Addis Ababa University, College of Business and Economics, Department of Management 2022

INTRODUCTION TO MANAGEMENT
CHAPTER I: MANAGEMENT AN OVERVIEW

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. That is, 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. There are points to be meet, targets to be shot or
places to be reached. All organizations establish a variety of goals and direct their energies
and resources to achieve them.
• Profit oriented business → ROI goals
• Hospital → Patient care
• Educational institution → Teaching, research & community service.

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.

b) Management is the art of getting things done through other people by making the
atmosphere conducive for others. It is the process of getting things done through others, and
this process puts emphasis on both the objectives to be attained and the people who will be
pursuing them.
• 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.

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

collective efforts or production.
• Management applies to any kind of organization, to managers at all organizational
levels.
• Without management, virtually no business could survive.
• Management increases the values of our resources.

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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
• Entails reaching important goals, and
• Involves knowing how to perform the five major functions of management.

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.

Organization – is a group of two or more people brought together to achieve common stated
objectives.
Organization – two or more persons engaged in a systematic effort to produce goods and/or
services.

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, which is,
choosing future courses of action from among alternatives. No real plan exists until a
decision – a commitment of human or material resources – has been made. Before a decision
is made, all we have is a planning study, an analysis or a proposal, but not a real plan.

• Planning bridges the gap between where we are to where we want to be in a desired
future.
• Planning identifies goals and alternatives. 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. Even other managerial functions have
to be planned.

- 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–

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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 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.
Staffing is concerned with human resource of the organization.

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.

3) Significance Of Management
Why do we study management?

There are different reasons to study management. These are:

▪ It is important for personal life.
▪ Managers are universal: managers work in all types of organizations, at all levels, and
in all functional areas. These managers are responsible fo0r the success or failure of
the organizations.
▪ Societies depend on organizations/institutions for the provision of goods and services.
These institutions are guided by the decision of few individuals /one or two/
designated as Managers.

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▪ It affects the accomplishment of social, economic, political and organizational goals.

Management is the force that determines whether business organizations and social
institutions will serve us or waste our talents and resources.
▪ Ever since people began forming groups to accomplish aims they could not achieve as
individuals, managing has been essential to ensure the coordination of individual
efforts.
▪ People currently not trained by management get themselves in managerial positions
and earn their livelihood, and the most common path to become successful manager
involves a combination of education and experience.
▪ Management is needed to coordinate and direct the efforts of individuals, groups and
the entire organization to achieve desired objectives. Management is responsible for
the success or failure of an organization.
▪ That is, when an organization fails it is because of poor management, and when an
organization succeeds it is because of good management. Whenever and wherever
there is a group work having stated objectives, management is needed to direct and
coordinate their efforts. Without management effort will be wasted.

4) 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 all perform the same management functions but with different emphases because
of their position in the organization. Although all managers may perform the same basic
duties and play similar roles, the nature and scope of their activities differ. These differences
are the base for the classification of managers.

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

An important determinant of a manager’s job is hierarchical level. Levels refer to hierarchical
arrangement of managerial positions or persons in an organization. The number of
managerial levels in an organization depends on the size of the organization. In most
organizations, however, there are three distinct levels. How these levels are distinguished?
What functions are performed at each level? And the reporting relationships are some of the
issues to be addressed.

Based on levels of management or hierarchy we do have three types of managers. A

manager’s assigned duties and the authority needed to fulfill those duties are what determine
management level.

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 include the
organization’s most important managers - the CEO or the president and his/her immediate
subordinates usually called vice-presidents. But the actual title may vary from organization to
organization. They are few in number because of the nature of the work they perform and

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economic problem. They deal with the big picture, not with the nitty gritty. They are
responsible for the overall management of the organization. They establish company wide
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.
- 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.

▪ They are responsible for the organization because objectives are established and policies
are formulated at the top.
▪ Top-level managers take the credit or blame for organizational success and failures
respectively.

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.

- Regardless of their title, 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. They interpret and implement top management directives and forward messages to
and from first-line management.
- Their principal responsibility is to direct the activity that implement the policies of the
organization.
E.g. Academic deans, Division Head, Plant managers, Army captain

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.
▪ They are responsible for overseeing and coordinating the work of operating
employees.
▪ Assign operating employees to specific tasks.
▪ Are managers on which management depends for the execution of its plan since their
job is to deal with employees who actually produce the organization’s goods and
services to fulfill the plan?
▪ 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.

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▪ 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.
- Are often neither fish nor fowl – neither management nor labor because they feel great deal of
empathy for their subordinates (which stems from close personal contact and the fact that
most supervisors have come up from the ranks of labor) and they are there to reflect the
company’s point of view to their subordinates. And that is why First-Line Mangers are called
“People in the Middle”.

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.

Top

Controlling
Planning

Organizing

Staffing

Directing
Middle

First-line

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.

Supervise employees (managers + workers) with specialized skills in specific areas of

operations such as accounting, payroll, finance, marketing, production, or sales etc. They are
responsible for only one organizational activity; i.e. 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.

Oversee a complex unit, such as a company, a subsidiary, or an independent operating

division. S/he will be responsible for all activities of that unit, such as its production,
marketing, sales and finance.

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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.

5) Managerial Roles
Role is an organized set of behaviors that is associated with a particular office or position. It
is a pattern of behavior expected by others from a person occupying a certain position in an
organizational hierarchy.
A role is any one of several behaviors a manager displays as s/he functions in the
organization

When a manager tries to carryout the management functions, s/he must behave in a certain
way – to fill certain role. Managerial roles represent specific tasks that managers undertake to
ultimately accomplish the five managerial functions. Factors which affect managerial roles
are: manager’s formal job description, and the values & expectations of other managers,
subordinates and peers.

Henry Mintzberg identified 10 managerial roles which are in turn grouped into three
categories: Interpersonal, Informational 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, be it 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. The superior represents the work group to higher management and higher
management to the work group.

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. (Virtually all managerial operations involving
subordinates are examples for a leadership role). 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 role through community
service, conferences, social events, etc, participation is meetings with representatives of other
divisions.

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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.

The top management uses this role to gain favors and information, while the superiors use it
to maintain the routine flow of work.

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.

Thus, the manager seeks information in the monitor role, communicates it internally in the
disseminator role and transmits it externally in the spokesperson role. The three informational
roles, then, combine to provide important information required in the decisional roles.

III. Decisional Roles: involve making significant decisions that affect the organization.

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. Often s/he creates
new projects, change organizational structure, and institutes other important programs for
improving the company’s performance. The entrepreneur acts as an initiator, designer, and
encourager of change and innovation.

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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, i.e. that are beyond
his/her control and expectation such as conflict between people or groups, strikes,
breachment of contract or unexpected events outside the organization that may affect the
firm’s performance. The disturbance handler is responsible for taking corrective action when
the organization faces important, unexpected difficulties.

iii. 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.

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

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6) 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:
▪ Technical skill
▪ Human Relations skill
▪ Conceptual 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.

▪ Is specialized knowledge and ability that can be applied to specific tasks.

▪ Is a skill that reflects both an understanding of and a proficiency in a specialized field.
▪ 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.

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3. Conceptual skills – involve 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.

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. The higher the manager is in the hierarchy, the more s/he will be involved in
the broad, long term decisions that affect large parts of the organization. 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

Top
Technical Skills

Human Skills

Middle

First-line

Managerial Levels Managerial Skills

Fig. 1.2 Variation of skills necessary at different management levels

4. Management: Science or Art?

Science is characterized by making conclusions based on actual facts and verifies knowledge
through cause-effect relationship. It can be generally learnt, thought, and researched to know
the universal truth. Managers can work better by using the organized knowledge about
management, and it is this knowledge that constitutes a science.

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Art is characterized by using common sense, personal feeling, beliefs, impulses, etc.
Management/Managing, like all other practices-music composition, engineering, accountancy
or baseball- is an art. It is know-how, skill or how to accomplish the desired objectives with
insufficient data and information or when there is limited use of secondary sources of
information. It is doing things in the light of realities of a situation. Thus, management as a
practice is an art; the organized knowledge underlying the practice may be referred to as a
science. In this sense/context science and art are not mutually exclusive but are
complementary.

Therefore, management in actual sense is neither an art nor science, but it requires both to be
successful, i.e., it is not pure art because it uses scientific methods e.g. computer and it is not
pure science because it uses intuition, judgment, and creativity. Management is one of the
most creative arts as it requires a vast knowledge and the innovative skills to apply. Managers
should develop new ideas, techniques and strategies and be able to communicate them
effectively in the work environment. They should be able to make decisions even when there
is shortage of data. This leads us to the conclusion that ‘the art of management begins where
the science of management stops’. This underlines the importance of making managerial
decisions in the absence of sufficient data and information by using the decision maker’s
common sense.

5. 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.
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.

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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