What is Management?
Management of a company is comprised of five areas: planning, organizing, staffing, directing, and controls. A weakness in one or more of these areas can cause problems throughout the company.
Planning
Planning starts with a detailed list that takes into account all potential variables that might occur in the business. A company might have a goal to increase the sales by 10%. A plan would determine how that goal would be accomplished. Most of our clients initially do not have clear goals and detailed plans to meet those goals. A plan allocates all resources based on various sales levels and product mixes. Basically it says if this is my sales level and this is my sales mix, I will spend my money this way and that will be my profit. This is accomplished by using flexible budgets. The plan also has control points so that the desired results can be achieved within a pre-determined period of time.
Organizing
Does the structure of the company match the profit plan? The organizational structure must fit the control points within the profit plan. It ensures that the qualitative functions of the company can be accomplished and determines who is accountable and what they are accountable for.
Staffing
Staffing starts with the duties, responsibilities, authority, and performance standards for a position and how that position fits within the organizational structure. It ensures that there is not duplication of effort, gaps, or omissions.
Directing
Direction comes from good communication within the company. Do the meetings, verbal, and written communications match the profit plan? Is everyone going in the direction that the company needs them to in order to obtain the desired results? In most companies the employees are not bottom line oriented. That is because profit and cashflow management is not the focal-point of the company and its importance is not properly communicated throughout the organization.
Controls
Controls are the tools the company uses to assure results. Most companies do not measure performance properly. They do not know how to set standards, measure results, or reward performance. The owners are not in control because they don't know how to be in control.
Planning
Planning starts with a detailed list that takes into account all potential variables that might occur in the business. A company might have a goal to increase the sales by 10%. A plan would determine how that goal would be accomplished. Most of our clients initially do not have clear goals and detailed plans to meet those goals. A plan allocates all resources based on various sales levels and product mixes. Basically it says if this is my sales level and this is my sales mix, I will spend my money this way and that will be my profit. This is accomplished by using flexible budgets. The plan also has control points so that the desired results can be achieved within a pre-determined period of time.
Organizing
Does the structure of the company match the profit plan? The organizational structure must fit the control points within the profit plan. It ensures that the qualitative functions of the company can be accomplished and determines who is accountable and what they are accountable for.
Staffing
Staffing starts with the duties, responsibilities, authority, and performance standards for a position and how that position fits within the organizational structure. It ensures that there is not duplication of effort, gaps, or omissions.
Directing
Direction comes from good communication within the company. Do the meetings, verbal, and written communications match the profit plan? Is everyone going in the direction that the company needs them to in order to obtain the desired results? In most companies the employees are not bottom line oriented. That is because profit and cashflow management is not the focal-point of the company and its importance is not properly communicated throughout the organization.
Controls
Controls are the tools the company uses to assure results. Most companies do not measure performance properly. They do not know how to set standards, measure results, or reward performance. The owners are not in control because they don't know how to be in control.
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