1.02 What managers manage

All levels of management are responsible for managing the resources of the business. Although top managers have the final say, both middle and supervisory managers are involved to a certain extent. The resources that a business must manage are human resources, financial resources, material resources, and information.

Human resources. Human resources are all of a business’s employees. Many businesses believe that employees are their most important resource because without workers, the business could not function. Could a coffee shop exist without servers to take customers’ orders and baristas to make the coffee and other specialty drinks?

All levels of management are involved with human resources. Top managers are mainly concerned that there are enough qualified employees to meet the business’s needs. Beyond that point, middle and supervisory managers are usually responsible for human resources.

Financial resources. Financial resources are all of the sources of money available to the business. These resources might include the cash the business has on hand, income from sales or investments, a line of credit that allows the business to borrow funds as needed, or money owed to the business by its customers. All businesses need financial resources to buy supplies and materials, to pay employees, and to cover their other operating expenses.

The way managers handle the business’s financial resources often determines whether the business succeeds or fails. Top managers have final responsibility for the profitability of the business. However, they usually do not personally handle the finances unless they are the owners of small businesses. Middle managers are the ones who develop budgets, oversee accounting departments, and coordinate investment programs. At the supervisory level, managers watch expenses to make sure they stay within their budgets.

Material resources. Material resources are the equipment and supplies that businesses need to produce and/or sell their products. Managing material resources involves purchasing and maintaining the right type and amount of equipment and supplies for workers to use in doing their jobs. As a result, top managers are seldom involved directly with these activities. They pass on that responsibility to middle managers. Depending on the size of the business, regional managers or branch managers may be the ones who decide what’s needed and purchase the materials. They often rely on first-line managers to give them information about the equipment and supplies that workers need.

Information. Another important resource for a business is information, including facts, statistics, and opinions. One type of information is internal and comes from within the business, such as sales reports. Another type is external and includes information about what is going on in the business’s industry. External information can also include the state of the economy, consumer trends, and any other data that apply to the specific business.

Managers get important information from many sources. Top managers often receive information from outside sources, such as advertising firms. They also get information from their own middle managers, who may get information from front-line managers, who may get information from their employees, who may get information from customers! The more information that business managers and owners have, the better able they are to make good decisions.

To achieve their goals, businesses must effectively manage all of these resources. To do so, all levels of management need to carry out their unique responsibilities and work together.