Business Skills

Business Management Skills, The Ultimate Guide

Business management skills

0. What is a business?

A business is an entity whose sole purpose is to create and keep a customer.


Companies have three responsibilities:

- make a profit

- satisfy employees, and

- be socially responsible.


A business has only two functions - marketing and innovation.

- Peter F. Drucker


1. What is management?

Management is about supporting and guiding people to do the work.


Getting a task done is the most unappreciated skill. You have to get things done with efficiency, and effectiveness (doing the right things.).


2. What does a manager do?

The major tasks of a manager are: Setting objectives, organizing, motivating and communicating, measurement, and developing people.


Thus, the seven major tasks for the manager are:


1. Managing by objectives: In other words, getting all the jobs done, which will help fulfill the business's objectives.

2. Taking more risks and looking at a longer period ahead.

3. Making strategic decisions.

4. Building an integrated team, each member of which is capable of managing and of measuring personal performance and results in relation to the common objectives.

5. Communicating information fast and clearly.

6. Seeing the business as a whole and integrate the manager’s own function with it.

7. Seeing the business in relation to business in general. The traditional specialization in a few products or one industry will also no longer be enough.


Executive vs Manager vs Leader:

Executive does the job using the skills she/he is good at. A manager oversees the executives, helping and guiding them to get the job done. A leader is the one who has convinced them all with a vision, that is, he has explained to them why they have got to do what they they are doing.


3. How to analyze a business

A manager must know the business before getting to the daily work of managing/supervision.


What is our business? (mission)

Who is our customer?

What does the customer consider value?

What have been our results?

What is our plan?


(Source: Peter Drucker, the man responsible for business management as a field of study)


4. What are the main managerial skills?


A manager is a:


- Effective Communicator

- Observer of trends and emerging issues

- Analytical thinker

- A problem-solver with a team-oriented style

- Highly motivated and organized

- Superior leadership and coaching skills.

- Service-oriented attitude

- Capable of effecting change

- Be able to shift to requests that require response on short notice

- Pro-active self starter

- Ability to manage several strands of work simultaneously

- Enjoys the challenges & rewards of developing a cohesive practice infrastructure while maintaining a supportive knowledge-based community

- Creative approach to changing businesses

- Bringing new ideas into reality: improving efficiency; redesigning functions

- Great at business process analysis, design and delivery

- Generator of great, useful, highly readable, well-formatted reports.

- Great critical thinker, taking real-world, real-time decisions.


(Source: A job ad from Mckinsey)


14 Undervalued managerial skills:


- Ability to develop real relationships

- Openness to change

- Ability to improvise

- Empathy

- Holding yourself accountable

- Entrepreneurialism

- Focus and clarity

- Imagination and creativity

- Creating an environment of accountability: making decisions stick

- The ability to stick to the game plan - courage of convictions

- The ability to listen to the complainer

- Design acumen

- Knowing when to pull the trigger - place a bet and act

- The ability to balance the need for information with the need for action


(Source: A survey of Business writers on


17 Overvalued managerial skills:


- People's 'schmoozing' abilities

- The leadership personality

- Confidence

- Being able to think ten moves ahead

- Holding other people accountable

- Organization

- Detail orientation (Hogshead).

- Building relationships, pedigree, status, connections in hiring people and selection

- Multitasking

- The need to be competitive

- Work all the time - do more

- That the CEO makes all the difference and it's all about the CEO

- Charisma

- Leadership

- We often overvalue analysis.


(Source: ‘9 Lives Of Leadership’, by Lisa Hanberg )


5. Eight Major Management Concepts


- Management by objectives: The term was given by Peter Drucker in 'The Practice of Management' in 1954. The system of MBO is a process whereby all the managers of an organization jointly identify its common goals, define each individual’s major areas of responsibility in terms of results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members. MBO shifts the focus to goals, to the purpose of the activity rather than the activity itself. Instead of asking ' What do I do?' the manager is led to ask ' What is the objective towards which we are working?' Under the concept, the manager is held responsible for results rather than for activities.


Eight areas of objectives: Drucker says there are 8 areas in which objectives should be set: Market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and Public Responsibility.


Development of objectives is the manager’s first responsibility. The task of objective-setting should be pushed as far down the organization chart as possible. Drucker also advises ‘self control’ while setting the objectives. The objectives should also serve the ‘public good’; the general welfare (common weal)


- Hawthorne Experiment: Conducted in the late 1920s by Elton Mayo and his Harvard Business School associates at the Hawthorne, Illinois, plant of the Western Electric Company. The essence of the Hawthorne effect lay in the following sequence -first, workers were given better working conditions; brighter lights, more pleasant surroundings, and so on. Their production went up. Then the improvements were taken away. Production continued to go up/ Then conditions were intentionally worsened and the work much more monotonous. Productivity continued to increase and workers remained fresh and satisfied.


Why? The answer lay in the fact of the experiment itself. Workers would produce as long as someone was paying attention to them.


After interviewing them, Mayo had found that the workers had performed better because during the experiment they were being treated better by their supervisors. The assembly line workers were further motivated because their menial tasks acquired greater meaning as part of an experiment.


- Brainstorming: Advertising executive Alex Osborne explained persuasively that creativity could b unleashed through the medium of ‘brainstorming’, a group of people sitting together, listing ideas/solutions and then ranking them.


- The Management Grid: Developed in the 1960s by Robert R. Blake and Jane S. Morton of the University of Texas , the ‘Grid’ is a rectangular framework in which managers are rated from very low to very high in their concern for people and their concern for production. At one corner would be the boss who does not a give a damn for workers but who goes all out to get the job done. At another corner would be the executive who is all-consumed with the establishment of rapport but who will let productivity lag because of his sympathy with people. A 1/1 would be the lowest rating. A 9/9 ranks the executive as optimum in his concern for production and for personnel.


- Hygiene theory: Through a set of studies in 1959, Dr. Frederick Herzberg and the co-authors identified two sets of conditions that affect a worker. One set of conditions has the power to satisfy. The most important motivators are: achievement, recognition, the work itself, responsibility, and advancement. All of these factors are intrinsic to the job. The other set of conditions affecting the workers are ‘dissatisfiers’ or ‘hygiene factors’. These are factors that have only a negative effect. When they are absent, or deficient, they cause the worker to be dissatisfied. But they cannot satisfy, and no matter how abundantly they are provided for the worker- they cannot motivate him to do a better job. The leading hygiene factors are - company policy and administration, supervision, interpersonal relations, working conditions, and salary. Herzberg maintained that money is not a true motivator. If you do not pay a man enough, true, he will become unhappy. But above a certain point, you cannot motivate him through money.


- Theory X, Theory Y AND Theory Z: Articulated by late Douglas McGregor in his book , 'The human side of Enterprise', the essence of Theory X and Theory Y' proposition is that there are two theoretical assumptions relating to the management of people. Executives deal with subordinates according to one assumption or another.


The traditional assumption, which McGregor called ‘Theory X’- is that the average human being has an inherent dislike of work and will avoid it if he can. He prefers to be directed, avoids responsibility, has little ambition, and wants security above all. Because of this human characteristic, the worker must be controlled, coerced, and threatened in order to get him to make an adequate effort. Theory X, said McGregor, was the way most bosses dealt with people. It led to ‘carrot and stick’ management. And it was not a good way to manage.


So, in place of Theory X, McGregor suggested 'Theory Y'. This formulation states that working is a s natural as playing or resting; that people want to work and achieve; that the average human being learns, under proper conditions, not only to accept but to seek responsibility; and that the intellectual potentialities of the average worker were only partially utilized. Therefore, says Theory Y, 'external control and the threat of punishment are not the only ways to bring about effort:' Man will exercise self-direction and self-control in the service of objectives to which he is committed.'


Theory Z: An improvement on Theory Y by William Ouchi in the 1980s. Using Z, the Japanese bring together management and workers in cohesive work groups. Every one is part of a consensual-decision making process. To improve quality, workers and management work together in ‘Quality Circles’.


Every employee is involved in ‘Kaizen’ - the continuous struggle necessary to improve all aspects of the self and of the company. When workers feel like partners in the business, they become more productive and committed to their jobs.


Many experts believe the competitive surge of Japanese Business in the 1980s and early 1990s owed to Theory Z.


- Management By Walking Around (MBWA): A theory expounded at information technology major Hewlett-Packard. HP executives were encouraged to be out of their offices, working on building relationships, motivating, and keeping in direct touch with the activities of the company. It is a very simple but useful concept


- Total Quality Management (TQM): Management philosophy dedicating the entire organization to a relentless quality- centered effort. In TQM, quality means meeting or exceeding the requirements of one’s customers. the customers can be the end users of a product, another department within a company or even a supplier.


6. How to get along well with employees


All the tips below have been covered elsewhere in this book too. Most of the can be found in 'Communication skills' and 'leadership skills' sections.


- Don't play favorites: Playing favorites can bias your judgment and impair your leadership abilities. Treat your employees equally.


- Give credit when it's due: Don't take credit for your employees' ideas or hog their limelight. This action not only fosters resentment but also makes you seem untrustworthy.


- Don't micromanage: While it's fine to keep up with what your employees are working on, don't constantly look over their shoulders.


- Never discuss employee matters with their co-workers: This kind of gossip always gets back to the person and will make you look unprofessional.


- Don't interfere with employees' work: If your employees are getting work done, don't stress about how it gets done. Even if it's not being done they way you'd do it, it's best to let employees use their best judgment.


- Don't push unreasonable deadlines: You don't want to spend all of your time at the office, and neither do your employees.


- Keep your promises: Barring some catastrophic event, you should always keep promises you make to employees, especially about pay and benefits.


- Keep work about work: Don't require employees to run your personal errands. Take care of your own personal business or hire an assistant.


- Reward hard work: Make sure your employees feel valued for the work that they do. Employees will be more willing to put in extra effort if they know it's noted and appreciated.


- Provide motivation: Sometimes employees need a morale boost. Provide them with encouragement to get a project rolling.


- Be accessible: Don't be holed up in your office all day - come out and visit with your employees. Let them know that they can always come to you with problems and concerns.


- Be open to constructive criticism: It may not always be what you want to hear, but listening to constructive criticism gives you the chance to learn and grow from your mistakes.


- Accept responsibility: Part of being the boss is accepting responsibility for the mistakes of all that you manage, not just your own.


- Get regular feedback: Your employees and superiors can give you valuable feedback on how to improve your performance. Use this to your advantage.


- Stand up for employees: If other departments or managers are bearing down hard on your employees, stand up for them.


- Manage and control your emotions: Don't let anger or frustration affect your problem resolution. If you are emotionally invested in a situation, cool down before discussing it or bring in an outside mediator.


- Learn when to step in: Some problems might resolve themselves if you just let them be, but you need to be aware of times where you'll need to step in and take control of a situation.


- Get the facts first: Before you pass judgment on a situation, make sure you have the whole story. Listen to employees and refrain from questioning anyone's integrity without first ensuring that you've gathered all the data.


- Try to depersonalize problems: Let employees know that the problem isn't with them but with their actions. Don't make it personal.


- Create milestones: Creating milestones for you and your team will help you keep track of your progress and also give you a sense of accomplishment as you reach each milestone.


- Delegate task: Spread work among your employees in a way that doesn't leave anyone overburdened while also allowing the project work smoothly.


7. The 4 types of corporate culture


- Tough-Guy Macho Culture (Fast feedback and reward, high risk):

Stress results from the high risk and the high potential decrease or increase of the reward.

Focus on now, individualism prevails over teamwork.

Typical examples: advertising, brokerage, sports.


- Work-Hard, Play-Hard Culture (Fast feedback and reward, low risk):

Stress results from quantity of work rather than uncertainty.

Focus on high-speed action, high levels of energy.

Typical examples: sales, restaurants, software companies.


- Process Culture (Slow feedback and reward, low risk):

Stress is generally low, but may come from internal politics and stupidity of the system.

Focus on details and process excellence.

Typical examples: bureaucracies, banks, insurance companies, public services.


- Bet-Your-Company Culture (Slow feedback and reward, high risk):

Stress results from high risk and delay before knowing if actions have paid off.

Focus on long-term, preparation and planning.

Typical examples: pharmaceutical companies, aircraft manufacturers, oil prospecting companies.


(Source: Terrence Deal and Allan Kennedy)


8. Four strategic types of companies

- Defender: A mature type of company in a mature industry that seeks to protect its market position through efficient production, strong control mechanisms, continuity, and reliability.


- Prospector: A type of company that seeks to exploit new opportunities, to develop new products and/or services, and to create new markets. Typically its core skills lie in marketing and R&D and it will tend to have a broad range of technologies and product types.


- Analyzer: A type of company that avoids excessive risks but excels in the delivery of new products and/or services. Typically it concentrates on a limited range of products and technologies and seeks to outperform other companies on the basis of quality enhancement. Analyzer organizations are characterized by balance—a balance between defender and prospector organizations.


- Reactor: A type of company which have little control over their external environment, lacking the ability to adapt to external competition and lacking in effective internal control mechanisms. They do not have a systematic strategy, design, or structure.


(Source: Raymond Miles and Charles Snow)


9. How to improve a business's performance


What do we mean by corporate performance?

- Manufacturing Performance: Organization & Human Assets, Customer Service, Utilization/Efficiency/Effectiveness, Quality, Inventory, Cost Structure

- Financial Performance: Return on Assets, Sales per employee, Overall market share, Over all pretax profitability, Offshore sales volume, Total sales volume

- Critical Success factors: Global Capabilities, Overall Customer Service, Overall product pricing and cost, overall technological leadership, Overall flexibility/responsiveness.

- Competitive Alternatives: Higher product value, Lowest Priced products, Low cost producer, Hold prices, Alliance with domestic firms, alliance with foreign majors , new products for existing markets, growing by acquisitions, Growing Market share


How to improve corporate performance:

- Eliminate low-return activities.

- Improve labor productivity revenues and profits per employees).

- Improve operating efficiency (speed, reduce wastage)

- Improve capital productivity (ROCE - return on capital employed)

- Look for growth opportunities (new products & markets, expanding market share)

- Build competencies (new capabilities and resources )

- Improve organizational capabilities (new skills, new methods)


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