In a company, there are many coexisting functional areas that make business work properly: management, finances, administration, production/operations, quality, marketing, human resources, project management, process, logistics. In order to reach its organizational objectives, it is vital that all these areas have the same purpose and business strategy.
Next, we are going to delve into the Management area: what is it, which are its main functions, its biggest challenges, etc.
What is business management?
Every company and every organization have been created and are managed by one or several leaders that have the necessary abilities to guide them towards success by establishing strategic goals. This leadership will set the course for the other areas of the organization so that all of them can be aligned to the objectives of the company.
Running a company is a continuous task that involves managing the productive resources of a company to reach goals efficiently. Business management tasks can be carried out by one person or by several people, depending on the size of the company. In general, in big companies, the management area is more complex and different management levels are created.
1. Strategic business management level (top-level management).
This level refers to the general vision of the market state and the development of strategies that allow the company to adapt to its changes.
The managing director of the company is who is in charge of designing the master lines that will be followed by the whole company. These lines are based on detailed observation of the state of the area, of its competitors and of the characteristics of the company.
The strategic level is the top level of the organizational pyramid of the company and it is the level that carries a lot of weight on the economic decisions. One bad decision on this level will have a cascade effect on all the others. At the same time, planning at this level is long-term.
It is the classical managing model of big companies; it is made up of chief executives, managing directors, and a group of people that cooperates with them and advise them. They are the highest authorities responsible for achieving the proposed goals.
2. Technical or tactical business management level (middle management level).
Participation is much more limited in this case. Departments are in charge of developing the strategy from the first level by applying tactics. They are specific activities that affect the general activities in part: goals and specific actions are created to reach final goals.
The tactics are deployed in periods of one to three years and a measurement criterion is established to assess the results. At this level, we can find factory managers, intermediate authorities and department chiefs. Their functions are organizational. They answer before high authorities.
This level allows the strategy to be implemented according to specific plans.
3. Operative business management level (Operative management).
The last level involves putting into practice the tactics from the previous level. Plans are short-term and they are focused on very concrete actions. Besides, they guarantee that tasks and operations are performed following the general strategy and the applied tactics. They are the people in charge of overseeing the production process and assigning tasks to the team. In a company, they constitute section chiefs or work teams.
Finally, these have been the three business management levels that hold an interdependence relationship among them even though they can act independently as long as they go in the same direction. Thanks to this coordination, the plans developed on each level assure the success of the whole company.
No matter the divisions that a company may make, each company will establish its own management method, so even though two companies are similar, they can work in a completely different way. Of course, these structures also depend on other factors, such as the decisions made by managers and the impact they have on the culture of the company on the organizational structure.
History of the Managing area
Beginning with the administrative area, the managing area model spread from the 20th century in both the public and the military areas. It began operating as a business structure in 1933 in Madrid, Spain. The development of business management per se began when the administration area was innovated thanks to its big influence.
From the beginning of times, from the Egyptians to Sumerian traders, administration has always been based on organizing methods that respond to particular practices that were carried out by the church and the old militia to keep a reliable record of their income and their expenses. Companies were guided on these methods no matter if they were small or big; however, they were not forced to use administration applications systematically. This way, little by little, innovations in administration created extensions such as the Arabic numbers and the appearance of bookkeeping. The areas already mentioned provided a better approach and control of the quantitative organization.
It was not until the 19th century when the first publications about administration appeared but in a scientific way. Besides, when the Industrial Revolution took place, it motivated the advancement of management and business management as we know them today.
Another business management tendency that deals with processes is known as continual improvement process (Kaizen in Japanese). This is another tool to deal with processes and improve them continuously.
Function of the Managing Area within the company
In the business world, organizing means grouping the necessary tasks that will lead to achieving the goals of the company. But companies also involve people so this area will also define the organizational chart and the relationship between each part.
Planning involves deciding the actions that will be performed to achieve the goals of the company. Within the planning, we can find the definition of methods and strategies to accomplish those goals.
3. Assignment and resource coordination.
Business management is in charge of distributing and using correctly the resources that the company has, at present and in the future. The present resources of the company are equipment, people, financial capital, infrastructure, communication digital tools and tasks management, among others.
Apart from the guidelines and goals that the managing area has defined, we add the supervision and control of the way of working to make sure that it is aligned with the goals. At the same time, this area is in charge of revising that the deadlines of tasks or projects are met efficiently and on time; that is to say, that the company is working according to the plans.
5. Promoting good relations among all the employees of the company.
The managers of a company or any of the leaders should avoid conflicts and problems that could arise as a result of being so many hours in the same physical space. They will mediate when there is a problem to make the troubled situation better in order to create a more collaborative and efficient working environment. At the same time, they also have to define actions that will improve the working environment within the company and which will have a great impact on the final performance of the team.
Key competencies in the management of companies
In the beginning, we stated that business leaders should have certain competencies and abilities to be able to manage the managing area efficiently and to be able to delegate tasks to the other areas. Next, we are going to list some qualities that a good leader should have when managing a company.
It is not easy to talk about leadership because, many times, it is confused with the concept of management. Management is the work associated traditionally with chiefs while leadership involves assigning tasks and everything related to accomplishing company growth. It is obvious that chiefs have to know how to manage the company but they also need to be good leaders.
The concept of leadership is closely tied to the idea of change, to that ability that some people have that is admired by everyone around them. A good leader is generous, humble, honest, concerned about his/her team, and courageous before setbacks; that is why that famous phrase says "Managers can be leaders but leaders need not be managers."
An effective communicator sends a clear, direct message with no room for confusion or misunderstandings. His/her goal is for the interlocutor to process the information given clearly and that he/she can give feedback about that message.
The communication process diagram has several elements to be considered for making communication more effective: the sender of the message, the recipient of the message, the message itself, the code that refers to the particular language used to create the message, the barriers participants deal with, and feedback to the message, to check if it was correctly understood.
It is important for a manager to have communication skills since he/she needs to be understood when he/she speaks. Sometimes, listening is laid aside but a good manager also needs to listen and take into account what his/her team says.
Team motivation is vital to attaining the desired goals so a manager that knows how to keep his/her team motivated has a great chance of getting better results. Motivation is provided through the following actions:
- Investing in the training and development of the team.
- Leading by example.
- Listening to the team members.
- Offering recognition of good work and constructive criticism if needed.
- Providing a pleasant work environment.
- Posing exciting challenges to encourage the team.
- Holding regard for the team members.
Different kinds of executives we can find in the managing area of a company (executive director and president)
The president of a company.
The president is an executive chosen by the administrative board of the company and who is in charge of presiding board meetings or executive committee meetings. The president usually sets the agenda and has a meaningful influence over the votes of the board. He/she assures that meetings are held without complications and works to reach an agreement in the board decisions.
The president leads the administrative board of the company. The directive board is a group of people chosen to represent shareholders. The responsibility of the board is to establish policies for the management and supervision of the company by making decisions on its main problems. The administrative board must represent the interests of the company and of the shareholders and, in general, it is made up of both internal and external members.
The board is in charge of making important decisions that involve the appointment of corporate employees and executive and political compensation for dividends. As a result, the president has meaningful power and influence on the decisions made by the board.
The presidential position is different from the position of general manager and it can be executive or non-executive. In some companies, the positions of executive manager and president are combined, which can reduce transparency and accountability due to fewer controls and balances that are generated when the two positions are held by different people.
Even though the president of the board has several supervision abilities, the main responsibilities of the executive director involve all the important corporate decisions, from daily operations to the resource management of the company which are the main point of communication between the managing board and other executives. Besides, the executive director usually has a position on the board.
Executive Director (CEO).
The CEO (Chief Executive Officer) runs the company and is the person in charge of the executives; however, the general director is appointed by the board. Therefore, the president can influence the CEO election or be in charge of the management of the company. Nonetheless, in most companies, the president does not get involved in the responsibilities of the CEO, which helps maintain the openness of the roles and the distinction of powers.
The role of the executive director depends on the size, culture, and industry of the company. In small companies, the executive director usually has a more practical role, making decisions on a lower hierarchical level, such as being in charge of interviews and staff hiring.
Functions of the director of a company.
Among the functions of the general director of a company, one that stands out is the orientation of all the areas and the development of strategies that are beneficial for making the company grow. The director delegates specific activities to his/her teams so that goals are reached.
Main issues in the managing area.
Even though it is the most important area of the company because it is in charge of taking responsibilities, challenges and pressures; so, sometimes, it is not easy to run it correctly and it can lead to problems and flaws associated with inadequate handling of the area. We have to take into account that each company is unique and, even though they can learn managing structures from other model companies, it must create its own basic structure with its knowledge about the functioning of each area, of the industrial area it belongs to and the general profile of the working staff, etc.
However, there are some key problems listed below that can develop in any company due to poor management of its resources, excess or lack of authority, lack of communication, among others.
1. Not taking responsibility for your actions.
One of the most common problems in the area is that the executive director, the president or any of the managers do not take responsibility for their own mistakes. This may create discord among the rest of the employees who may not be able to express their opinions without feeling that they are underestimated or not taken into account.
2. Not promoting personal development.
Not knowing the weaknesses, strengths and motivations of your staff is a mistake that could prove costly in the long run because employees will not be able to train themselves within the company and will seek other places to fulfill their aspirations. Consequently, the managing area will notice that the company has a high rotation rate of their employees who do not remain a long time in their positions. This leads to overburdening the human resources area which will be forced to recruit employees all the time, which, at the same time, will end up being a waste of time and efforts to train new people every time.
3. Focusing only on results.
It is very common that the leaders of the managing area are more concerned about the results than about the processes themselves. For instance, they analyze results and reports, failures and successes in a project, or the performance of their employees instead of looking at the variables that may be affecting the correct performance. The strategy is to take into account the methods, procedures and working habits because they are the key to get the expected results.
4. Focusing too much on issues.
In relation to the previous point, focusing too much on the problems is counterproductive for the correct functioning of the company. When one of the leaders of the managing area, even the executive director himself/herself, shows too much concern about the issues that may arise is a sign that that person has not developed the ability to detect them before they arise; this shows a lack of foreseeing and planning to have a solution to these issues and restructure that planning.
5. Managing every person equally.
Another very common problem in this area is that executive directors think that all employees should be like they want them to be, without taking into account their different personalities, characters, strengths, and weaknesses. This is why it is a mistake to treat them equally without establishing personal relationships with them focalizing on their aptitudes and difficulties in order to offer them adequate support and advice. Developing a personal relationship with them allows you to exchange information and establish performance guidelines together, making all structures flexible to manage the company with autonomy focusing on management parameters and goals.
6. Surrounding yourself with inadequate employees.
Even though the company boasts about the highly qualified employees it has, it is not a guarantee of success if they are not aligned with the values, mission, and goals of the company.
Main challenges in the managing area.
When the issues that were affecting the development and growth of the company are settled successfully, the company may feel the need to raise the expectations regarding its objectives. This will lead to set new, more ambitious goals because leaders understood that they have the necessary human capital and resources to accomplish them. Which are the challenges that companies want to overcome in the managing area?
1. Expanding their business to a wider audience.
Every company that is built up from the ground, once it is consolidated with an organizational structure, it can feel the need to grow in the market, to gain brand recognition and attract more customers. These goals are established by the managing area as a result of collective work with the department managers and then, they are put into practice by the different teams with the support of these leaders.
2. Building an efficient work team motivated to grow and to make the company grow.
This is an essential challenge to reach medium-term and long-term goals because if the company does not have motivated work teams that are satisfied with the functional diagram of the company, it is impossible for them to carry out efficient and productive processes. Moreover, a company does not grow without the collaboration of the employees of every area; this is why in order to get satisfied customers, you have to have satisfied employees.
3. Aligning all marketing and sales departments to feed into and boost one another.
Applying smarketing with the aim of aligning the marketing and the sales areas should not be considered a challenge itself but considering that these areas were struggling in the past because of their different interests, their ambition of transcendence, and recognition, this collaborative method of working between these two areas proved to be highly beneficial for commercial success, achieving better results than if they were working separately.
4. Providing tools for professional training and development that allow workers to create something new from what is already there.
Finally, in order to train true team members and not mere employees that follow orders, it is important to boost their talent at the service of the company but understanding that the acquired knowledge will open them to new possibilities to pose new realities other than the established or learned ones in the daily routine.
Importance of the managing area of a company.
- It puts into motion the established guidelines in the planning and organization. If there is no action, those guidelines will remain as dreams and illusions.
- Through this area, team workers can develop better behavior within the organization.
- The productivity of the organization depends directly on this area.
- Its quality is reflected in the achievement of global goals, a correct implementation of control systems and a solid leadership based on teamwork.
The role of the Managing area of a company is vital in its development and growth since it is in charge of obtaining a good or bad response on the part of the human resources of the company. This is why it requires a high level of leadership in the people who run the company. Besides, it requires the establishment of a free-flowing communication system in the whole company that allows teamwork with the employees and the coordination of tasks that will contribute to achieving the proposed goals.