People
Recruit or redeploy employees and define responsibilities.
Cambridge International AS & A Level Business · 9609 · AS Level
2.3 Management
Managers turn objectives into action. This topic explains the core functions and roles of management, how managers influence business performance, the main management styles, and McGregor’s Theory X and Theory Y views of management.
Exam-focusedComplete Topic 2.3Instant-feedback questions
What you need to know
For strong exam answers, you should be able to explain what managers do and then judge which management role or style is most appropriate in a particular business situation. Avoid assuming that one management style is always best.
High-grade habit: apply management theory to the context. A style that works in a crisis or with inexperienced employees may be unsuitable for a creative, highly skilled workforce. Evaluation should consider the task, employees, time available, business size, culture and the quality of communication.
Subtopics
This follows the textbook table of contents. Select the subtopic to jump directly to it.
2.3.1
Management and managers
ManagementPlanning, organising, directing and controlling all or part of a business enterprise.
LeadershipGuiding and inspiring people in pursuit of agreed objectives.
Management and leadership are related but not identical. Managers are concerned with getting tasks completed, organising resources and implementing decisions. Leaders are more strongly associated with creating a vision, encouraging change and inspiring people to follow.
Manager
Often focuses on the present, implementation, organisation, control and ensuring work gets done effectively.
Leader
Often focuses on direction, vision, change and motivating people to move towards a desired future.
Exam point: do not use “manager” and “leader” as if they mean exactly the same thing. A manager may also be a leader, but management includes functions such as planning and controlling that must be discussed directly when the question asks about management.
The four functions of management
Planningdecide what should be achieved and how
→Organisingassemble and allocate resources
→Directing & controllingguide people, monitor results and correct problems
Planning
Planning looks to the future. Managers establish objectives, gather forecasts, prepare functional plans and estimate the resources required. Planning should be continuous because markets, technology, competitors and other external factors can change.
- Set objectives and targets.
- Forecast important information such as costs and revenues.
- Prepare plans for functions such as marketing, finance and human resources.
- Estimate the people, finance, equipment and other resources needed.
- Prepare contingency plans for emergencies or unexpected events.
Example: an airline planning to expand its route network needs forecasts of passenger demand, aircraft availability, finance, trained staff and airport capacity. It may also need contingency plans if a route licence is refused or demand falls.
Organising
Organising means putting the necessary resources and relationships in place so that the plan can be carried out. Managers decide how resources are allocated, how work is structured and how different activities fit together.
Physical resources
Arrange land, premises, equipment, technology and materials.
Finance
Ensure the business has enough funding to carry out the plan.
Good organisation aims to use as few resources as reasonably possible while still achieving the business objective.
Directing
Directing is the process of guiding and influencing employees so that business goals are achieved. Two especially important elements are motivation and communication.
Motivation
Managers encourage employees to apply effort and perform well, using financial and non-financial methods where appropriate.
Communication
Clear information, instructions, guidance and feedback help employees understand what is expected and solve problems effectively.
Controlling
Controlling involves setting standards, measuring actual performance, comparing the two and taking corrective action where necessary.
1Set standards
Use objectives, targets or budgets to define expected performance.
2Measure performance
Collect reliable information on what is actually happening.
3Compare
Identify gaps between expected and actual results.
4Correct
Take preventive or corrective action and continue monitoring.
| Area monitored | Examples | Why it matters |
|---|---|---|
| Financial performance | Revenue, profit, costs, losses | Shows whether financial objectives and legal reporting requirements are being met. |
| Employee performance | Productivity, absenteeism, training costs | Helps managers judge how effectively the workforce is performing. |
| Social performance | Ethical behaviour, pollution, employment creation | Allows managers to monitor social or environmental objectives and stakeholder effects. |
Henri Fayol’s principles of management
Fayol developed fourteen principles explaining how managers should organise and interact with employees. They were developed more than a century ago, but many remain relevant.
| Principle | Meaning |
|---|---|
| 1. Division of work | Specialisation can improve skill and productivity. |
| 2. Authority | Managers need the authority to give orders, but authority carries responsibility. |
| 3. Discipline | Employees should respect rules and agreed standards of behaviour. |
| 4. Unity of command | Each employee should normally receive orders from one manager and be answerable to that manager. |
| 5. Unity of direction | Activities with the same objective should follow one plan under one manager. |
| 6. Subordination of individual interests | The interests of individuals or groups should not override the interests of the organisation as a whole. |
| 7. Remuneration | Employees should receive fair financial and non-financial rewards. |
| 8. Centralisation | Managers should find an appropriate balance between senior control and involvement of junior employees. |
| 9. Scalar chain | Employees should understand their position in the hierarchy and lines of authority. |
| 10. Order | Employees should have suitable resources and a safe, organised workplace. |
| 11. Equity | Managers should treat employees fairly. |
| 12. Stability of tenure | Managers should aim to retain suitable staff and avoid unnecessarily high labour turnover. |
| 13. Initiative | Employees should have freedom to develop ideas and be creative where appropriate. |
| 14. Esprit de corps | Managers should build team spirit, unity and good morale. |
Fayol’s functions of management
Fayol identified five functions: planning, organising, commanding, co-ordinating and controlling. These are very similar to the four general functions above, with commanding and co-ordinating broadly reflected in directing.
Evaluation: Fayol provides a useful framework for thinking about management, but businesses differ and modern managers may need flexibility rather than applying every principle in exactly the same way.
Mintzberg’s ten management roles
Mintzberg focused on what managers actually do. He grouped ten roles into interpersonal, informational and decisional categories.
| Category | Role | What the manager does |
|---|---|---|
| Interpersonal | Figurehead | Represents the organisation and carries out ceremonial, social or legal duties. |
| Leader | Motivates, develops and manages the performance of employees. | |
| Liaison | Builds internal and external contacts and networks. | |
| Informational | Monitor | Searches for useful internal and external information and monitors performance and welfare. |
| Disseminator | Passes useful information to others inside the organisation. | |
| Spokesperson | Communicates information about the organisation to people outside it. | |
| Decisional | Entrepreneur | Plans and initiates change inside the organisation. |
| Disturbance handler | Deals with crises, unexpected problems and disputes. | |
| Resource allocator | Decides how finance, employees and physical resources should be used. | |
| Negotiator | Represents the business in important negotiations. |
What Mintzberg observed about managers
- Senior managers are busy and face heavy workloads.
- Their work is fragmented and they switch rapidly between tasks.
- Immediate problems can push long-term planning into the background.
- Managers often prefer verbal contact because it provides quicker interaction.
- Unexpected events can control a manager’s day rather than the manager controlling everything.
Limitation: Mintzberg’s observations focused mainly on senior managers. This makes the theory realistic for the managers studied, but it may not describe the work of junior and middle managers equally well.
How managers contribute to business performance
Suitable objectives
Managers should set objectives that are challenging enough to improve performance but realistic enough to avoid repeated failure and demotivation.
Using people effectively
Good managers recognise employee strengths and decide when to use authority, delegation or empowerment.
Good-quality decisions
Experience, skills and relevant data can reduce risk and improve the quality of major business decisions.
Effective managementobjectives, people, decisions
→Resources used wellless waste, better co-ordination
→Performance improvessales, profit, market share, objectives
Styles of management
Management style can be viewed as a continuum from strong manager control to substantial subordinate freedom. The Tannenbaum and Schmidt continuum emphasises that managers may use different degrees of authority and employee involvement rather than fitting perfectly into one category.
| Style | Main features | Possible strengths | Possible weaknesses |
|---|---|---|---|
| Autocratic | Manager keeps control of information and decisions; communication is mainly downward; close supervision and little delegation. | Fast, consistent decisions; useful in emergencies or with a large inexperienced workforce. | Can reduce initiative and motivation; senior managers may become overloaded. |
| Paternalistic | Manager retains control but makes decisions believed to be in employees’ best interests and may consult them. | Can create loyalty and low labour turnover because employees feel cared for. | Employees remain dependent and may have limited scope for creativity or initiative. |
| Democratic | Employees participate in decisions; communication is two-way; delegation and decentralisation are encouraged. | Can improve commitment, ideas, skill development and motivation. | Decision-making can be slower and consensus may not always produce the best decision. |
| Laissez-faire | Employees receive substantial freedom and the manager has little direct involvement. | May suit skilled, self-motivated and creative teams. | Can lead to weak co-ordination, lack of direction and uncertainty. |
When different styles may be appropriate
More manager-centred
May be useful when decisions must be made quickly, employees need close guidance, or the business faces a crisis requiring one clear direction.
More subordinate-centred
May be useful where employees are skilled, creative and self-motivated, or where complex decisions benefit from specialist knowledge and participation.
Style versatility: the strongest managers may change style to fit the situation. A manager could use a democratic approach when developing a creative campaign but become more autocratic during an immediate safety emergency.
Douglas McGregor’s Theory X and Theory Y
McGregor studied managers’ assumptions about employees. These assumptions can influence the way managers behave and, in turn, how employees respond.
Theory X manager
Assumes employees dislike work, are mainly motivated by money, need close supervision and may avoid responsibility. This approach is linked to Taylor’s scientific-management ideas.
Theory Y manager
Assumes employees can gain satisfaction from work, possess creativity and knowledge, can commit to objectives and often want responsibility and involvement.
McGregor did not present Theory X as the preferred approach. His argument supported the more positive Theory Y view and suggested that poor employee performance may partly result from dull work or poor management rather than from employees naturally disliking work.
Possible implications of a Theory Y approach
- Greater delegation and authority further down the hierarchy.
- More two-way communication.
- Training managers to delegate effectively.
- Changes in organisational culture so managers are willing to share authority.
- Possible delayering and greater employee involvement.
Evaluation: moving towards Theory Y is not achieved simply by telling managers to delegate. It may require training, cultural change, employee support and changes to organisational structure. The most appropriate approach still depends on the workforce and situation.
2.3 revision checklist
Distinguish management from leadership.
Explain planning, organising, directing and controlling.
Explain why contingency planning may be important.
Show how motivation and communication support directing.
Explain how financial, employee and social performance can be controlled.
Know all fourteen of Fayol’s management principles.
Know Fayol’s five functions of management.
Classify Mintzberg’s ten roles into the three categories.
Explain the strengths and limitations of Mintzberg’s approach.
Explain how managers can improve business performance.
Compare autocratic, paternalistic, democratic and laissez-faire management.
Choose a suitable management style for a business context.
Explain why management style may need to change with circumstances.
Distinguish McGregor’s Theory X and Theory Y managers.
Explain how Theory X links to Taylor and Theory Y to human-relations ideas.
Evaluate the likely implications of adopting a Theory Y approach.
Questions open in a pop-up. Each answer is marked immediately, with an explanation so you know why it is correct or incorrect.