Top-level management is the ultimate career goal for most ambitious professionals. The types of managers in a small business are similar to a large company, but a small company has fewer people and likely fewer management roles. A very large organisation on the other hand could have several managerial layers, with branch managers, regional managers and country managers forming a chain of command from the top to the bottom.
Regardless of the actual field, once you’ve made your way towards the top of most companies, your job will almost certainly involve management of some sort. This can be tricky for some people. For example, an engineer could be fantastic at her job and rise through the junior ranks quite quickly. But as she rises in the organisation, her job becomes less and less about engineering and more about managing people. This requires a very different set of skills to those that got her there in the first place.
There’s a term for this, the “Peter Principle”, which says: “In a hierarchy, every employee tends to rise to his (or her) level of incompetence.” So what do you do about this? While it is true that some people are just naturally better at dealing with people than others, management is a skill that you can learn. There are many courses you can study to gain these valuable skills, such as the online Postgraduate Diploma in Business Administration.
When we talk about types of managers, two different things could be referred to. The first way of looking at it is in terms of the business function that is carried out by the manager, which relates to their role and position in the business. The second way in which people talk about types of managers relates to the personal style that the manager uses. Although personal style can tend to be affected by the manager’s personality, a well trained and prepared manager should be able to adopt the most effective and appropriate management style regardless of their personality.
We’ll go into much more detail later on the types of managers in both big and small businesses as well as the four types of management styles. For now, we’ll start at the top and look at top-level management.
As the name suggests, those working in top-level management have made it to the top of the managerial ladder. These are the people who run any organisation, big or small. Of course, a small business may just have one top-level manager, but large businesses require more people to handle these top-level managerial roles. These include the board of directors, president, vice president and chief executive. They in turn work closely with the next level of managers such as the chief operations officer, chief marketing officer, chief technology officer, chief financial officer and chief compliance officer.
These are the people steering the ship of the organisation. They are responsible for the organisation’s long-term success. It is their job to set long-term goals and define strategies to achieve them. They are the ones who mostly work on the business, rather than in the business.
Different management experts and academics have analysed management from different angles over the years, each developing their theories on management. Two hugely influential authors are Luther Gulick and Lyndall Urwick, who together wrote and edited a paper in the 1930s that proposed the seven functions of management that we still use today.
Their aim in developing this concept was to provide businesses with a systematic framework to maximise output, minimise wastage and improve profit margins. It also helps organisations to break down the work into their component processes.
Gulick and Urwick coined the term POSDCORB, which is an acronym of what they defined as the seven functions of management: planning, organising, staffing, directing, coordinating, reporting and budgeting.
Planning: This involves setting out the objectives for the organisation, as well as working out how those objectives will best be achieved.
Organising: This management function involves bringing together the different parts of the business and getting them to operate efficiently. It looks at both the physical and human resources of the organisation.
Staffing: For an organisation to succeed, it needs to employ people who have the correct skills for the work they need to do. Staffing deals with recruiting the best candidates, as well as monitoring and developing employees to ensure they have a good work environment.
Directing: The management function of directing deals with the actual work being done in the organisation and how to work is efficiently delegated to the correct people. It follows on from the previous three functions which establish what work should be done and by whom. Directing answers the question of how the work must be done.
Co-ordinating: Managers need to ensure that there is harmony between all the different parts of the organisation. This particular management function is quite similar to that of organising. Some management academics do not include it, arguing that coordination is the central role of a manager, rather than just a function to be fulfilled.
Reporting: Reporting is another important part of managing an efficient organisation. Without reliable information on what is happening within the organisation, top-level management would not be able to properly plan and carry out their jobs.
Budgeting: For an organisation to be successful, money must be spent efficiently and all expenses must be properly accounted for. This involves setting out the company’s budgets, allocating money to each department and forecasting future earnings and profit.
What are the 5 principles of management?
Before the advent of the seven functions of management, another prominent management expert named Henri Fayol developed a system based on the five principles of management. It provided a similar but slightly simplified structure to the seven functions of management and is what Gulick and Urwick built on to get to POSDCORB.
Also sometimes referred to as the five functions of management, these are the five principles of management that Fayol proposed: planning, organising, commanding, coordinating and controlling. Even though this concept was developed more than 100 years ago, these principles remain important to modern managers.
Types of managers in a small business
Smaller businesses require fewer managers as fewer people are working for the company. However, the management principles and functions still apply to at least some degree to even the smallest of companies. Although much of that may seem redundant if you are just working for yourself, those who apply those principles to the way their one-man company works are far more likely to grow their business successfully.
As a small company grows, it will start to require top-level management to direct the activities of the company. In a small company, there would be more direct contact between the top-level management and the front line employees, and less of the complicated chains of command required by large organisations.
The style of management can be very important within a small business. That’s not to say that it isn’t important in a large business, but unlike a large business where managers are brought in for their skills, a small business is often run by the founder of the company. As such it is more common for small businesses to be led by people with poor managerial skills than is the case in large organisations. We’ll take a closer look at the four types of management style a little further down.
Types of managers in a big business
We’ve already covered top-level management higher up, but there are more types of managers in a big business. The number of types of managers varies between systems, with some having only three levels while others describe four distinct levels for the types of managers in a big business.
Naming conventions also differ, but these are the three main levels: general or top-level managers, functional managers and frontline managers.
As we’ve already covered, the top-level managers are responsible for setting the objectives of the organisation as a whole and determining the best way to achieve them. They rely on the managers under them to ensure that policies and procedures are implemented correctly.
Functional managers are responsible for a specific function within an organisation, such as marketing, accounting, human resources or information technology. These include roles such as chief operations officer, chief marketing officer, chief technology officer, chief financial officer and chief compliance officer. They report to the top-level managers and in turn, direct the front line managers beneath them
Frontline managers deal with things at the operational level. They implement instructions, procedures and policies that are sent down from higher up and ensure that they are carried out by the company’s employees.
These three cover the types of managers in most big businesses that involve just one industry or business division, but if a company is involved in multiple industries then another level is needed. For example, Virgin is a holding company that has various divisions operating in completely different industries, such as Virgin Air, Virgin Active, Virgin Mobile and Virgin Money.
This is where business-level managers come in, slotting between the top level and the functional managers. At the top of each of these divisions is a business level manager responsible for managing the entire division.
The 4 types of management style
As we touched on earlier, aside from the types of managers within a business there are also different management styles. Here again, names do vary, but they can be broken down as follows:
Visionary management style: Under the visionary management style, the top-level manager takes control and sets the agenda for the company’s employees to follow. Some systems use less complimentary language, calling this autocratic or authoritarian leadership, reflecting the top-down nature of this style.
Democratic management style: In this style of management, the manager seeks to get feedback and input from the employees. This style of management gives employees more say in the company’s direction and decisions. It counts on the fact that the people on the frontline may well have a better understanding of the actual operations than the person in the top floor corner office.
Coaching management style: This style draws from sporting metaphors, where the manager works closely with employees, seeking to keep them motivated and ensuring they can perform to their fullest potential. It also emphasises the personal growth and development of the employee.
Laissez-faire management style: Laissez-faire is French for “let do” and is the name of an economic system that is free of regulations and interference. Managers who adopt this style have a hands-off approach and allow their employees to use their initiative. For this management style to work effectively, there needs to be a lot of trust between manager and employee, with employees needing to be self-motivated.
Whether you feel you would like to learn more about management to improve your chances of promotion, or whether you already find yourself taking on management responsibilities, a course such as the Postgraduate Diploma in Business Administration may well be a good next step.