2.19 - Managers & Business Performance
How managers contribute to business performance
Effective management is essential for guiding a business towards success.
Indicators of effective management
- Achievement of goals - The business consistently meets its set objectives.
- Customer satisfaction - High levels of positive feedback and repeat business from customers.
- Employee engagement - Strong motivation among staff, resulting in low rates of employee turnover.
- Brand reputation - A well-respected image in the market.
- Stakeholder relations - Positive views from external parties.
- Communication quality - Clear and effective interactions both within the organisation and with outside groups.
Key roles in the management hierarchy
Businesses often have a structured hierarchy of roles to ensure smooth operations and clear decision-making.
Main positions and their responsibilities
| Role | Key responsibilities | Reporting structure |
|---|---|---|
| Chief executive officer (CEO) | Makes high-level corporate decisions, oversees all operations, and manages company resources. | Highest executive, reports to the board. |
| Director | Helps shape and implement company policies as part of the board. | Reports to the CEO. |
| Manager | Oversees people, resources, and decisions in a department; directs, motivates, and disciplines staff. | Has authority over subordinates. |
| Supervisor | Monitors team performance to meet predefined goals; focuses on guidance rather than major decisions. | Leads teams but reports to managers. |
Characteristics of autocratic and democratic management styles
Management style refers to the approach leaders use to make decisions and interact with their teams.
Autocratic management
Autocratic management involves leaders making choices alone, without input from others, and issuing direct instructions for compliance. This style relies on one-way communication from manager to employees.
Advantages:
- Works well in high-pressure environments like the military or during crises where quick actions are needed.
Disadvantages:
- Can lead to over-dependence on the leader.
- May reduce team motivation.
Democratic management
Democratic management involves team discussions before finalising choices or allows employees to decide on certain matters. This style uses two-way exchanges to gather ideas and feedback.
Advantages:
- Draws on team expertise for improved decisions.
- Boosts motivation through involvement, aligning with Herzberg's ideas on participation as a motivator.
Disadvantages:
- May take longer to reach decisions due to the need for consultation.
Features of paternalistic and laissez-faire management styles
Paternalistic and laissez-faire styles offer alternative approaches to leadership, focusing on guidance or independence respectively.
Paternalistic management
Paternalistic management involves leaders consulting with teams and considering their views but keeping the final authority. This style prioritises employee welfare, such as safety and job security, in line with Maslow's hierarchy of needs.
Advantages:
- Effective for teams with less experience, providing supportive oversight.
Disadvantages:
- Experienced staff may feel restricted, leading to lower motivation.
Laissez-faire management
Laissez-faire management gives employees significant freedom to decide within general guidelines, with little direct involvement from leaders.
Advantages:
- Encourages creativity and expertise in specialised groups, such as research or design teams.
Disadvantages:
- Can result in uncertainty, lack of direction, and suboptimal choices if used in unsuitable settings.