Unit 3
Management and the skills and activities involved
As we have already learned, entrepreneurs are necessary
for the setting up of a business, however managers play a
vital role in the planning, organising and controlling the
growth of the business. In other words effective
management is essential for the successful running of a
business/ organisation.
An organisation is a group of people who work together to
achieve a common goal.
A good manager is able to achieve results through people.
They plan, organise and control the work to be done using
their leading, motivational and communicating skills to get
this done.
Effective managers tend to have the following
characteristics:
 Decisiveness: They analyse information quickly and
set weekly, monthly and yearly goals for their staff. If
things go wrong they restore control by reacting
quickly to the problem.
 Confident, flexible and resilient: This inspires staff to
work effectively as a team as they trust and believe in
their manager.
 Positive and future focused: Manager must be able to
interact in a positive way in order to motivate staff
they must also keep their eye on competition and
never become too complacent.
 Good communicators: Staff must feel like they can
approach their manager as they know they will be
listened to.
 Highly motivated and hard working: This sets a good
example for staff.
 Good time management: They are careful at
arranging work load so that time is not wasted and all
staff are able to be as productive as possible. This
avoids stress and increases profits.
Managers are hired by entrepreneurs to carry out the
following roles:
 Plan: They take an entrepreneurs vision or idea and
turn it into small achievable targets that will be
carried out by their staff in a specific timeframe.
They are realistic in their approach and they take
advantage of opportunities and avoid threats to the
business.
 Organise: They bring all the resources together
(staff, equipment, finance) and get them to work in
an efficient manner.
 Control: Managers must regularly monitor their
plans to ensure they are working effectively. They
act as facilitators when dealing with staff as they are
actively mentoring their progress.
In order for a manager to carry out the above activities
successfully they must obtain the following skills:
 Leadership: They can naturally influence people in a
positive way and get them to work towards the goals
of the business. Leaders are confident and decisive
in their approach and are able to inspire people and
gain their trust.
 Motivators: They are able to get the best from their
staff and offer suitable incentives and rewards.
 Communicators: They have great people skills as
they talk, negotiate and listen to their staff.
Management Skills
1. Leadership
This is the ability to influence people to go in a
particular direction and achieve a particular goal.
There are three types of leadership style: autocratic,
democratic and laissez-faire.
Autocratic: This type of leadership doesn’t share
responsibility with its subordinates but instead makes all
the decision and then dictates the orders.
Advantages:
1. Decisions are made quickly
2. Things are completed exactly in the manner that the
boss requested
3. Some organisations require a strict discipline e.g.
The Army
4. If a company is in financial ruin a dictator style
leadership may be necessary to improve efficiency.
Disadvantages:
1. Decision making may be poor due to the fact that
other opinions and expertise are not considered in
the thought process.
2. Time can be wasted when mangers are making small
inconsequential decisions.
3. Subordinates get little training and experience and
as a result may become frustrated and demotivated.
4. Lack of trust and respect can lead to industrial
dispute
5. The manager can suffer from stress as a result of all
the responsibility.
Democratic: These leaders are willing to discuss issues
with subordinates and delegate responsibility.
Advantages:
1. Decisions are of better quality due to the input
variety.
2. Managers do not waste time on smaller less
significant matters.
3. Subordinates get more training and experience
hence more motivating.
4. Delegation encourages intrapreneurship.
5. Morale is high therefore staff turnover may be
lower.
6. There is good industrial relations so disputes are
minimal.
Disadvantages:
1. Decision making is slower as managers consult with
subordinates.
2. Too many different opinions may ruin the quality of
the decisions.
Laissez-faire: This leadership style is also known as
spectator as the manager gives subordinates all the
control to carry out a general goal in whatever manner
they see fit.
Advantages:
1. Fast and better decision can be made by the
subordinate as they may be closer to the issues
involved.
2. This delegation of considerable power can be
extremely motivating for some people
3. Intrapreneurship is greatly encouraged
4. Talented, hardworking creative people are attracted
to this type of leadership style.
Disadvantages:
1. Lack of supervision and control may lead to reckless
decisions been made.
2. Some people may find it too stressful to be given too
much responsibility and not enough support.
3. Inexperienced and untrained staff may not be
equipped to deal with this much authority.
2. Motivation
This is the willingness of people to contribute their
best efforts.
Maslow’s Hierarchy of Needs
Maslow believes its important to find out what
someone’s needs are before deciding how to
motivate them.
He also states that human needs can be arranged in
order of their importance, see below.
The Hierarchy of needs:
1. Physical: This is a basic need for food, water and
shelter
2. Safety: This is a need for security and
predictability.
3. Social: This is a need for friendship and love.
4. Esteem: This is the need for respect and
appreciation.
5. Self-Actualisation: This is the need for fulfilment
and realising potential.
A manager must be aware of the above needs
when determining how to motivate their staff.
Once the manager addresses the need of the
individual subordinate then they can begin to
carry out the necessary action that will motivate
their subordinate.
For example a manager can carry out the following
to ensure they are motivating their staff:
1. Physical needs: A manager should ensure fair
pay and comfortable working conditions. (e.g.
proper breaks and holidays.)
2. Safety needs: A manager should make their staff
feel secure and eliminate rumours of job losses
and be truthful with subordinates if potential
losses may exist. Give fair redundancies and
were possible help those laid off find new
employment
3. Social Needs: Encourage staff bonding by
organising social events after work. Incorporate
new recruits in the staff as quick as possible by
inviting them to lunch and social get-together.
4. Self-esteem needs: Show appreciation by
praising staff for work done and given rewards.
5. Self- Actualisation needs: Delegate greater
responsibility and tasks to the worker. Help
them with further training and education. Assist
with the development of career plans and allow
for career breaks if workers want the
opportunity to travel.
Mc Gregor’s Theory X Theory Y
After research he found that managers can be
grouped in accordance with their attitude when
motivating staff. He named these two groupings;
Theory X and Theory Y.
Theory X managers believe:
1. Workers are lazy and only motivated by money
2. They have no ambition or wanting to take
responsibility.
3. They dislike change and always resist it.
If a manger believes in the above then they will act
accordingly; distrust staff, refuse to delegate, offer only
financial incentives and act in an autocratic manner. This
type of manger acts as a ‘controller’ and is associated
with the autocratic leadership style.
Theory Y managers believe:
1. Staff enjoy work and can be trusted with
responsibility.
2. They have ambition, intelligence and imagination.
3. They are open to change when consulted and
involved.
If a manger believes in the above then they will trust
staff, delegate, encourage intrapreneurship , set
challenges and praise staff. This type of manger acts as
a ‘facilitator’ and is associated with the democratic or
laizzes-faire style of leadership.
3. Communication
Communication is the transfer of information between
people. It can be verbal (meetings), written (e-mail) or
visual (diagrams, body language)
Sender → Medium → Receiver → Feedback
The medium is the method used to send the message
e.g. phone, intercom, TV etc.
Internal communications is the transfer of information
between staff. Mediums used include memo,
noticeboards and meetings.
External communications is the transfer of
Information between Company and other
stakeholders (customers, supplier’s government etc.).
Mediums include telephone letters etc.
Communication Channels
These are the routes in which information flows within
an organisation.
1. Upward communication: Staff communicating to
their supervisor/manager.
2. Downward communication: Manager
communicating to their subordinates.
3. Horizontal. Staff communicating with people of the
same rank/authority. E.g. Finance manager talking to
a Marketing manager.
4. Formal communication: This is planned and follows a
certain approved route.
5. Informal communication: Known as ‘grapevine’
were it is chat/gossip in the canteen or social events.
The Importance of Communication in a Business
 Managers spend 90% of their time communicating
so it’s important they are skilled in this area. They
must be able to communicate effectively with all
their stakeholders.
 Effective communication with subordinates leads to
the correct work been done and avoids confusion
which can lead to industrial disputes.
 Good communication between managers will result
in better decision making.
 Communicating with investors increases trust and
confidence leading to them investing more money.
 Good communication with customers helps
customer loyalty and means they will be more
forgiving if an error occurs.
 Effective communications with suppliers will avoid
delays that may upset production.
 Good communication with government is necessary
if looking for a grant, planning applications or
lobbying for changes in the law.
Managers must have good communication skills – the
ability to listen, to articulate ideas, to convey the aims
and objectives of the business clearly to their team, using
the most appropriate and effective language.
For communications to be effective, the manager must
include the following:
 Select the correct medium
 Ensure the message is sent on time
 Make sure the message is accurate and easy to
understand for the receiver.
 Be clear about the message he/she intends to
communicate – this means the manager should plan
all formal communications and take great care when
communicating informally.
 The sender must allow for feedback to check the
message has been received and understood.
Barriers to effective communication:
Lack of trust: a message will not be believed if the
receiver does not trust the source.
Listening: if the receiver is not listening or concentrating
the message may be lost
Language used: if the message contains technical jargon,
a wide audience may not understand it.
Incorrect medium: management should choose a
medium appropriate to the message e.g. the results of
individual performance appraisals should not be posted
on the staff noticeboard or intranet.
Lack of feedback: if the receiver fails to respond or there
are no procedures allowing responses then the sender
will not know if the message got through.
Length of communication lines: if the message has to
pass through too many channels it may become
distorted.
Communication and information technologies
Information technology (IT) has become vital to the
success of the business as:
 It increases the speed and quantity of information
that can be transmitted.
 It can integrate information from all parts of the
organisation, allowing for informed decisions.
 It can lead to a reduction in the levels of
management hierarchy ( a process known as
delayering)
 It allows a business to become multinational or
global.
Management Activities
1. Planning
Planning involves selecting organisations goals and
finding ways to achieve them. It provides the following
benefits:
 Direction – the plan sets the direction for the
business by clearly identifying the objectives, for
example, to expand, Ryanair has opened up many
bases outside Ireland and purchased new planes.
 Co-ordination – the plan is used to co-ordinate the
activities of the different departments, for
example, the sales department must not take
orders that the production department is not able
to meet.
 Control – management can compare the actual
results to the planned targets. Good performance
can be rewarded (bonuses, profit shares) and
failure to meet target can be investigated, people
held accountable and suggestions made as to their
improvement. In the worst case scenario, people
should be let go.
 Finance – a plan can be used when approaching
potential investors for money as it demonstrates
how the money will be used and how funds will be
generated for repayment.
 Awareness – an organisation that plans by
consulting all relevant stakeholders become aware
of its strengths, weaknesses, opportunities and
threats (SWOT) and is therefore more adaptable
to change.
NB. SWOT sometimes known as SCOT (Strengths
Challenges Opportunities Threats)
The four stages in the planning process are:
Analyse the situation: this involves conducting a
SWOT/SCOT analysis and forecasting future events.
Accurate forecasting can lead to success. Bill Gates
predicted that there would be a PC in every
household and planned Microsoft strategy to ac
hieve that goal. He failed to predict the importance
of the internet and lost ground to Netscape but later
changed his view and so begun the Internet Explorer
v Netscape war. Ultimately Microsoft win.
Identify the goals: goals should be Specific,
Measureable, Achievable, Relevant and Timed
(SMART). To communicate the organisations most
important goals to stakeholders a mission statement
should be written.
Draft the plan: the plan should consist of a strategic
(long term) plan, a tactical (operational plan) and a
contingency plan (for unseen events)
Implement the plan: plans are implemented by
putting policies in place. The policies of the
organisation detail how aims, goals and objectives
are to be achieved. Policies succeed best if they are
devised by consultation, discussion and agreement.
Policies must be adaptable to outside forces such as
competitors or gover+nment legislation.
2. Organising
This means bringing people and resources together
to achieve a common objective. An organisation
structure identifies the different functions in an
organisation and sets out the power structure. This
can be represented in an organisational chart. The
simplest organisational chart is the functional
structure, which divides a business according to
management function at senior, middle and junior
management levels.
Organisation chart here:
 There are three layers of management in this
chart: senior, middle and junior management.
 It indicates where authority and responsibility
have been delegated
 It illustrates the chain of command, i.e. who is
answerable to whom.
 It shows the managing directors span of control
(The number of people reporting directly to a
manager)
Leaving Cert students should know how to describe
several types of organisational structures such as, matrix,
geographical and Charles Handy’s “shamrock structure”.
Delayering
This refers to the reduction in the number of layers in the
management structure of the organisation. This process
has the following advantages:
 It simplifies the structure
 It increases the speed and accuracy of internal
communication, which means the organisation can
respond more rapidly to change
 Delayering gives more power to subordinates
 This increase in responsibility can increase creativity,
innovation and initiative
 It reduces the total wage bill paid to managers
This process has the following disadvantages:
 Senior managers have to deal with a wide span of
control and an increased workload and this may
cause stress
 Mangers jobs may be lost through redundancies and
this may lead to industrial relations problems
 Control becomes more difficult because the span of
control increases
3. Controlling
Management control refers to the monitoring and
checking of results to see that they agree with the
targets set out in the plan. Control is important to
managers because:
Correction – a good control system allows
management to detect and correct problems before
they get out of control, if Bearings Bank had better
control systems, Nick Leeson would not have been able
to bankrupt the bank
Quality – the control system will ensure service to the
consumers remains at the highest level and this may
be achieved by creating a total quality management
system (TQM) in the organisation and by the
introduction of quality awards
Efficiency – waste is reduced in all areas of the
organisation when corrective action is prompt
Profits – profits should increase due to a reduction in
costs associated with waste and defective products,
sales revenue may increase due to the ability to charge
a premium price of a high quality product
The control process involves:
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Setting targets
Measuring performance against the targets
Investigating any variance
Correcting problems
Preventing deviations by anticipating problems
Leaving Cert students should be able to explain the
following types of management controlling:
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Stock Control
Credit Control
Financial Control
Quality Control
Environmental Control
Break-Even Analysis
Human Resource Management (HRM)
This is broadly defined as any part of the management
structure relating to people at work. It involves everything
from recruitment to training to performance appraisal and
overall employee welfare. HRM was originally an American
management concept which has taken over from the more
restrictive ‘Personnel Management’. It denotes a more
proactive and business focused role with an emphasis on
good communication, staff loyalty and commitment, more
flexible work practices and a performance related reward
system.
Once considered a more peripheral activity, HRM has now
moved to the heart of the business and its many functions
are gaining further importance as an expanding global
economy creates a much tighter labour market. The
question facing most organisations now is: How can we
attract, train and retain the best people?
People are an important and expensive resource in a
business. When a direct cost of employment (wages,
employers PAYE and PRSI contributions etc) are added to
the indirect costs of recruitment, selection, training and
development, one can quickly see that the organisation’s
investment in an average full time employee could reach
€100,000 in just a few years. This important asset has the
capacity to be highly productive and generate a lot of
revenue for the business. The employee may also require
as much attention and more careful maintenance than the
most complex piece of industrial machinery. Otherwise,
industrial relations difficulties may ensue.
Manpower Planning
This involves charting the future needs of the organisation
so that the firm has the right people in the right numbers
at the right time. It is necessary to conduct both a human
resource audit to analyse the skills present in the
workforce as well as a human resource forecast to predict
future needs. Given this information it is possible to
establish a recruitment and training programme.
Recruitment and Selection
This is the process by which the firm gets the best people
to do jobs necessary to achieve its goals. Preparation is the
key to effectiveness in this area: “fail to prepare – prepare
to fail”, Benjamin Franklyn (US President)
By clearly establishing the jobs to be done and the type of
people needed to do them, the construction of an
accurate job description and person specification will
ultimately save a lot of time and money. Many
organisations revert to employment agencies to source
staff. In Ireland the growth of this business sector with
agencies such as Grafton Recruitment, Irishjobs.ie and
Monster.ie was a feature of the 1990’s and 2000’s.
Identifying the most suitable person form a pool of
applicants can involve a mixture of scientific method,
intuition and luck. While assessment are deemed to have
the greatest predictive accuracy, they are costly and time
consuming and so most organisations employ a
combination of interviews and some selection tests (IQ,
aptitude and personality)
Training and Development
This has become a major growth area with firms realising
that flexibility and the development of skills are essential
to business success. This can be done internally by means
of coaching and job rotation or externally via training
courses, seminars and further education. Training involves
teaching staff the skills necessary to do a particular job.
Development refers to the long term contribution which
staff makes to an organisation and focuses on how the
individual’s career can develop over time.
Performance Appraisal
This involves a formal system of regularly collecting,
recording and sharing information between the employee
and the appraiser about the employee’s work
performance and potential. Conducted in the correct
manner, it can enhance motivation, contribute to
achieving organisation goals and assist in the process of
rewarding good performance.
Reward Management
This involves designing the most appropriate methods of
remuneration (i.e. pay systems) and increasingly
incorporates broader performance related items such as
bonuses, benefits-in-kind and employee share options
schemes.
Industrial Relations
This is the process of collective bargaining on employees’
terms and conditions, resolving disputes that may arise
and adhering to legislation governing the relationship
between employers and employees in the workplace. The
Human Resource manager should ensure that an agreed
grievance procedure is in place as it is important that
breaches of discipline are treated formally. This should
decision should be communicated in writing
 An appeals procedure must be put in place
Safety
Safety of workers is an increasingly complex issue and unless a
Safety officer is employed it is common practice that the
Human Resource Manager will be made responsible for
ensuring all relevant legislation is being followed.