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Understanding the Four Functions of Management

Office Manager Talking To Employees During Morning Meeting

What are the four most important functions of management?

The four functions of management are planning, organizing, leading, and controlling. Entrepreneurs, CEOs, and mid-level managers all carry out these duties in their respective environments. Whether you are already part of the management team or you aspire to be someday, understanding the nature of these elements is an integral part of your career development.

Learn more about the four critical functions of management

While many principles in the business world may change as the company grows and changes, the 4 functions of management are consistent at each stage of the business life cycle. They address every step, including getting started, gaining market share, hiring and motivating employees, growing, managing that growth, and dealing with threats. Here is a more detailed description of each of the functions if you are interested in learning more about what are the four functions of management.

Planning

Business planning includes setting goals and devising a strategy for reaching them. It is a leading function of management, the cornerstone of all other management functions. Every unit within a company needs a plan, whether it's a small department or multinational corporation. Planning begins with an understanding of the company, department, or business unit in its present state. The management team chooses the path for leading the company into the future and decides how to take it there through strategic planning.

Four different kinds of planning exist.

  • Operational planning: Addresses the daily tasks that must be completed to keep the business running. This kind of planning may be used to carry out one event, like the rollout of a new product, or ongoing to address regulations or approach challenges.
  • Strategic planning: Determines the company's long-term purposes, including the mission, vision, and values. Strategic plans usually cover the next two to 10 years and involve every part of the company. Tactical planning is building a supportive structure to carry out the strategic plan.
  • Tactical planning: Often has a scope of less than one year as it breaks down the steps needed to achieve the strategic plan into manageable tasks and timelines.
  • Contingency planning: The process for making changes as necessary when something unexpected happens to the company. A new competitor might enter the market, changes in the government may bring new threats, or a significant supplier may go out of business. Contingency planning lays out a structure for handling such unanticipated challenges.

Organizing

Once the business' plans for the present and the future are in place, it's time to get organized. The plan provides a structure around which to build the organization. The process of organizing a business involves bringing together all of the business' resources, including the money, people, technology, assets, and equipment, to work toward the expected plan. Then staff members are assigned responsibility for an allocation of the resources and the authority to manage them toward the common goals. Management must balance the workload with the resources entrusted to each unit within the company. If the two get out of balance, team members get frustrated and lose sight of the larger goal. Just like planning, organizing never stops and must be revisited as often as the plan changes.

Motivating

Once organizing is underway, the next step is to motivate and inspire the team to work together toward the company's common plan. Motivation, also called directing, has multiple components. Managers must decide where each element of the business and each person on the team is best suited to carry out the plan. Clear communication is critical to make sure everyone understands the plan and continues to work toward it. Ensuring adequate and properly trained supervision helps keep staff members working together in the right direction. In difficult times, motivating involves encouraging the team to keep working toward the goal, even through challenges.

Motivating, possibly more than any of the 4 basic functions of management, requires building relationships to encourage trust. When the staff trusts the management team and believes that the plan will lead to a successful company, they are more likely to stay engaged and striving toward the goal. Part of building that trust and maintaining it is clear and consistent communication at every level and in every direction. Managers must communicate with supervisors who must communicate with employees. Coworkers should communicate with each other to hold each other accountable and keep everyone working in the same direction.

Managers who are successful motivators know that at different times different management styles are necessary. Some of the common types of managing for motivation are directing, coaching, supporting, and delegating. Over time, successful motivators learn when, how, and why to use all of these styles.

Controlling

Controlling is the last of the four basic functions of management. It is the one that evaluates the success of the other three primary management tasks in terms of progress toward the goals identified in the planning process. Every company has some select metrics that it monitors to provide objective data to inform the controlling process. Controlling based on data helps prevent making reactive changes that are disruptive but not necessary. However, it also informs management on when change is required. Controlling helps companies avoid crises, and just like the other four basic management tasks, it is a never-ending process.

For managers carrying out the controlling function, data drives the kind of modifications that happen when change is necessary. For example, if more money is needed for a given project, a manager in the controlling function determines whether enough surplus dollars are available. If not, the funds may have to come from another project's budget. If one area of the company has too many employees, the decision of whether to move employees or eliminate positions comes into play.

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