Part A: Management foundations
An overview of management
Key takeaways
- Management is the process of planning, organising, staffing, directing and controlling people's efforts and the organisation's resources to achieve stated objectives efficiently and effectively.
- Efficiency is doing things right, the ratio of output to input; effectiveness is doing the right things, achieving the objectives that matter, and Drucker held that effectiveness comes first.
- Katz's three skills are technical, human and conceptual: technical matters most at first-line level, conceptual at top level, and human skills at every level.
- Mintzberg found ten managerial roles in three groups, interpersonal, informational and decisional, and showed that managerial work is brief, varied and fragmented.
- Management is both a science in its body of principles and an art in their application, and it falls short of a full profession because it has no licence requirement and no enforceable code with power to exclude.
Management is the discipline this whole level rests on, and the chapter is examined largely on definitions, lists and distinctions. Learn the lists as lists, because that is how the marks are allocated.
Introduction to management
Every organisation, whether a Kenyan tea factory, a county hospital or a two-person consultancy, faces the same problem: resources are limited, objectives are not, and the work must be done by people who cannot all do everything. Management is the activity that resolves that problem, and it exists wherever people work together towards a common purpose.
Defining management
The nature of management
- It is goal-oriented: management exists to achieve stated objectives, and an activity with no objective cannot be managed, only performed
- It is a continuous process, not an event: the functions recur in cycles rather than finishing
- It is pervasive: it occurs at every level and in every kind of organisation, public, private, cooperative and voluntary
- It is a group activity: management coordinates people, so it presupposes more than one person
- It is intangible: management is seen in its results, not directly, which is why its contribution is often disputed
- It is multidisciplinary, drawing on economics, psychology, sociology, mathematics and law
- It is dynamic: methods that worked in one environment fail in another, which is the contingency insight of the chapter on schools of management thought
- It is a factor of production, distinct from land, labour and capital, and the one that combines the others
- It is universal in principle and situational in application: planning is universal, but how a Kenyan county government plans differs from how a start-up does
Why management matters
- It achieves group objectives that individuals could not achieve separately
- It optimises the use of scarce resources, which in most Kenyan organisations is the binding constraint
- It reduces cost by matching resources to requirements rather than to habit
- It establishes a sound organisation, with clear authority and responsibility
- It establishes equilibrium with a changing environment, adapting the organisation to what the environment now requires
- It develops people, since managers are responsible for the competence of those they direct
- It contributes to national development: productive, well-managed enterprises generate employment, tax revenue and exports, which is why management capability is a development question and not only a private one
- It provides innovation and leadership, giving the organisation direction it would not otherwise have
Management functions
The five functions of management
| Function | Question it answers | Principal output |
|---|---|---|
| Planning | What are we trying to achieve, and how? | Objectives, policies, programmes, budgets |
| Organising | Who does what, and who reports to whom? | Structure, job descriptions, authority relationships |
| Staffing | Who fills the positions, and are they competent? | Recruitment, selection, training, appraisal |
| Directing (leading) | How do we get people to do it well? | Supervision, motivation, communication, leadership |
| Controlling | Are we achieving it, and if not, what do we change? | Standards, measurement, comparison, corrective action |
Fayol's five, and the modern four
Fayol listed planning, organising, commanding, coordinating and controlling. Modern texts usually give four, folding staffing into organising and renaming commanding as leading, giving planning, organising, leading and controlling: the P-O-L-C framework this syllabus names. Either list earns the marks provided you say which you are using.
Types and levels of managers
Levels of management
| Level | Titles | Time horizon | Principal concern | Skill emphasis |
|---|---|---|---|---|
| Top management | Board, chief executive, managing director, directors | Three to ten years | Strategy, external relations, survival of the whole | Conceptual |
| Middle management | Departmental heads, plant manager, regional manager | One to three years | Translating strategy into departmental plans, coordination | Human, balanced with conceptual and technical |
| First-line management | Supervisors, foremen, section heads | Days to months | Day-to-day operations, direct supervision of non-managers | Technical |
- Functional managers are responsible for one function: production, finance, marketing, human resources, quality
- General managers are responsible for a whole unit containing several functions, such as a branch or a subsidiary
- Line managers direct the activities that produce the organisation's output and carry authority over subordinates
- Staff managers advise and support line managers but do not command them, for example the quality, legal or human resources function
- Project managers direct a temporary undertaking across functional boundaries, which is why they typically hold responsibility without full line authority (see Project Management)
Management skills
Robert Katz classified managerial skills into three, and the examinable point is that the mix changes with level rather than the total requirement.
- A fourth commonly added is political skill: understanding and working within the informal power structure, which no organisation chart shows
- Diagnostic and analytical skills are sometimes separated from conceptual skills: diagnosing a situation and then designing a response
- The practical consequence for promotion is that technical excellence predicts first-line success and predicts nothing about top-level success, which is why organisations that promote solely on technical merit fill senior posts badly
Managerial roles
Henry Mintzberg observed what managers actually do rather than what texts said they do, and found ten roles in three groups. His finding that managerial work is brief, varied and fragmented, rather than reflective and systematic, is itself examinable.
Mintzberg's ten managerial roles
| Group | Role | What the manager does |
|---|---|---|
| Interpersonal | Figurehead | Performs ceremonial and symbolic duties: signing documents, receiving visitors |
| Interpersonal | Leader | Motivates, directs, staffs and develops subordinates |
| Interpersonal | Liaison | Maintains a network of contacts outside the chain of command |
| Informational | Monitor | Seeks and receives information about the organisation and its environment |
| Informational | Disseminator | Transmits information to organisation members |
| Informational | Spokesperson | Transmits information to outsiders about the organisation |
| Decisional | Entrepreneur | Searches for opportunity and initiates improvement projects |
| Decisional | Disturbance handler | Takes corrective action when the organisation faces unexpected disruption |
| Decisional | Resource allocator | Decides where the organisation's effort and money go |
| Decisional | Negotiator | Represents the organisation in major negotiations |
Managerial and organizational performance
Efficiency and effectiveness are not the same thing
Two Kenyan county hospitals, each with a KES 400 million budget.
HOSPITAL A HOSPITAL B
Cost per outpatient visit Cost per outpatient visit
KES 620 KES 940
Bed occupancy 91% Bed occupancy 74%
Staff per bed 1.8 Staff per bed 2.6
On every efficiency measure, A beats B.
But now the effectiveness measures:
Maternal deaths per 1,000 Maternal deaths per 1,000
deliveries: 2.9 deliveries: 0.8
Hospital-acquired infection Hospital-acquired infection
rate: 11.2% rate: 3.1%
Patients readmitted within 30 Patients readmitted within 30
days: 18% days: 6%
A is efficient and ineffective. It processes more patients more
cheaply and a greater proportion of them come to harm. B is less
efficient and more effective.
Compute the real cost, not the apparent one:
A: 18% readmission on, say, 40,000 visits = 7,200 readmissions
at KES 620 each = KES 4,464,000 of repeat work
B: 6% on 26,400 visits = 1,584 readmissions
at KES 940 each = KES 1,488,960
A's efficiency advantage is partly an artefact of counting the
same patient twice. The examinable point is Drucker's: there is
nothing so useless as doing efficiently that which should not be
done at all, and management's first duty is effectiveness.
Science or art?
Management as science and as art
| As a science | As an art |
|---|---|
| Has a systematic body of knowledge | Requires personal skill and judgement |
| Principles derived from observation and experiment | Applied situationally, not mechanically |
| Principles have universal validity in their conditions | Depends on the practitioner's creativity |
| Cause and effect relationships can be established | Improves with practice, not only with study |
| Predictions can be made and tested | Aimed at a concrete result in a particular case |
The settled answer is that management is both: it is a science in its body of principles and techniques, and an art in their application, so it is usually described as an inexact or social science. It is also increasingly treated as a profession, since it has a body of knowledge, formal education, and in Kenya representative bodies such as the Kenya Institute of Management, although it lacks the two defining features of a full profession, namely a licence requirement and an enforceable code of conduct with power to exclude.
The P-O-L-C framework
P-O-L-C is planning, organising, leading and controlling. The framework is the structure of this guide's chapters on the five functions, and it is worth stating that the functions are interdependent rather than sequential: controlling generates information that changes planning, and organising decisions constrain what can be led.
Answer definition questions with a named authority
In this chapter the difference between a pass and a strong answer is usually attribution. 'Management is getting things done through people (Mary Parker Follett)' and 'the ten managerial roles in three groups (Mintzberg)' earn more than the same content unattributed, and they take no longer to write.
Self-check
Distinguish efficiency from effectiveness and explain, with a Kenyan example, why an organisation may be efficient and yet fail. (8 marks)
Describe Mintzberg's ten managerial roles and explain what his research showed about the nature of managerial work. (12 marks)
Show worked answer
Efficiency and effectiveness (8 marks: 3 for the distinction, 5 for the example and reasoning).
Efficiency is the ratio of output to input, doing things right, and it measures how economically resources are used. Effectiveness is the degree to which objectives are achieved, doing the right things, and it measures whether the output was worth producing. The two are independent: an organisation can be high on one and low on the other in any combination.
Why efficiency without effectiveness fails: efficiency measures the cost of an activity and says nothing about whether the activity serves the objective. An organisation optimising an activity that does not advance its purpose consumes resources faster the more efficient it becomes, which is Drucker's observation that there is nothing so useless as doing efficiently that which should not be done at all.
Kenyan example: a county hospital reduces its cost per outpatient visit from KES 940 to KES 620 by shortening consultations, reducing staff per bed and raising occupancy. Every efficiency measure improves. Its hospital-acquired infection rate rises from 3 to 11 per cent and 18 per cent of patients are readmitted within thirty days. The hospital is efficient at producing consultations and ineffective at producing recovered patients, which is its actual objective. Its apparent cost advantage is also partly illusory, because the readmissions mean the same patient is counted and treated repeatedly, so a share of the throughput that flatters the efficiency ratio is rework.
The management lesson is that effectiveness must be established first, by defining the objective in terms of the outcome rather than the activity, and efficiency pursued within it. Measuring only what is easy to count, visits rather than recoveries, produces exactly this failure.
Mintzberg's roles (12 marks: 10 for the roles, 2 for the nature of the work).
Interpersonal roles, arising from the manager's formal authority and status:
1. Figurehead: performs ceremonial and symbolic duties, such as signing documents, receiving official visitors and attending functions.
2. Leader: motivates, directs, staffs and develops subordinates, and is responsible for their performance.
3. Liaison: builds and maintains a network of contacts outside the vertical chain of command, through which favours and information are exchanged.
Informational roles, arising from the interpersonal ones:
4. Monitor: continually seeks and receives information about the organisation and its environment, much of it informal and verbal.
5. Disseminator: transmits information received from outside, and from subordinates to each other, within the organisation.
6. Spokesperson: transmits information about the organisation to outsiders, including the board, the regulator and the public.
Decisional roles, arising from the informational ones:
7. Entrepreneur: searches the organisation and its environment for opportunity and initiates improvement projects.
8. Disturbance handler: takes corrective action when the organisation faces an important and unexpected disruption.
9. Resource allocator: decides where the organisation's money, time, materials and attention go, including approving significant decisions before implementation.
10. Negotiator: represents the organisation in significant negotiations with unions, suppliers, customers and government.
What his research showed about the nature of the work: Mintzberg observed that managerial work is not the reflective, systematic planning that classical texts described. It is characterised by brevity, variety and fragmentation, with a large number of short activities and frequent interruption; by a strong preference for verbal media, the telephone and meetings, over written reports; by a network of contacts outside the formal hierarchy that supplies much of the manager's information; and by a mixture of duties, from the ceremonial to the substantive, that no job description captures. The practical implication is that managers rarely have the uninterrupted time the planning function assumes, so planning must be built deliberately into the calendar or it does not happen.