the organization but they are also
conscious of their social responsibilities.

6. Universality Of Management
Regardless of title, position, or management level, all managers do the same job. They
execute the five managerial functions and work through and with others to set and
achieve organizational goals. Managers are the same whether the organization is private
or public, profit making or non-profit making, manufacturing or service giving, and
industrial or small firms. Hence, management is universal for the following reasons.
1. All managers perform the five managerial
functions even if with different emphasis.

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2. It is applicable for all human efforts; be it

business, non-business, governmental, private. It is useful from individual to
institutional efforts.
3. Management utilizes scientifically derived operational principles.
4. All managers operate in organizations with specific objectives.
5. Management, in all organizations, helps to achieve organizational objectives.
6. Principles of management are universal. They are applicable to any kind of
organization wherever there is a coordinated effort of human being.

In sum, management theories and principles have universal application in all kinds of
organized and purposeful activity and at all levels of management.

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