Essential Business Management Principles
The Social Function
Social problems are taking the lead over purely economic problems. Among the objectives of a company must be true social returns. We must distinguish two trends:
a) The staff: The company must ensure that employees are in a perfect position to perform their work.
b) The community: The company depends largely on the material welfare of society as a whole, through increased consumption per capita and profit margins used to lower prices in a competitive spirit. Also, with increasing purchasing power, customer satisfaction will be higher. There is a moral value in a company that increases social wealth through its activity.
The Information Company
We must distinguish:
a) Internal Information: The knowledge workers need to avoid uncertainty, which causes excessive dependency and fosters a sense of inferiority. This requires information and communication.
b) External Information: In contrast to previous eras in which firms sought to be accountable only to their stockholders, the general belief today is that companies are dependent on public opinion, the State, customers, and consumers.
Directive Function
Traditionally, the employer personally represented and managed their business. Today, companies seek professional leaders prepared to carry out the job effectively.
We must distinguish the leadership role from the exercise of command. Management involves forecasting, setting objectives, and determining ways to achieve them. The exercise of command is the ability to give orders and have them delivered in the most convenient way.
To lead, one needs to know what will be imposed. Authority is gained through personal influence. A good leader is respected for their moral and intellectual qualities, human development, and technical expertise. The true function of leadership is not to impose but to convince.
Gelinier defines leadership roles: “Directing is an outcome of other people and being responsible for what we have done together.”
Delegation is the ability to get results through others. Every leader should know how to delegate their authority so they can be replaced. This should be done through the judicious choice of competent individuals.
Delegation has a dual quality. The person who acquires it receives authority and responsibility, and what is delegated is the power of accomplishment. However, the delegator must not ignore the delegated responsibility and authority entrusted to others.
Administrative Functions of Various Organizational Levels
All managers perform administrative tasks, although the time spent on each function may differ.
Managerial Skills and Organizational Hierarchy
There are four types of skills for administrators:
- Technical skills: Possession of knowledge and skills in activities that involve the application of methods.
- Human skills: The ability to work with individuals.
- Conceptualization skills: The ability to see the big picture.
- Design skills: The ability to solve problems for the benefit of the company.
Henri Fayol
Known as the father of modern management theory. Industrial activities are divided into six groups: Technical, Commercial, Financial, Security, Accounting, and Administrative. He formulated 14 principles of management, referring to authority and responsibility, unity of command, rank, and team spirit.
- Subordination of Special Interests to General Interests: The company’s interests take precedence over employees’ interests.
- Unity of Command: An employee in any job should only take orders from one superior.
- Unity of Direction: One head and one plan for all group activities with a single objective. This is essential for achieving unity of action, coordination of effort, and focus. Unity of command cannot exist without unity of direction, but the latter does not follow from the former.
- Centralization: The concentration of authority in the top ranks of the hierarchy.
- Hierarchy: The chain of command that goes from the highest authority to the lowest level, with all communications going through the highest authority.
- Division of Work: Tasks should be specialized to develop staff in their work.
- Authority and Accountability: The ability to give orders and expect obedience from others, which creates more responsibilities.
- Discipline: This depends on factors like the desire to work, obedience, and proper behavior.
- Remuneration of Staff: Employees should receive fair and guaranteed satisfaction.
- Order: Everything must be properly placed, both materially and in terms of human resources.
- Equity: Kindness and justice to ensure staff loyalty.
- Stability and Duration of Staff: Provide stability to the staff.
- Initiative: The ability to visualize a plan and ensure its success.
- Team Spirit: Get everyone working within the company with ease and as if it were a team, the strength of an organization.