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functions of managementWhat does a company value more, time or money?  The answer can be debatable, but one thing is for sure.  Time is continually passing, and there is no stopping it.  That is where management steps and does what it is supposed to do, manage time as efficiently as possible.  But that isn’t the only job managers have to do.  In the next few sections below, you will see why management is important and the top five functions of management in an organization.

To define management in the business world, it is the organization of activities of a company to reach defined objectives.  This is usually accomplished by directors and managers who have the authority to make decisions in the company.  In corporations, the board of directors or the chief executive officer (CEO) is usually in charge of management. 

Why Is Management Important?

All organizations rely upon group efforts to achieve goals.  And whenever two or more people are required to work together, management is necessary.  According to the U.S. Bureau of Labor Statistics, management positions are projected to continue to grow by an average of 7% percent.  If that is not enough reason to become a believer in management, maybe the reasons below will:

Five Functions of Management

There are more functions of management than the ones listed below, but these are considered the most important.  Learning how to balance each of these is the key to effective management within a company.  If you are focused too much on one function as opposed to another, the imbalance can impact both the employees and management.


This is the core function of management because it is the foundation of the other four areas.  Planning involves mapping out exactly how to achieve a specific goal.  As a manager, he or she will need to map out detailed actions;  what to do, when to do it and how it should be done.  Think of it as bridging a gap for where we currently are and where we want to be.  For example, if the company’s goal is to earn profit, the manager needs to determine the steps necessary to achieve that goal.  This can include spending more on advertising, hiring more experienced employees, cutting costs, or improving the products being sold.

Planning is always an going process.  There will be times when external factors will affect the company both positively and negatively.  This in turn may alter the original planning process in reaching certain goals.  This is known as strategic planning.  Depending on the exact scope of an organization, the strategic planning process can look ahead as far as ten years or more.  The findings are usually collected in a strategic planning document.


Immediately after planning, the manager needs to organize the team according to plan.  This involves organizing all of the company’s resources to implement a course of action and determining the organizational structure of the group.  And in order to do this correctly, management will need to evaluate the different divisions of departments and the staff to figure out the best way to accomplish the tasks needed to reach their goals.

This function is also known to be the backbone of management.  Without organization, a company will have no structure and their day-to-day operation of business will most likely collapse.  If management is disorganized, it can trickle down to the employees because they will lose confidence in their leaders.


The purpose of staffing is to control all recruitment and personnel needs of the organization.  After management decides what needs they have, they may decide to hire more employees in a certain department.  It is also responsible for training and development, promotions, transfers, and firing.  A lot of times management and the human recourse department will work together because their roles are similar in this case.

The importance of this function has grown lately, mostly because of the increasing size of businesses and the advancement of technology.  A good example of this is the IT department.  The size of the IT department in a company ten years ago is nothing compared to what it is now because of the dependence we have on computers and servers.  Without the staffing function, a business will certainly fail because there will not be an experienced, sufficient amount of employees within each department.


Supervision, motivation, leadership, and communication are all involved in the directing function.  Management needs to be able to oversee and influence the behavior of the staff and achieve the company’s goals, whether that means assisting or motivating them.  When morale is high within a company, it usually has a significant impact on job performance and efficiency.  Incentive programs and rewards are a great way for a business to keep its employees happy and motivated.

However, the most important aspect of directing is having good communication.  This means building positive interpersonal relationships, effective problem solving and evaluating one another.  Most directing takes place in in meetings and other meeting sessions with the department leaders to ensure that everyone is on the same page.  Poor communication will lead to poor execution in an organization,


The last function of management deals with monitoring the company’s progress and ensuring that all of the other functions are operating efficiently.  Since this is the last stage, there are bound to be some irregularities and complexity within the organization.  This in turn can lead to certain situations and problems arising that are disrupting the company’s goals. Given is the stage where all the final data is gathered, it is the management’s job to take corrective action, even where there is the slightest deviance between actual and predictable results.

Management Courses

If you want to learn more about the five functions of management, take a look at our Introduction to Management course.  We also offer a Project Management and a Classroom Management Essential lesson if you are looking for something more specific.  As you become more experienced with management skills, you will realize that it does only apply in the business world, but it can affect your life just as much.

Page Last Updated: February 2020

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