Chapter 1

Part A: Foundations

Management concepts

Last updated November 20266 sectionsabout 8 min read

Key takeaways

Management is the process of planning, organising, leading and controlling an organisation's human, financial, physical and informational resources to reach its goals efficiently and effectively.
Managers sit at three levels: top management sets the mission and long-term strategy, middle management turns that strategy into departmental plans and targets, and lower management supervises the day-to-day work.
Mintzberg grouped what managers actually do into ten roles in three categories: interpersonal, informational and decisional.
Katz's three skills shift with level: technical skill matters most at lower management, conceptual skill at top management, and human skill equally at every level.
A manager's authority comes from their position; a leader's influence comes from inspiring others, with or without a formal title.

Every organisation, whatever it sets out to do, needs someone deciding what to do, arranging people and resources to do it, and checking it gets done. This chapter fixes the vocabulary this paper builds on: what management is, who a manager is, and how managers differ from each other by level and by the skills each level leans on most.

Management and the manager

Management

Management is the process of planning, organising, leading and controlling an organisation's resources, human, financial, physical and informational, to achieve its stated goals efficiently and effectively. It is both a process (the four functions covered in depth in the chapter on the functions of management) and, informally, the group of people who carry that process out.

Manager

A manager is a person formally responsible for overseeing the work of others and the resources assigned to them, and for being held accountable for the results. What separates a manager from an individual contributor is not seniority alone but this accountability for other people's work, not only their own.

Levels of management

Most organisations of any size arrange their managers into a hierarchy of three broad levels, each with a different time horizon and a different mix of the skills covered under Management skills, below.

Top level management

The smallest group, the board, chief executive and other senior executives, setting the organisation's overall mission, long-term strategy and major policy, and answerable to owners or a governing body.

Middle level management

Departmental heads and regional or branch managers, translating top management's strategy into departmental plans and targets, and coordinating the work of first-line managers under them.

Lower level management

First-line supervisors and foremen, directly overseeing the operating employees who do the organisation's day-to-day work, and the level closest to daily execution.

Management roles

Henry Mintzberg's classic study of what managers actually do (as opposed to what management theory says they should do) grouped a manager's daily activity into ten roles across three categories.

Interpersonal roles

Three roles:

Figurehead: ceremonial and symbolic duties.
Leader: motivating and directing staff.
Liaison: maintaining a network of outside contacts.

Informational roles

Three roles:

Monitor: scanning the environment for information.
Disseminator: passing information to subordinates.
Spokesperson: transmitting information outward on the organisation's behalf.

Decisional roles

Four roles:

Entrepreneur: initiating change.
Disturbance handler: responding to unexpected problems.
Resource allocator: deciding who gets what.
Negotiator: representing the organisation in negotiations.

Management skills

Robert Katz identified three skills every manager needs, in a mix that shifts by level: lower management leans most on technical skill, top management most on conceptual skill, and human skill matters at every level equally.

Technical skill

Proficiency in the specific methods, processes and tools of a particular field, an accountant's command of financial reporting standards, for example. Most critical at lower management, where managers are close to the actual work.

Human (interpersonal) skill

The ability to work with, motivate and communicate with people, individually and in groups. Equally important at every level, since every manager works through other people.

Conceptual skill

The ability to see the organisation as a whole and understand how its parts relate to each other and to the wider environment. Most critical at top management, where decisions affect the entire organisation.

Qualities of an effective manager

Decisiveness, the ability to make a timely decision with incomplete information
Integrity and fairness in dealing with subordinates and other stakeholders
Strong communication, both listening and articulating direction clearly
Emotional intelligence, self-awareness and empathy in working with others
Adaptability, adjusting plans and approach as circumstances change
Sound judgement, weighing competing priorities and risks realistically
Accountability, owning outcomes rather than deflecting responsibility

Katz's three skills show how a manager's job changes with seniority. Technical skill matters most at supervisory level, conceptual skill, the ability to see the organisation as a whole, matters most at the top, and human skill matters at every level. That is why an excellent technician promoted into senior management can struggle: the job has moved from the first skill to the second.

Management, administration and leadership

The three terms are often used loosely as synonyms, but each carries a distinct emphasis. Administration is chiefly concerned with setting objectives and major policy, historically framed as a higher-level, more strategic activity than management, which is concerned with implementing that policy through people and resources. Leadership is narrower still: the ability to influence and inspire others toward a goal, a quality a manager may or may not possess, and one a person can exercise without holding any formal management position at all. A good manager is not automatically a good leader, and an organisation's most effective leader is not always its most senior manager.

Exam tip

A frequent short-answer question asks you to distinguish a manager from a leader. The cleanest line: a manager's authority comes from their position; a leader's influence comes from their ability to inspire followers, with or without formal authority.

Self-check

(a) A branch manager spends most of her week translating head office strategy into monthly targets for her branch's departments, and coordinating the supervisors under her. Identify her level of management, and explain why. (4 marks)

(b) Using Mintzberg's roles, classify each of the following: a CEO cutting the ribbon at a new branch opening; a manager scanning industry news for competitor moves; and a manager deciding which department gets the new budget allocation. (6 marks)

(c) Using Katz's skills, explain why a newly promoted top executive who was an excellent accountant may still struggle in the new role, even though their technical competence has not changed. (5 marks)

(d) Distinguish between management, administration and leadership, and explain why a highly respected shift supervisor with no formal management title can still be described as exercising leadership. (5 marks)

Show worked answer

(a) She is a middle-level manager. Middle level management consists of departmental heads and regional or branch managers, translating top management's strategy into departmental plans and targets, and coordinating the work of first-line managers under them, exactly the activities described, translating head-office strategy into branch targets and coordinating supervisors. (4 marks)

(b) The CEO cutting the ribbon is performing the figurehead role, a ceremonial and symbolic duty (interpersonal roles). The manager scanning industry news is performing the monitor role, scanning the environment for information (informational roles). The manager deciding budget allocation is performing the resource allocator role, deciding who gets what (decisional roles). (6 marks)

(c) Katz's skills shift by level: technical skill is most critical at lower management, while conceptual skill, the ability to see the organisation as a whole and understand how its parts relate to each other and the wider environment, is most critical at top management. An excellent accountant's strength lies in technical skill, but a top executive role demands strong conceptual skill above all, seeing across departments and the organisation's whole environment, a genuinely different skill their prior technical excellence does not automatically confer, which is why the transition can be difficult even without any decline in their original ability. (5 marks)

(d) Administration is chiefly concerned with setting objectives and major policy, a higher-level, more strategic activity. Management is concerned with implementing that policy through people and resources. Leadership is narrower still, the ability to influence and inspire others toward a goal, a quality a person can exercise without holding any formal management position at all. A shift supervisor with no formal management title can still be described as exercising leadership because leadership is about the ability to inspire and influence others, which does not require formal positional authority, respected informal influence over colleagues is leadership in substance even without the management title to match. (5 marks)