What is administrative management

We all deal with organizations. We are also influenced by organizations. For example, if you have handled a dustpan lately, chances are that it was made by Rubbermaid, Inc., the company based in Wooster, Ohio, that makes plastic household and commercial items. The company has a reputation for innovation and steady growth. What makes Rubbermaid so successful?

Rubbermaid began to experience greatly accelerated success after a new chief executive officer (CEO), Stanley C. Gault, took over the helm in 1981. By the late 1980’s, once-staid Rubbermaid even began appearing on Fortune magazine’s annual survey of the 10 most admired in America. In contrast, over an 11-year period, William H. Bricker, CEO of Diamond Shamrock, transformed the company from a profitable chemical company into a debt-ridden energy one and was forced to resign. To understand how administrative management can make such a difference in an organization, we need to explore the nature of administrative management.

Management is the process of achieving organizational goals through engaging in the four major functions of planning, organizing, leading, and controlling. This definition recognizes that management is an ongoing activity, entails reaching important goals, and involves knowing how to perform the four major functions of management.

Planning. Planning is the management function that involves setting goals and deciding how best to achieve them. This function also includes considering what must be done to encourage necessary levels of change and innovation.

For example, Rubbermaid Company typically sets an annual goal of increasing sales by at least 15 %. In addition, though, the company aims to reap 30 % of those sales from products that are no more than 5 years old – a powerful signal that innovation is important. One result is that the company typically launches 100 or more new products per year. The success rate for the new products is an enviable 90 %, largely because of the careful planning that also goes into new product development and product launches.

At Diamond Shamrock Company, the major goal was to change the chemical company into a major energy company; this was based on the view that energy prices would continue their upward trend (later proven to be faulty). Even so, progress toward the goal was somewhat erratic and reflected poor planning.

Organizing. Organizing is the management function that focuses on allocating and arranging human and non human resources so that plans can be carried out successfully. It is through the organizing function that managers determine which tasks are to be done, how tasks can best be combined into specific jobs, and how jobs can be grouped into various units that make up the structure of the organization. Staffing jobs with individuals who can successfully carry out plans is also part of the organizing function.

For example, Rubbermaid recently reorganized to serve customers better by creating five divisions aimed at different customers needs: housewares, office products, commercial products, international operations, and the Little Tikes Company toy subsidiary. In addition, recruiting is done with a careful eye toward bringing in individuals with the potential to take on leadership positions as the company continues to expand.

In contrast, at Diamond Shamrock considerable organizing effort was channelled toward developing luxurious facilities for use by top management and the board of directors.

Leading. Leading is the management function that involves influencing others to engage in the work behaviours necessary to reach organizational goals. Leading includes communicating with others, helping to outline a vision of what can be accomplished, providing direction, and motivating organization members to put forth the substantial effort required.

At Rubbermaid the number-one rule of products is clearly articulated to everyone: They’re to be useful, long-lasting, and inexpensive .To help motivate organization members, Rubbermaid offers an incentive plan that enables eligible Rubbermaid managers to receive bonuses based partially on profit levels. In addition, many hourly workers participate in a retirement plan based on profits.

Chosen partially for his support of Diamond Shamrock’s tradition of administrative management, Bricker assumed an autocratic style after becoming CEO. Many executives who had been with the company for some time concluded that it was useless to fight with him over his high-risk ideas.

Controlling. Controlling is the management function that is aimed at regulating organizational activities so that actual performance confirms to expected organizational standards and goals. To do the necessary regulating, managers need to monitor ongoing activities, compare the results with the expected standards or progress toward goals, and take corrective action as needed.

For example, in order to reach earnings goals, Rubbermaid must keep a careful eye on costs. Recently the costs of certain resins that were a key ingredient in a newly launched plastic desk product suddenly increased 52%. Managers moved quickly to take corrective action by changing to a less expensive combination of petrochemicals.

As oil prices and earnings began to change, Diamond Shamrock began to sell assets and cut expenses. The original fleet of five company planes was cut back to three, but then the company leased extra planes for various trips. News of various potential conflicts of interest involving company dealings with Bricker’s friends began to emerge.

Although the four major functions of management form the basis for the managerial process, several additional elements are considered key ingredients of this process as well. A manager’s working knowledge and key management skills also are important factors that contribute to high performance (achieving goals).

The managers show a strong preference for verbal communication, preferring to communicate through phone conversations and informal meetings rather than depending on more formal written memos and reports. For obtaining and transmitting information, they rely on networks. A network is a set of cooperative relationships with individuals whose help is needed in order for a manager to function effectively. The network of contacts includes superiors, subordinates, and other individuals inside the organization, as well as numerous outside individuals.