1 OneChapter OBJECTIVES Dineh Mohajer is young, sharp, and a millionaire whose business After studying this chapter and doing the exercises, you should and managerial success started unexpectedly. One day while still a pre- be able to: medical student, she painted her nails blue and went shoe shopping. 1 Explain the term man- Dozens of shoppers approached Mohajer and insisted on knowing where ager, and identify differ- she bought that polish. She explained that she had mixed the polish ent types of managers. herself in her kitchen. A shoe store sales associate told Dineh that the 2 Describe the process of polish perfectly complemented the store’s spring line of shoes. management, including the functions of manage- At that moment Dineh and her sister, Pooneh, decided to put to- ment. gether a business plan over lunch and start selling the polish under the 3 Describe the various name Hard Candy. Dineh’s boyfriend, Benjamin Einstein, was also brought managerial roles, along in as a cofounder. Shortly thereafter, while Dineh was pitching the nail with the roles currently emphasized. polish to an upscale specialty store, a teenager bought the entire stock of samples. Later Seventeen and Elle featured the pastel-colored polish. Next, 4 Identify the basic man- agerial skills and under- Nordstrom, Bloomingdale’s, and Saks Fifth Avenue called in orders. By stand how they can be the time Dineh was 25, Hard Candy had $20 million in annual sales. developed. Runaway success put heavy pressure on Dineh. Establishing reli- 5 Identify the major devel- able suppliers, distribution networks, accounting systems, and a corpo- opments in management thought, along with sev- rate structure was an overwhelming task, while managing high-speed eral best management growth at the same time. Hard Candy caught on so fast that customers practices. were ordering more than the company could possibly make. Nine months after officially beginning the busi- ness, Dineh was physically and emo- tionally exhausted. The Manager’s Job CHAPTER 1 The Manager’s Job 2 “I didn’t know anything about the business,” Dineh explains. “I didn’t have any computers, except for this Macintosh with Quickbooks on it. I was over- whelmed and burned out.” Dineh’s mother then lent a hand and set up a Visa machine to make phone orders possible. She helped in finding a reliable manu- facturer and in handling invoices. Mom and Dad also invested in the business, making it possible to for Hard Candy to move into a commercial office in 1995. Despite the help from her parents, Dineh was still overwhelmed and near- paralyzed with fatigue. At that point, she decided it was time to turn to professional management for help. Assisted by a consulting firm, Dineh hired William Botts, a former cosmetics-industry executive who understood her vision for Hard Candy. Botts whipped Hard Candy into shape by applying a broad range of man- agement skills. It was his expertise that has allowed Hard Candy to function like a true multimillion-dollar business. Pooneh, who is an attorney, handled con- tracts, administration, and financial management. Dineh and her boyfriend now focus more on the creative end of the business. She feels constant pressure to keep coming up with hot new colors like Trailer Trash, a metallic silver. Dineh’s market is mostly 12- to 25-year-old women, and because of her age, she fits right in. Yet she recently added Candy Man, a nail polish for men, to her line, and the company now sells other cosmetics as well. Hard Candy also released a white nail polish, Love, to benefit AIDS research. Hard Candy is now a well-managed creative company with exciting plans for the future.1 Whether or not you intend to become a business owner, the case history just presented sets the stage for the serious study of management. To effectively manage an enterprise, you need a mix of skills including creative thinking, work- ing with employees and customers, and organizing activities. An effective man- ager combines business skills, such as knowledge about marketing and finances, with people skills to achieve important results. Management is the force that makes things happen. It pulls together resources to get important objectives ac- complished. A manager’s job is therefore inherently exciting. The alternative to placing effective managers in charge of an operation is chaos. Dineh Mohajer was feeling overwhelmed because the success of Hard Candy was spinning the company out of control. Poor management (and lead- ership) is one of the major reasons so many businesses of various sizes fail. These firms lack people who can tie together loose ends and get important things ac- complished. When business firms fail because of competitive pressures or a dwin- dling economy, it is often the case that astute management could have overcome the problem. For example, when Frontier Communication (a national telecom- munications company) recently needed to upgrade its telephone-equipment ser- vice, the decision was made to double the number of supervisors. Adding su- pervisors gave the large number of new field technicians the technical and emotional support they needed to learn their jobs. Customer complaints decreased substantially after more supervisors applied their management skills. 1 WHO IS A MANAGER? Explain what the term man- A manager is a person responsible for the work performance of group mem- ager means, and identify bers. (Because organizations have become more democratic, the term group mem- different types of managers. ber or team member is now frequently used as a substitute for subordinate.) A man- ager has the formal authority to commit organizational resources, even if the approval of others is required. For instance, the manager of an H & R Block in- The Manager’s Job CHAPTER 1 come-tax service outlet has the authority to order the repainting of the recep- manager 3 tion area. The income-tax specialists reporting to that manager, however, do not A person responsible for have the authority to have the area repainted. the work performance of group members. The concepts of manager and managing are intertwined. From the viewpoint of Peter Drucker, a noted management authority, management is the specific practice that converts a mob into an effective, goal-directed, and productive group.2 The term management in this book refers to the process of using or- management ganizational resources to achieve organizational objectives through the functions The process of using orga- of planning, organizing and staffing, leading, and controlling. These functions nizational resources to achieve organizational ob- represent the broad framework for this book and will be described later. In ad- jectives through planning, dition to being a process, the term management is also used as a label for a spe- organizing and staffing, cific discipline, for the people who manage, and for a career choice. leading, and controlling. Levels of Management Another way of understanding the nature of a manager’s job is to examine the three levels of management shown in Exhibit 1-1. The pyramid in this figure in- dicates that there are progressively fewer employees at each higher managerial level. The largest number of people is at the bottom organizational level. (Note that the term organizational level is sometimes more precise than the term manage- rial level, particularly at the bottom organizational level, which has no managers.) TOP-LEVEL MANAGERS Most people who enter the field of management aspire to become top-level managers—managers at the top one or two levels top-level managers in an organization. Top-level managers are empowered to make major decisions Managers at the top one affecting the present and future of the firm. Only a top-level manager, for ex- or two levels in the orga- nization. ample, would have the authority to purchase another company, initiate a new product line, or hire hundreds of employees. Top-level managers are the people who give the organization its general direction; they decide where it is going and how it will get there. The terms executive and top-level manager can be used interchangeably. EXHIBIT1-1 Chairman of the board, CEO, Top- president, executive vice- Managerial Levels and Level president, vice-president, Sample Job Titles Managers group team leader, chancellor Many job titles can be found at each level of management. Middle-Level Director, branch manager, Managers department chairperson, chief of surgery, team leader Supervisor, office manager, First-Level Managers crew chief Tool-and-die maker, cook, Individual Contributors word processing technician, (Operatives and Specialists) assembler Note: some individual contributors, such as financial analysts and administrative assistants, report directly to top-level man- agers or middle managers. CHAPTER 1 The Manager’s Job 4 middle-level MIDDLE-LEVEL MANAGERS Middle-level managers are managers who managers are neither executives nor first-level supervisors, but who serve as a link between Managers who are neither the two groups. Middle-level managers conduct most of the coordination activ- executives nor first-level supervisors, but who serve ities within the firm, and they disseminate information to upper and lower lev- as a link between the two els. The jobs of middle-level managers vary substantially in terms of responsibil- groups. ity and income. A branch manager in a large firm might be responsible for over 100 workers. In contrast, a general supervisor in a small manufacturing firm might have 20 people reporting to him or her. Other important tasks for many middle-level managers include helping the company undertake profitable new ventures and finding creative ways to reach goals. Quite often the middle-level manager conducts research on the Internet to gather ideas for new ventures. FIRST-LEVEL MANAGERS Managers who supervise operatives are referred first-level managers to as first-level managers, first-line managers, or supervisors.