NCEA BUSINESS STUDIES 2.1 - Roles and skills of managers and leaders

Managers

Managers are important in every business. They take responsibility for ensuring that employees provide the required service/products to customers. They also take responsibility for any communication between the workers within an organisation and the owners of the business.

The four functions of management:

1. Planning

2. Organising

3. Leading

4. Controlling

Planning

Managers need to set goals, and give direction as to how these goals can and should be met and whose responsibility it is to achieve them.

Organising:

Managers need to ensure that there are enough resources to be able to meet the business goals - this includes physical resources, human resources and financial resources.

Leading:

Managers need to be able to inspire and/or motivate staff to achieve the required tasks.

Controlling:

Managers need to monitor the progress of staff, and the business, to see if goals have been met. If they have not been met, then managers need to adjust their goals or find strategies to help improve their performance.

What is important about these four functions of managers?

It is important that these four functions of managers relate to the organisational culture of the business as well as to the objectives decided on by the senior management/owners of the business. Managers need to ensure that the goals and objectives set can be met and they need to encourage all workers to work towards them.

Levels of management:

Senior

Middle

Front-line

Senior managers:

Include managing directors, CEO (Chief Executive Officer), CFO (Chief Financial Officer), General Manager

Middle managers:

Include Head of Departments, or managers

Front-line managers:

Often Team Leaders or Supervisors

Leadership:

- Leadership is setting a vision (or a new direction) for a group, with the leader being the spearhead for that new direction

- Leaders are followed because of the characteristics that they have

People look to them for purpose

- Leadership in a business is vital as it sets up the culture within the organisation and is helpful in decision making

- Leaders can inspire others to take action

Formal leaders:

Formal leaders tend to hold positions of power in the business and their subordinates follow them. This is part of their role within the business, some examples are CEO's, supervisors, team leaders and other management positions.

Informal leaders:

Informal leaders do not necessarily have the "formal" authority but they inspire others to act. These leaders can sometimes have a lot of power as they influence the thoughts and opinions of others.

Managers vs leaders:

- Management controls or directs people/resources in a group according to principles or values that have been established.

- Managers are appointed.

People look to them for tasks.

- Leaders get their power and influence through their actions, charisma and attitude.

- Note that it is possible for one person to fill both roles.

Leadership styles:

Autocratic

Democratic

Paternalistic

Laissez-faire

Autocratic or authoritarian leaders:

Autocratic or authoritarian leaders make decisions independently with little or no input from the rest of the team/department/staff. They provide clear expectations for what needs to be done, when it should be done, and how it should be done. There is a clear division between the leader and the subordinates.

Positive impact of autocratic:

- This works effectively when timelines are short. This is because this leadership style does not need a prolonged decision-making process

It can work very effectively with low-skilled workers - because they are being told what to do and what to expect

- It can enable fast decision-making

- Works well when satisfactory completion of a task is of importance

Negative impacts of autocratic:

- Employees/stakeholders may be highly-skilled so this form of leadership would make them feel undervalued and frustrated, thereby reducing their motivation

- May result in a less creative, efficient, and effective strategy because there is little involvement from others in the team/workplace/etc

- Does not allow for individuals/team members to give their opinion/contribute their ideas

- Fear of punishment can lead to poor performance

- More concerned about how a task is completed, than about the welfare/motivation of employees

Democratic

While democratic leaders still have power and authority, they allow their staff to become involved in the decision-making process. They offer guidance to group members, allow input from group members and delegate some power and authority for making decisions and taking action. This is generally the most effective leadership style as group members are involved in decisions and thus are more motivated and creative.

Positive impacts of democratic:

- It maximises input from all managers/employees, which leads to a more effective and agreed strategy as team members have collectively a wider range of skills and experience

- Being able to participate can increase motivation - employees feel that their views are being taken into account and they are being listened to, so they feel more valued

- Fosters a greater feeling of loyalty/commitment to a team

Negative impacts of democratic:

- It requires an experienced manager to lead the process

- Decision making can be slow and it may cause the implementation of the change to take longer than an autocratic leadership style

- The leader may not agree with the decisions and yet feel obliged to accept them

- Team members may not have sufficient knowledge and experience to make decisions

- Could cause dissatisfaction or conflict within a team if some members do not agree.

Paternalistic:

Paternalistic managers give more attention to the social needs and views of their workers (pater means father in Latin). They consult employees over issues and listen to their feedback or opinions. The manager will however make the actual decisions (in the best interests of the workers) as they believe the staff still need direction.

Positive impacts paternalistic:

- More two-way communication can be motivating

- Employees are invited to give feedback - which is good for their morale/makes them feel important

- Workers feel their social needs are being met and that their best interests are being taken into account

Negative impacts paternalistic:

- Slows down decision making

- Still quite a dictatorial or autocratic style of management

- Employees are dependent on their leader to lead them

- Dissatisfaction if bad decisions are made.

Laissez-faire

Laissez-Faire ("hands off") leaders offer little or no guidance to group members and leave decision-making up to group members. Group members are allowed to get on with their work without interference and the manager remains in the background, supporting team members and representing them outside of the team, eg at management meetings.

Positive impacts laissez-faire:

- Employees are able to use their own skills to the full and make their own decisions

- Encourages loyalty and commitment by giving team members responsibility for their own actions

- Allows for exploration of multiple creative ideas

- Great for professional workers (for example lawyers, accountants, doctors)

Negative impacts laissez-faire:

- It appears that there is no real direction within the team

- Can lead to duplication of work - or team members working at cross purposes

- It might mean that too few people are on board with changes as they make their own decisions

- Cooperation becomes difficult without supervision. - -- The aim of the decision making process can be lost and decision making can become difficult (as everyone working independently)