Basic Business Management Skills

The verb manage comes from the Italian word maneggiare which means handling (especially a horse), which is derived from the Latin word manus meaning hand. In the 17th and 18th centuries, meaning of the English word management evolved from the Old French word mesnage.
“Management is the art of getting things done through people,” says management consultant Mary Parker Follett. People are perhaps the most valuable resource of a business. But there are others, like financial resources, infrastructural resources, inventory, and technology, whose optimum use is essential for effective business management. According to Peter Drucker, “Managers give direction to their organizations, provide leadership, and decide how to use organizational resources to accomplish goals.”
Management skills are classified as political (used in building power and business networking), conceptual (used in analysis of situations), diagnostic (used in taking an action in response to a situation), technical (domain knowledge), and interpersonal (people skills).
Management quote by Peter Drucker
Frenchman Henri Fayol describes management as a composition of five functions, namely planning, organizing, commanding, coordination, and control. Modern texts have reduced them to four, which include, planning, organizing, leading, and controlling.
Planning in management
Planning involves identification of your business goal and finding the way to reach it. It involves the estimation of various costs that will be incurred and evaluation of the time required to attain the business goal. A business plan has to be documented and reviewed on a regular basis. A plan is worth it if the attainment of the business goal is feasible with the allocated resources.
It involves the assignment of tasks and allocation of resources throughout the business organization. It includes determining the primary goals of the business and strategies to reach them. It includes division of activities into tasks and assignment of the tasks to suitable and deserving employees.
Commanding or leading is a management skill in itself. A true leader builds confidence in his followers and instills a feeling of admiration in them. He develops in them a sense of commitment towards business. A leader influences others to follow him. Understanding the need of the time, leaders need to be flexible and adaptable to change. They should help encourage the development of flexibility and adaptability in the team members.

Being innovative is important for business growth. Leaders need to be open to new ideas, they need to innovate, bring in positive change as and when needed, and progress. Progress is hardly possible without innovation. A leader should not just dream big but also provide his followers with a framework to fulfill those dreams. Innovation includes both imagination and action in accordance with it. Delegation is another important aspect of leading. It refers to allocation of tasks to the right people. It involves entrusting deserving candidates with work that they can do best.
Coordination and control in management
Coordination involves effective communication between team members and across teams. It is useful in tracking activities towards achievement of goals. Mary Parker Follett, an American social worker and management consultant, says that coordination is the “Plus value of the group”. That is, a well-coordinated group can achieve more. Coordination involves integrating and synchronizing the efforts of team members towards fulfillment of a common goal. It is crucial for taking decisions about the future lines of action.
Control refers to setting standards, ensuring that the performance meets the set standards, and taking corrective action as and when necessary. Taking a corrective action needs prior analysis of the causes of performance deficit. Control is best-implemented in the form of able guidance given to employees by their manager. Evaluations are necessary to track employee and business performance.

Coordination and control are important for the success of a business. Business is ‘busy-ness’. In simple words, it refers to the act of being busy in productive work. Management is the process of measurement of the amount of work being done. It also involves assessing the quality of work and productivity.
Business management skills cannot be confined to the definition of any one management theorist. The definition of management has evolved over time and the role of a business manager is no longer limited to only planning work and overseeing its execution. Considering the competition and changing market trends, a business manager needs to be a thinker and communicator. He needs to have an in-depth understanding of his business and its resources. Here, we look at these and certain other skills that make a good business manager.
Directed Thinking
Simply put, it refers to thinking towards a specific goal. The ability of directed thinking is crucial to develop a business idea as it involves logical, purposeful thinking to reach a particular goal. It is an important part of problem-solving, and can fall under both, conceptual and diagnostic business management skills.
One more quality that a skilled manager should possess, is the willingness to work effectively towards the achievement of his business goal. Management guru Peter Drucker made a distinction between ‘efficient’ and ‘effective’. According to him, performing an activity swiftly and economically refers to being efficient, while doing the right thing at the right time, with efficiency, refers to effectiveness. Good business management skills lead you to the right goals. On the other hand, doing the wrong things or doing things in the wrong direction is a waste of time and resources. In other words, it’s the exercise of efficiency to no avail. A leader should know how to prioritize business activities. He should be able to understand what’s important for the business and differentiate it from what is urgent. It is important for effective business management.
SWOT analysis for management
Knowledge of Strengths and Opportunities
Effective business management asks for a complete knowledge of the strengths and growth opportunities a business has. Knowing the strengths requires an understanding of the availability and potential of the business resources. A complete understanding of the business and competition can help a manager understand the prospects of his business.
Knowledge of Weaknesses and Threats
As a leader, one should be able to understand the weaknesses of his organization and try to improve on them. A manager must be able to identify the threats to his business and fight them effectively. He should have the skill to endure every setback and learn from mistakes or bad decisions. Successful business development strategies used by others can help a business manager devise his own. This is where the skill to ‘experiment’ comes in the scene. Experimentation needs to be accompanied by the right judgment of actions and results.
Business management includes management of all business/organizational resources. And that includes management of money, time, and people. Proper prioritizing and scheduling of tasks for oneself and the team is an important constituent of business management. Management of money is integral to running a business. The activities of buying, selling, and pricing have to be done skillfully. Business management is not a cakewalk. It includes everything from planning, supervising, right up to being the spokesperson for your business.
People Skills
A business manager needs to possess people skills for effective management of human resources. A manager should be able to bring out the best from his team. Difficult people, those with rigid opinions and those not adaptable to change, need to be dealt with. Identification of errors followed by instructions for improvement need to come from a manager. He needs to imbibe in the minds of others that improvement is a continuous process and is essential for growth. A manager should take every opportunity to appreciate the efforts of his team members and celebrate the team’s successes. This encourages them to work to the fullest of their capacities. A manager should have the ability to keep the team’s spirits high and keep the people motivated. It’s human psychology to like getting noticed for one’s work. It’s not unnatural for one to expect recognition for his work. One of the most important business management skills is to be able to encourage your team members, extract work from them and appreciate them for it.
Another managerial skill is to create and maintain an open atmosphere in the team. The team members should feel free to voice their concerns and always feel assured of their concerns being heard. There should be a proper hierarchy for communication within the organization. It is a good practice to assign relatively experienced employees as buddies for those newly-joined so that the new recruits do not feel unheard. This way, everyone in the organization has a point of contact.
Communication Skills
Communicating in a way that everyone understands is a skill a manager should have. That’s essential for teamwork and thereby for business management. In the words of Henry Ford, “Coming together is a beginning. Keeping together is progress. Working together is success.” This is what teamwork means. Developing a team spirit and maintaining it through thick and thin of a business is indeed a management skill. Keeping people together needs a manager to be a good communicator. Being able to convey one’s ideas to people, and getting good work done from them, is a skill. Communication should be effective. A business manager needs to exercise his communication skills, not just when interacting with the team, but also when communicating with external agencies; for example, during business negotiations or when addressing customer issues. That depends on your job responsibilities in the organization, but communication is an important part of a managerial role.
Foresight in management
It is important in business management. A business manager needs to be able to sense trouble ahead of time. He needs to be prepared for it and plan work and devise strategies accordingly. Foresightedness helps a manager assess future needs of the business and identify emerging fields for diversification.

An excellent example of a business developer with foresight, was Steve Jobs. “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new,” he said. He believed in anticipating customer needs in advance to be able to give them products they would start wanting.
Management is about taking the right decisions at the right time and getting them implemented by the right people. Effective business management requires a manager to have certain basic skills like the ones given above. And one very important, yet not-so-common thing he needs to have is common sense.

Business Management and Administration

In simple words, management can be defined as the function of utilizing and managing all the available resources in the organization, such as human resources, material resources, and financial resources, so that the goals of the organization can be achieved. A degree in business administration will prepare you to perform this function of management in an appropriate manner. To enter this profession, you will need to get into a business school and get an MBA degree. Here is some useful information on the kind of training, studies, and experience you can expect at a business school during your degree, followed by the jobs that you will become eligible for once you pass out of the course.

MBA Subjects

General Management
Human Resources Management
Financial Management
Business Strategy
Business Ethics
Information Management and Technology
Business Laws
Company Structure and Organizational Management
Economic and Financial Affairs
E-Commerce & Technology

Management Skills

Communication (Spoken and Written)
Problem Solving
Customer Relationship Management Skills
Negotiation Skills
Team Building

Today, education has evolved a lot, owing to changes that have taken place in the corporate world, due to globalization and technological advancements. There have been new subjects introduced, such as e-commerce, international finance, information technology, etc., and the emphasis is shifting more on practical experience and learning, by way of guest lectures by industry professionals, case studies, internships, presentations, and group assignments.

Careers in Business Management and Administration

A person who has an MBA degree, years of experience in the corporate world, and the desired skills, has the potential to reach the highest position in an organization, i.e., become a CEO. However, to reach such heights, he needs to have the experience of heading various departments, and performing all functions such as planning (setting individual, departmental, short-term and long-term goals), organizing ( setting supervisory-subordinate structures, fixing responsibilities, communication flow structure, etc), hiring (interviewing applicants and selecting workforce), directing (motivating and leading people to achieve maximum employee output), and controlling (taking performance appraisals, attaching ‘rewards and punishments’ to ensure results).

An MBA degree will open up a lot of job avenues for you in the corporate world. The salaries at the entry-level positions are pretty competitive too. According to the Bureau of Labor Statistics, an entry-level managerial position can fetch you anywhere between $30,000 to $ 110,000, with the finance specialization being the most well-paying. A senior manager can expect anywhere between $60,000 to $1,000,000, depending upon the size of the company, his work profile, as well as the location.

Management Styles and Techniques

A leader or a manager should be very careful, while choosing the business management styles and techniques for an organization. This is because the success of an organization depends upon the kind of management styles and the management skills which the managers exhibit. Some management styles are people oriented, while others are project or work oriented. Here are the three management styles which are primarily used by the managers in today’s organizations.

Management Styles

Teamwork Style

Here, tasks are accomplished by constituting teams first, and then dividing the tasks among the teams. It is commonly observed that tasks are accomplished more efficiently through teams. That is why most organizations follow this style of management. The different team members bring their knowledge to the table while accomplishing various tasks, and hence, tasks can be done more quickly in teams rather than by individuals on their own. In order to function properly, there should be proper workplace communication between the various team members and also between the manager and the team members. “Team spirit” is a prerequisite for the success of this style of management.

Directing Style

In this style of management, the manager communicates the “goals, expectations, and standards” to the employees very clearly in the beginning itself. The manager is in direct control of the situation literally, i.e., he dictates to the employees what tasks have to be done, how they have to be done, and the deadline for those tasks. The manager has all the decision-making powers and seldom asks the employees for a feedback. This management style is considered slightly impersonal, but sometimes, such situations arise in organizations, such as meeting a deadline or when the number of employees is too huge, that only top-down management approach or directing style of management can bring desired results.

Participatory Style

Participatory style of management is based on the principle of “faith”. Under this style of management, the leadership and management places full faith in the abilities of the employees. The tasks are given directly to the employees and are well-explained to them in advance. Their inputs on the tasks are also given due importance. The employees know how their work is fitting into the organization’s big goals. When their inputs are sought and they are also made aware how important they are to the health of the organization, their motivation levels become very high and they perform better. This style is usually seen in smaller organizations with lesser number of employees.

Management Techniques

Management techniques are those management concepts or strategies, which are followed to run an organization efficiently and profitably. Management techniques, whether pertaining to employees, the customers of the organization or the partners, in case of partnerships, should be chosen only after evaluating the needs of all three. An example of a management technique pertaining to employees is the use of incentives, so as to motivate them, or to provide them with training in order to update their skills. Management techniques pertaining to customers are usually aimed at keeping them happy and satisfied so that they keep on coming back. An example of this, could be the various discount offers that are given to the customers on special occasions, such as Christmas. Whatever management techniques are chosen by organizations, the main thing to consider is that they should fulfill the needs of the organization and also, of the employees, customers and the partners.

According to business experts, the most effective techniques are those that are a mix of all the styles. The management styles that are followed, should depend upon the situation that an organization is facing. In the fast changing business environment, it will neither be practical nor profitable, to stick to only one style. That is why the management gurus, when giving management tips, always insist that only the organizations that evolve their management techniques, according to the ever-changing corporate culture, will survive to see the future.

Careers in Business Management

Dynamic changes in the manufacturing, communications, technology, and transportation industries have also brought on changes in the list of possible careers. Business management careers provide good growth opportunities, both in terms of job scope as well as pay packages. The only catch being that one requires a relevant and current education profile to get in. Moreover, these vocations are so wide in the kinds of jobs they offer, that no matter what your skill and expertise are, you are sure to find your own place here. Let us see the various categories these jobs can be classified under.


This field mainly comprises accountants and auditors. They are responsible for the fiscal and financial accuracy of the business on a day-to-day as well as on year basis. Record keeping and data management is simpler today due to the various accounting software that are available in the market. But still, this segment is known to have some of the most stressful jobs. They entail 40 hours week but the tax season brings on more sweat and additional hours. Generally a bachelor’s degree in business, accounting, or any related field can get you this job, but a CPA (Certified Public Accountant) will always have an additional edge. The Bureau of Labor Statistics (BLS) claims an expected growth of 18 percent for this field, all through to 2016. The mean annual wage for a general accountant was about USD 63,550 in 2012.


Professionals in this field (financial managers and analysts) are the people who interpret complicated financial information and try to make out logical conclusions from it. They are hired for their critical thinking capabilities, financial insight and foresight, and their ability with numbers. A traditional 40 hours a week does okay for financial analysts and managers, but as it is a strenuous job, overtimes and long hours are common. BLS predicts an increase of 37 percent employment in this field through 2016. An MBA (finance) or any other formal certification, namely CFA (Chartered Financial Analyst) or CFP (Certified Financial Planner) gets you right into this high paying field. The average annual earning was USD 109,740 in 2012. Finance is the right career for all those who crave a challenging job.

Human Resource Management

They are the guides of every employee through the process of recruitment, all the way to the exit interviews. HR managers and HR specialists, both are strategic planners and mostly work behind the scenes to generate work passion and zeal in the employees. They suggest the policies and procedures to improve employee work experience. They are supposed to plan health benefits, retirement packages, and other internal incentives for the general employees. An MBA certification or a masters in HR is mandatory for an HR job. It is however essential for them to know how to staff an organization, draft compensation benefit plans, and know ways to improve employee performance. It is one of those few fields, that is found in almost all industries and hence it is highly unlikely for this field to grow obsolete. People with technical and computer knowledge have an upper hand in job selection. The mean annual wage for professionals in this field was USD 99,720 in 2012.

Information Systems and Technology

All industries take the help of technology to remain competitive in this ‘Darwinian’ world. IT managers direct the work of system analysts, computer programmers, and support specialists to keep the company system’s running smoothly and without any glitches. They are also involved in the active planning and coordination of hardware and software installations, upgrades, programming, and developing internal and external networks. One of their most important jobs is to ensure the security and maintenance of all networks and servers. This industry is expected to grow in job generation, faster than average for all occupations through 2014. MBAs with technology as a core subject or an MIS (Management Information Systems) degree, easily get these positions, if they fulfill the prerequisites of good communication and administrative abilities. They spend most of their time at their offices, as 40 hours week is never enough. Their social evenings and weekends might also end up being a date with their computers. Their pay is very good with the annual median earnings for 2012 being USD 120,950. The only catch is the stress that comes from tight deadlines, steep goals, and tight budgets, not to mention the even shorter time frames.

Marketing, Advertising, and Public Relations

This entire glossed up industry is the one that creates sales out of nowhere. Providing product information, achieving high product visibility, and making people realize a need for the product, is basically what all the marketing managers, analysts, and executives do. Their job includes estimating product demand, identifying potential (high growth) markets, developing pricing strategies, and monitoring consumer trends. It also involves long stressful hours, but gives domestic and international travel perks to all those interested. Any sort of formal education with some form of experience is what is preferred in this field. A bachelor’s degree or an MBA with a marketing emphasis is a prerequisite. One can enter the advertising and PR industries with even a bachelors in journalism or a bachelors/masters in public relations. There is a keen competition for coveted positions in this industry and hence, proper education is the best bet. BLS predicts around 68000 marketing-related jobs in the US by 2016. The annual mean earning was USD 115,750 for professionals in this field in 2012.


Administration as a field is growing well but secretarial and administrative assistant jobs are growing much slower than average. They involve training and orientation of new staff, storing, retrieving and integrating information, and troubleshooting office technologies. It also involves planning and scheduling appointments and handling travels and accommodation responsibilities of guests and employees. It is the only field that provides jobs that can easily double up as alternative or flexible work arrangements. Part-time as well as full-time jobs (traditional 40 hours week) and even temporary positions are easily available. It involves extensive computer usage, and good technical and communication know-how is a plus point. High school grades with basic office skills are considered suitable for entry-level positions, but anything else requires higher education. High school vocational training programs, B-school’s office administration training programs (1 – 2 year), etc., works for certain positions. A bachelor’s degree or any other professional certificate is also gaining importance in this industry, where supply far outweighs the demand. A CPS (Certified Professional Secretary) and a CAP (Certified Administration Professional) are best-suited for high level jobs like executive secretaries, etc. There were about 4.1 millions jobs held in this sector in the year 2004, but the growth is expected to be slow over 2004 – 2014 period. The annual median salary was USD 35,330 as of May 2012 and it has been observed that management companies are the one’s that pay the best.

Effective Financial Management Tips

Financial management means putting together the economic resources at hand to make efficient use of them and taking decisions that can successfully culminate in acquiring more assets for the family or business. With effective utilization of funds, you can even attract finance to meet the short-term and long-term requirements of the family or firm. The whole process is intense and deals with the selection of specific or a combination of assets to deal with the monetary issue, if any. The overall aim is to reduce the size of the problem and ensure fiscal growth of the enterprise or family funds.

Financial Management Analysis

This analysis deals with the calculated and predicted cash inflow and outgoings. The analysis is directed towards the study of the effect of existent funds on managerial objectives. It handles everything, right from procuring the funds to effective utilization of the same. Dedicated analysis handles procurement of funds from multiple sources, and since the funds are from different sources, they naturally need to be addressed, considering the difference with regards to the potential risk and control.


This management practice involves the optimum use of funds issued via equity, especially in the case of a business. This source is the best from the risk point of view since there is no involvement of any repayment. Management of business funds should ideally capitalize on equity capital, in spite of it being the most expensive source of funds. Furthermore, it should also involve calculation of risk, cost and control, and maintenance of the cost of funds at minimum. This is done with the intent of establishing a proper balance between the involved risk and optimized control.

Tapping Foreign Investments
In today’s competitive business world, mobilization of funds is very important. The implications play a very significant role in the overall growth of the venture. Financial management involves the raising of funds through the domestic and foreign market. When considering overseas solutions, direct and foreign institutional investments are major resources to tap, in order to raise the required funds. This whole mechanism designed for effective procurement of funds has to be periodically reviewed and modified, understanding the changing requirements of foreign investors.

Utilization of Funds
The ultimate goal cannot be addressed or achieved without first designing a strategy to ensure the proper utilization of funds. This helps to evade situations in which the funds remain idle or lack of profitable utilization of funds in hand. When availing of funds for the business, it is important to understand the involved cost and risk factors. Wastage of funds will only result in the business objectives not being met and ultimately, loss. The funds existent within the business should be critically reviewed from time to time and employed properly and profitably.

Scope and Extent
It has become imperative to address sound financial management in all types of organizations to guarantee efficient use of all resources. Research reveals that many firms liquidate because of mismanagement of funds and not, as it is commonly believed, because of obsolete technology or the lack of skilled labor. It is, in general, designed and customized according to different client needs to optimize output from the assessed fund input. In a situation where resources seem scarce and the demand for funds is high, its proper utilization is an absolute necessity.

The objectives of efficient financial management include maximization of profit. However, profit maximization is a limited objective and if it becomes the sole focus, then the approach only leads to more problems. This aspect must take into consideration, the relationship between risk and profit and work towards achieving a balance. The value of a business is analyzed on the evaluation of the stock market price. Thus, all in all, this financial practice should take into account, present and expected future income and the dividend policy of the firm to come up with a near-perfect understanding of the company’s progress potential.

Basics of Business Management

Management involves handling and controlling the activities of men, machines, material, and money effectively and efficiently. Efficiency refers to getting the maximum output from the available scarce resources, i.e., “doing things right.” Effectiveness refers to “doing the right things” to achieve desired business objectives.

Every organization works towards achieving some common goals and formulates methods to achieve them. Managers are the people within the organizations who play a vital role towards achieving these goals by monitoring and controlling the organizational activities.


It is the process of planning, organizing, leading, staffing, and controlling the activities of various resources within the organization through systemic, coordinated, and cooperative human efforts to achieve business objectives.

Functions of Managers

They typically perform five basic functions within an organization:

It is the process of selecting goals for the organization and designing necessary programs to achieve them. This helps managers to decide the activities to be performed with available resources.

It is the process of assigning and allocating tasks, authority, and resources for enabling the firm to achieve its organizational objectives.

This involves manning the various positions created by the organizing process. It involves activities such as identifying workforce requirements, recruitment, selection, and orientation of new employees.

It involves directing, influencing, and motivating employees towards achieving organizational objectives.

The main elements of the control process include establishing the standards of performance, measuring the actual performance, comparing the actual performance with the standards, and taking corrective action in case of deviation.

Organizational Hierarchy

The size of the organization determines its structure. Responsibilities of a manager differ according to his or her position in the hierarchy. Management can be categorized into three major levels:

The top-level management is responsible for the overall activities of the organization. It establishes plans and goals that influence the business in entirety. Professionals in this category are few in number and mainly occupy the posts of Chief Executive Officers, Chairman, President, Vice-president, Director, etc.

These professionals are directly responsible for managing the performance of first-level managers. They are responsible for the operational efficiency of various departments in an organization. They hold designations such as Department Heads, Project Leader, Plant Manager, and Divisional Head.

Managers at the first-level have the responsibility to manage the performance of the non-managerial personnel in an organization and ensure implementation of operational plans. They are also called supervisors. They are given different titles in different companies, like Foremen, Clerical Supervisor, Technical Supervisor, etc.

Management Skills

There are four essential skills that are needed by a manager. They are as follows:

Technical Skills
A person’s ability to use methods, processes, and procedures in a specialized field is known as a technical skill.

Human Skills
They refer to the ability to work with other people as individuals and in groups. They help employees to communicate, motivate, lead, and inspire others in an organization. These skills are equally important for all the levels.

Conceptual Skills
These are the skills that are required to conceptualize abstract and complex situations. They are essential for top-level managers, as they need to possess a clear understanding of the overall functioning of the organization and relate it to the external environment.

Design Skills
These are required by top-level managers to find solutions to problems in a manner that would benefit the organization. These professionals should suggest a rational and feasible solution to a problem apart from recognizing it.

Managerial Roles

In today’s turbulent times, a manager has to perform different roles every day, whether it is training his team or handling clients. He has to remain flexible and calm to carry out these roles, irrespective of the situations and tasks. According to management expert, Henry Mintzberg, a manager’s functions can be categorized into ten primary roles, classified under the following three categories:

Interpersonal (Figurehead, Leader, Liaison)
Informational (Monitor, Disseminator, Spokesperson)
Decisional (Entrepreneur, Disturbance Handler, Resource Allocator, Negotiator)

Let us understand each of these roles in the following part in brief:

As the name suggests, he is a person with authority and performs social and legal responsibilities.

This involves leading a team from the front, directing and managing the performance of individuals in a team, and choosing and training new employees.

This responsibility emphasizes the importance of networking and building relations within and outside the organization.

This involves gathering industry-related information for bringing in favorable changes, in the business or at the workplace. This also includes tracking team performance individually and combinedly.

This role encompasses the task of presenting and communicating critical information to the team within the organization.

In this role, a manager represents his organization and communicates its goals and agendas to industry-related outsiders; for example, in a conference meet, etc.

This involves envisioning new ideas and choosing the best ones for the progress of the business.

Disturbance Handler
An organization or team is always vulnerable to unexpected setbacks, and this is where a manager should come to the rescue. This role emphasizes taking charge, handling disputes or problems within the organization, and coming up with right measures.

Resource Allocator
Correct utilization of resources proves to be more beneficial for an organization than just collecting or having the same. In this role, the manager considers all the factors and determines where to use them, allocates funds, and assigns responsibilities to the staff for their effective usage.

As the name suggests, this role may require a manager to be a part of or direct negotiations within his team or organization.

Self-Managed and Self-Directed Teams

The service industry is getting more attention in the B-World. It has never been as easy to establish a company, I should say, a listed company. Production and operations companies have seen so many business management concepts for quality control and best team management practices including quality circles.

Emery suggested, “In designing a social system to efficiently operate a modern capital-intensive plant, the key problem is that of creating self-managing groups to man the interface with the technical system.”

The basis of the autonomous work group approach to job design is the socio-technical system theory that suggests the best results are obtained if grouping is such that workers are primarily related to each other by way of task performance and interdependence.

Charles Peguy described, “A man is not determined by what he does and still less by what he says. But in the deepest part of himself, a being is determined solely by what he is.” A self-management team is made of such persons who are motivated by self.


A self-managing team or autonomous work group is allocated an overall task and given discretion over how the work is done. It provides for intrinsic motivation by providing people autonomy and the means to control their own work, which will include feedback.

Self-directed teams are those that have been structured to manage and coordinate their own activities, and make many of the day-to-day decisions that would have traditionally been made by a supervisor or manager. They usually have responsibility for a complete piece of work (such as engine assembly) and they work quite closely and interdependently.

According to a research study, the TQM and mass-production organized groups did not improve customer service quality or sales volume. While self-managed teams improved sales by 9.4% and the quality of customer service by 6.3%.

In fact, comprehensive surveys report that 79% of companies in the Fortune 1000 currently deploy such “empowered,” “self-directed,” or “autonomous” teams. Because of their widespread use, much research has been devoted to understanding how best to set up such teams to maximize their effectiveness.

Understanding Multi-Skilled Teams Better

Self-managing teams incorporate the concepts of Hackman and Oldham’s job characteristics model:

Skill variety
Task significance
Task identity

Their features include:

The team enlarges individual jobs to include a wider range of operative skills.
It decides on methods of work and the planning, scheduling, and controlling of work.
It distributes tasks among itself, i.e., its members. It plans and guards the process on its own, solves daily problems, without having to consult a manager or supporting services.
It takes account of the social or group factors, and the technology as well as the individual motivators.
It maintains independent contact with others teams and staff.
It improves working methods on its own, and has all the relevant information available on the basis of which they evaluate their results.
Its members possess both, qualifications on the product they deliver as well as certain organizational qualities.

Self-Management Team Development

According to Vanessa Urch Druskat and Jane V. Wheeler, leading self-managed teams in an organization is a process that can be grouped into four basic functions.

Continually moving back and forth between the team and the broader organization to build relationships.
Scouting necessary information from managers, peers, and specialists.
Persuading the team and outside constituents to support one another.
Empowering team members through coaching, delegating authority, and exercising flexibility regarding team decisions.

Corporate Testimonials

“Whole Foods is very committed to the team structure and self-managing work teams; they’re like the basic cells of the company. The teams are empowered. They do their own hiring. They do their own scheduling. To become a team member at Whole Foods, you have to get voted on by your team after a trial period. If you don’t get a two-thirds vote, you don’t get on the team,” said John Mackey, founder of Whole Foods on this concept.

Hewlett Packard trusts and respects individuals focusing on high-level achievement and contribution, conducting business with integrity, achieving objectives through teamwork, and encouraging flexibility and innovation.