Concepts of Management. Characteristics, Levels, Functions, Skills, and Importance

1 Introduction

We encounter organizations such as companies, parties, and associations every day in real life, so we tend to underestimate their existence. From an economic point of view, however, the emergence and permanent observability of organizations in the form of multi-person associations are not readily comprehensible. Foremost, economic activity can be derived from the scarcity of goods and the division of labor between individual actors, which lead to corresponding exchange processes (transactions) and finally to the emergence of markets. For the efficiently and smoothly function of these markets through the entire transaction process is a modern management of commercial organizations essential. Therefore, on closer inspection, the existence of management concepts that can really be observed appears in need of explanation.

The management of business organizations has always been a challenge for human since it became scientific. Since the victory of human in the industrial revolution, the abolition of slavery and the beginning of mass production with modern machines, every company today uses modern management concepts to achieve corporate goals. Everything started to be produced with the highest technology at the push of a button. The materials have been optimally used. The time has shortened, and the use of physical force required to generate benefits is a thing of the past. On the other hand, mass production also brought other problems with it. The global natural resource stocks began to decline. With a larger and richer world population and growing consumption needs, the demand for many goods, including food, water, and energy, is increasing. It is obvious that the increasing demand and the declining stocks could intensify the global competition for the resources in the future. Therefore, an optimal management of business organizations with rational approach is necessary to deal with all these events.

In the present study, management is to be understood both as an institution and as a function in corporate organizations. In this context, the management is the administration of a business organization, whether it is a corporation, a non-profit organization, or a government agency. It is about every goal-oriented human action in leadership, organization, and planning in all areas of life that is based on economic principles. It is the art and science of managing the business's resources. Therefore, Management is not only limited to companies or other associations of people (e.g., government agencies), but also affects parts of life in private households (e.g., time management). The central content of management is the organization, preparation, and implementation of decisions in a complex, ever-changing environment under the conditions of complete information. Anyone who is entrusted with managerial tasks in work and action systems, is referred to as a manager. Above all, it requires management skills and modern concepts, while executives must especially have leadership skills.

The focus of the following considerations is the discussion of the management of the organization, primary in the form of modern and large companies. These are typically characterized by a set of organizational and conceptual issues arising from the interactions between the various organizational members. This primarily includes the business management issues. In the following, management will be understood as the solution of organizational problems. This central task is the responsibility of the top management of an enterprise.

In the light of this background, the following central questions of management will be discussed and explained:

·         What management actually is and what characteristics it has,

·         what management concepts and models exist and how these processes can be explained,

·         which levels the modern management has and how they can be defined, 

·         which functions, tasks, and goals the management has in a modern organization,

·         what skills modern management in an organization must exactly possess to achieve the corporate goals successfully,

·         just how relevant the management is in a modern organization.

The aim of this work is to explain the management concepts and processes in modern organizations from an economic perspective and to discuss the internal management problems and possible solutions. This analysis also aims to provide an up-to-date contribution to science and research.

Social systems are complex. Companies are increasingly changing structurally in the direction of more flexibility and flat hierarchies. Agility offers many opportunities and at the same time places significantly different demands on systems, structures, and people. Parallel to these developments, the importance of modern management systems in business organizations is also increasing. In the following scientific paper, we will go into the central topic of the nature of management in more detail.

2 Definition of Management

“Management is the art of getting things done through people.”^[1] Who doesn't know this famous definition of modern management theory by Mary Parker Follett, who is one of the most prominent classics in the world? Follett is known as the “Mother of Modern Management.”^[2] Now, is this the right definition of management? But is that really the case today? Is this concept still valid today, or to what extent? One thing is for sure, and that is that there are different management theories.^[3]

However, it can be observed that this concept is not so popular today. It is not really a universally accepted definition anymore because it fails to highlight.^[4] Various factors, such as the functions of the manager, also ignore the scientific aspect of management given by Frederick Winslow Taylor. In contrast, Taylor established processes and metrics for increasing the outcomes of human labor, the basis of many modern management practices today. He called it Scientific Management. The totality of his teachings is called as Taylorism. He is considered one of the founders of ergonomics (work science).^[5]

Follett’s concept also ignores the human aspect of management (human factors) and simply treats people as if they were just means to get things done. This is a situation that is incompatible with today's understanding of democracy and human rights in the workplace. A modern management concept requires the observance of western values and principles. It also does not define the role of internal and external environment, which we all know that affects the organization.

Therefore, it is important to know what the true definition of management is to better understand the complexities of the subject. The modern management in the Western sense can be defined “as the art of work done through people, with the satisfaction of the employer, employees, and the public. To do this it is necessary to guide direct control human effort towards the fulfillment of the goal of the enterprise.”^[6] So, the real definition, or the more effective definition of management in a broader sense, can be described today as follows:

Management is the process of planning, decision-making, organizing, leading, motivation and controlling the human resources, financial, physical, and information resources of an organization to reach its goals efficiently and effectively in an ever-changing environment.^[7]  Leadership should be viewed as a multidimensional task.^[8]

A basic distinction is made between the two types of management: Strategic management^[9] (long-term) and tactical management (medium-term and operational (short-term).^[10] The long-term plans of management “focus on activities that start now and continue well into the future. This includes activities associated with acquisitions and other complex business transactions.”^[11] “Shorter-terms objectives focus on the strategies to be used in achieving specific projects and milestones. They're essentially a tactical strategy to achieve the company's mission.”^[12]

In this respect, it can be said that management is essential not only in business but in all walks of life, as it makes everything systematic and balanced in the most basic sense. In short, management refers to the process of administering and controlling the activities and affairs of the organization, regardless of its size, structure, type, and nature. Now, this definition considers the different functions of management such as planning, organizing, directing, and controlling. We also have functions like reporting and coordinating, so all these two are significant functions which are considered in this definition. This will be discussed in more detail later.

Therefore, a modern management concept also requires an organization that uses its resources efficiently and effectively with the latest technological know-how to reuse the resources in the best possible way. At the same time, it speaks about the constantly changing environment in which the organization is located, namely the internal enemy and the external environment. The internal environment essentially consists of the customers, the employees, the suppliers, or the competitors, which basically all stakeholders directly affect the organization. In contrast, the external environment is the pestle, which represents a political, economic, social, cultural, technological, environmental, or legal environment that indirectly affects the organization. For that reason, it is important to understand that all these changes or all these environments affect the organization directly or indirectly. So, this is a more effective definition of management.

3 Characteristics of Management

After talking about the meaning of management, below now we will discuss its basic characteristics which defines management in a better way. First, it should be emphasized that the modern management requires an optimal concept.^[13] A modern management concept primarily includes the following features:

·         First, one must consider management as an executive act that actively directs human effort toward a common goal.

·         Second, the main task of management is to apply the knowledge and analytical approaches developed by many other disciplines.

·         Third, management is the follower of the administration in an organization who receives a salary or a portion of the profit instead of its services.

·         Fourth, a modern management does not make, shape, or frame politics. It only implements the policy determined by the administrator, namely an overall plan that embraces the general goals of the organization.

·         Fifth, planning, organizing, staffing, motivation, directing, coordination, and control are all the indispensable functions of the management in an organization. These characteristics are an elementary part of every management concept.^[14]

·         Sixth, it is crucial to treat the concept of management as both an art and a science. That is the only way to successfully achieve corporate goals in a competitive and ever-changing world.

In addition, a modern management has other essential characteristics to successfully achieve the goals of the organization:^[15]

·         Universal: First, it turns out that management is a universal phenomenon. Management is the nature that is necessary in all types of organizations, whether it is profit-making or not, they require management, for managing their activities. Hence, it is common and essential in all businesses.^[16]

·         Goal-oriented: Second, management is a goal-oriented process. Every organization has different predetermined objectives, which are the reasons for its existence. These goals should be expressed clearly so that every member of the organization can work towards its achievement. Management helps in reaching those goals timely, and smoothly.^[17]

·         Continuous Process: Third, a management process is a combination of various composite but separate functions which is an ongoing process. It tends to continue as long as the organization exists. It is required in all areas of the organization, be it manufacturing, human resources, finance, planning, or marketing.

·         Pervasive: Next, activities such as planning, organization, directing, staffing, controlling, and coordination are common to all organizational types.

·         Multi-dimensional: The next important point is that management is multidimensional in this sense.^[18] It includes not the administration of people only, but it also manages work, processes, and operations at the same time, which makes it a multi-disciplinary activity. In this way, it is possible to avoid rush and chaos.

·         Group Activity: An organization does not consist of a single person, but a group of various people with different qualifications, skills, competences, knowledge, needs, and beliefs.^[19] Every member joins the organization with a different motive, goal, and interest. After becoming a member of the organization, they must work toward achieving the same organizational goals. It primarily requires supervision, teamwork, and coordination, and this is where management comes in into the picture.^[20]

·         Dynamic Function: It can be said that a modern management is inherently dynamic and continually adapts to the changing business environment.^[21] A modern organization exists in a business environment with various conditions such as social, political, legal, technological, and economic factors. A small change in any of these factors will impact the organizational growth and performance. To cope with these changes, management formulates and implements strategies.^[22]

·         Intangible Force: Finally, management is, in a sense, an intangible force. It cannot be seen or touched. However, its presence is felt in the way organizational activities are regulated.^[23]

4 The 5Ms Model of Management  

Now, another important concept of management is the 5Ms model of management. So, what are these five m's? Let's just understand how the significant part of management are.

Foremost, it should be emphasized that the factors of production consist of many elements such as land, labor, capital, entrepreneurship, and management in which the management an essential factor of production. An entrepreneur can start the organization as its owner, but it is the management that makes different resources productive. All these factors always need management as a locomotive to achieve results, since management coordinates various factors of production. “Therefore, management occupies a central place among all the factors of production.”^[24] There are other factors of production, too, which are manpower, machinery, money, materials, and methods. These are known as the five m's of management because of their initials, which is 'M'.^[25]

Since human became victorious in the industrial revolution, every business management has been using these five m’s to have success in today's conditions. The Management is concerned with optimally using the 5Ms model, i.e., methods, material, machine, money, and men. This is possible only when there are proper direction, coordination, and integration of the processes and activities, to achieve the desired results.^[26] Now, let's explore these essential factors in more detail below.

4.1 Money

It can be said that the first thing, namely the first 'M' is the money. An organization cannot really function without the financial resources or money. The Money is the most important and universal resource, as it is used to acquire other resources. It is used in an organization to generate more money in the form of profits or surpluses. A business company or enterprise requires the money in the form of fixed capital and working capital.^[27]  

4.2 Manpower

The second very important 'M' in the five m's of management is man. Without the manpower no organization can function. The right staff for the right position ensures the effectiveness and efficiency of a modern organization.^[28] The Manpower refers to the managerial and non-managerial personnel that employed in an organization. Other resources cannot act on their own and must be used by humans. Other resources cannot act by themselves and must be used by humans. Consequently, the human resources mobilize, allocate and utilize an organization's physical and financial resources.^[29]

4.3 Materials

The third essential thing is that without materials, human resources become redundant. A modern management concept also require material. It is about the optimal utilization of the material, the best possible handling of the material or the resources. Materials represent the physical raw materials and intermediate products (semifinished goods). They are converted or assembled into end products using specific processes and technologies. Compromising on quality is impoverishing jobs. Low-quality materials potentially destroy entrepreneurship. This is an indisputable fact.^[30]

4.4 Machinery

The fourth 'M' of management is the machinery or the tools with which the management needs to be performed. So, machinery or the tools are required for proper working of the organization. Machines are the equipment that are used to process the materials into finished or semi-finished products. In other words, machines are used to transform raw materials into finished goods.^[31] The use of modern machines helps to reduce costs and improve production quality. Therefore, the technology has become an important part of managing organizations efficiently.

4.5 Methods

The fifth 'M' of management is the methods. Well, it is very important to know the right method to do something right. You can't manage things properly if you don't know the right ways or methods to do things successfully. Everything has a right way to do, and this right way is known as method in management. In short, it means an art of doing. A set of procedures and instructions is called as a method.^[32] The Methods refer to the normal and prescribed procedures. Accordingly, different operations are performed according to specific systems and procedures. There is no doubt that the use of the right methods helps to increase the efficiency of operations and contributes to effective management.^[33]

It could be said that the “method is all about the time efficiency. There are several methods a manager can use to get the same thing done. Getting from point A to point B may have ten different routes. It is a challenge here for a manager to choose the best one. The best method is usually the one that is cost-efficient while meeting the quality standards.”^[34]

In summary, a successful management means making optimal and responsible use of manpower, materials, machines, methods, and money for the advancement of an organization. A modern management creates such a business environment where all the members of the organization can work together to achieve the desired objectives. The primary objective of management is to get things done through others efficiently and effectively that is in the minimum time and cost, and that too of a required standard. To achieve this, the 5Ms model is the most important instruments of management.