6.1 The Role of Management

6.1 The Role of Management

1. What is the role of management?

Management is the process of guiding the development, maintenance, and allocation of resources to attain organizational goals. Managers are the people in the organization responsible for developing and carrying out this management process. Management is dynamic by nature and evolves to meet needs and constraints in the organization’s internal and external environments. In a global marketplace where the rate of change is rapidly increasing, flexibility and adaptability are crucial to the managerial process. This process is based in four key functional areas of the organization: planning, organizing, leading, and controlling. Although these activities are discussed separately in the chapter, they actually form a tightly integrated cycle of processes and actions.

From this perspective, the managerial process can be described as (1) anticipating potential problems or opportunities and designing plans to deal with them, (2) coordinating and allocating the resources needed to implement plans, (3) guiding personnel through the implementation process, and (4) reviewing results and making any necessary changes. This last stage provides information to be used in ongoing planning efforts, and thus the cycle starts over again. The four functions are highly interdependent, with managers often performing more than one of them at a time and each of them many times over the course of a normal workday.

The four management functions can help managers increase organizational efficiency and effectiveness. Efficiency is using the least possible amount of resources to get work done, whereas effectiveness is the ability to produce a desired result. Managers need to be both efficient and effective in order to achieve organizational goals. For example, in 2025 Delta, one of the most efficient U.S. airlines, operated at revenue of 17.65 cents per seat-mile, which is the revenue the company makes on one seat (occupied or not) for the distance of one mile. No other airline came close to operating this efficiently, except American Airlines, which flew seats that produced 16.93 cents a mile.¹ There are many ways that airlines can manage to produce higher revenue per seat-mile. For instance, they can raise ticket prices, fill more of their seats, operate more efficient aircraft that utilize less fuel, or negotiate favorable salaries with their employees. While efficiency and effectiveness are sometimes lauded by investors, airlines also need to account for customer satisfaction, which can mean extra costs.²

The growth of AI has prompted many organizations to evaluate how this technology can improve their operations. For example, Unilever is utilizing AI to increase efficiencies in their recruitment and hiring processes. These efforts have resulted in significant cost savings by reducing the time to hire by 90 percent and reducing the interview time by a total of 50,000 hours. IBM is seeing similar results with a 30 percent decrease in costs related to recruitment, and as of 2024, nearly 4 million hours of employee time had been saved in the recruitment process by incorporating AI.³

As these examples and Table 6.1 show, good management uses the four management functions to increase a company’s efficiency and effectiveness, which leads to organizational efficiency and effectiveness, resulting in achievement of the organizational mission and objectives. Let’s look more closely at what each of the management functions entails.