What Is Management?

Raymond Hofman
Posted: 12/02/2016

What is management? It is a seemingly simple, straightforward question.

But it’s hard to answer, at least judging by the many different, sometimes totally incompatible answers I get when I’ve asked over the years.

I’ve asked managers and non-managers alike, in large multinational corporations, small businesses, and entrepreneurial ventures.

Here’s what I found: It’s not uncommon for managers to have only a vague idea of what it actually means to be a manager. And it is very common for members of senior management teams to hold widely differing views on the topic—and never talk about it.

The only thing that almost everybody agrees on is that we need better management. The problem is: Unless we share a basic understanding of what management is, we cannot have a meaningful discussion on how to make it better.

So here’s my attempt to define management through its purpose and nature.

The idea is to establish a few basic premises, which can be built upon further by asking: What should managers actually do? How should they do it? What skills do they need? How should we select and train managers? And of course, how can we do vastly better than we do today?

The Purpose and Importance of Management

In essence, the purpose of management is to enable people to come together and collaborate in pursuit of a goal which lies beyond any individual’s reach. Without management, organizations could not exist.

When management fails, organizations fail — whether it is in the private or the public sector, in business or in nonprofit.

Gary Hamel rightly refers to management as “the technology of human accomplishment.”

In that sense, management is probably the most important social function in the world. In The Practice of Management, Peter Drucker makes this powerful case: 

Management is the organ of society specifically charged with making resources productive, i.e. with the responsibility of organized economic advance. It therefore reflects the basic spirit of the modern age.

And later:

Management, its competence, its integrity and performance will be decisive to the free world in the decades ahead.

Indeed it is unthinkable that we will solve the most difficult questions of our time without well-managed organizations and institutions.

How to reduce poverty and hunger? How to reduce youth unemployment? How to improve healthcare systems and education? How to make businesses more meaningful contributors to all of the above?

The answers depend on management. Management matters. A lot.

The Nature of Management

Management is human-centric. It needs to work for people and thus needs to be designed for people.

First, it needs to work for customers: Managers responsibility is to run organizations that produce goods and services of true value to customers.

To do so, management also need to work for employees. Managers responsibility is to enable employees to put their talents to the best possible use.

In Roger Martin’s words: “Management’s job is to design and implement an organization where people can thrive.”

Management is context-specific. Since the function of management is to integrate people in a common enterprise, culture will play a major role.

So will an organization’s size, the markets in which it operates, its industry, technology, history, product portfolio, in addition to many other factors.

There are no real shortcuts. There is no such thing as a one-size-fits-all approach to management.

Management is a practice. And its own proper discipline. A discipline with its own body of knowledge, one which can be learned.

It draws from and builds on other social sciences like economics, psychology, philosophy, ethics, or history. In that sense it is also a liberal art. But never a science.

The Nature of Managers

Managers require character. Managers have the ability to profoundly impact people — for good or bad.

They must draw their legitimacy from acknowledging this enormous responsibility. And this requires character.

As a manager, you know who you are and what you stand for. You are willing and able to serve a purpose beyond yourself.

You strive to be a well-rounded person, one that can demonstrate humility and vulnerability, exercise good judgment, and uphold the highest standards of professionalism.

Above all, you are able to reflect and never stop developing yourself—you continuously broaden your horizon, make connections, and ask great questions.

A manager is always also a leaderand vice versa. There cannot be a meaningful distinction between manager and leader—one without the other simply does not make sense.

In fact, distinguishing the two has proven quite harmful to the practice of management in recent years. It gave managers a bad reputation and it allowed leaders to not worry about the hard choices required to get stuff done.

One popular distinction says “leaders do the right things” while “managers do things right.”

Think about that for a moment. How can you do one without the other? How can you do the right things if you can’t do them right?

Let’s drop the divide and think of leaders and managers as in a unified concept.

How to Tell Great Management Is at Work

Great management can be seen in the results it produces.

First and foremost, you’ll find happy, loyal customers based on an organization’s deep understanding of their needs — and of course, great products and services that actually address those needs.

Next is people engagement. Great management produces a happy, engaged workforce with low turnover among its best performers.

And finally: innovation. Great management is never satisfied with the status quo and strives to constantly innovate, in products and services as well as in how it operates.

Note that the results do not include revenue or profits. I deliberately exclude them for two reasons.

First, revenue and profit are only really meaningful in business. Yet the above results are the true tests of management in any organization: business, government, and nonprofit alike.

Second, even in business, revenue and profit are never a direct outcome (except in the very short term or in quasi-monopolistic settings) but always a consequence of happy customers, happy employees, and constant innovation.

Regaining Legitimacy and the Force for Good

Management, understood in the above sense, is an enormous task. If we get it right, it can be a powerful force for good in this world.

Alas, we’re not doing very well. The return on assets of American companies today is 25% of what it was in 1965.

Employee engagement is at record low levels in the developed world. Consumers distrust companies.

And managers score lower in rankings of professional integrity than lawyers and politicians.

The great Sumantra Ghoshal argued in 2003 that business and management had lost its way:

Institutions… lose their influence and effectiveness when they lose their social legitimacy.

This is what happened to the institutions of monarchy and aristocracy in nineteenth century Europe. This is what happened to the Church and the State.

And this is precisely what is going to happen to companies and management unless the tide of suspicion and distrust is turned.

More than ten years have passed since Ghoshal made his case. Isn’t it about time we took management and management development more seriously?

Isn’t it still all too common that managers are selected for all the wrong reasons and then are let loose managing without proper training or coaching? That we still mistake business skills for management skills? That we have all the wrong incentives in place for managers to interpret their roles more responsibly?

So what’s the solution? Do we need to fundamentally re-think how we select, train, and act as managers? Yes and no.

We can always do more, but much of the re-thinking has already been done (one of my next posts will focus on that).

We know more about good, effective management today than we ever did before.

Yet management is a practice. Knowing is not enough, we also need to rigorously apply what we’ve learned. In so doing, we can regain management’s legitimacy and once again make it a force for good ,  one organization at a time.

Raymond Hofman
Posted: 12/02/2016

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