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Management is defined as the planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively. The tiers of management are top-level, middle, first line, and team leaders.

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This video does a really good job at explaining the value of management as well as the processes the role is requires to facilitate.

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Management Process | Functions of Management process #managementprocess

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2020 was a year that prompted a reshifting of values for everyone globally - not just COVID-19 related, but in social justice movements, as well. As with the changing of the tides, the expectations of what a company should stand for and prioritized have shifted slightly, too. According to ReWorked, "Until January 2020, the focus of Corporate Social Responsibility had typically been global warming, climate action, sustainability, adherence to diversity and inclusion principles and efforts aimed at building a kind and empathetic corporate image."

COVID-19 changed everything, moving the focus onto what companies are doing to give back to their communities, care for their now-remote employees, and adhere to social distancing guidelines and regulations. Then, in May, the wrongful death of George Floyd sparked the critically important Black Lives Matter movement, leading to another reshifting of priorities toward equality and justice.

Consumers are loudest with their money, and they're not afraid to take their business elsewhere if they're displeased with the social responsibility measures that a company is taking - or not taking. Millennials especially are willing to look beyond the products or services a company offers, and into what the company stands for. A 2015 study reported that "More than nine-in-10 Millennials would switch brands to one associated with a cause (91% vs. 85% U.S. average), and two-thirds use social media to engage around CSR (66% vs. 53% U.S. average)."

On the heels of a year that changed so much, and with stakes around corporate social responsibility as high as they are, it's never been more important to assess what your company stands for and how your corporation is responding on the whole to the pertinent conversations the world is having.

Corporate Social Responsibility Is More Important Than Ever-Here's How To Ensure Your Company Is ... [+]
Deposit Photos

Adapt To The New Challenges
Companies like Ford and Louis Vuitton were lauded for their quick thinking and selfless strategy of repurposing their factories to help in the mass production of PPE equipment and hand sanitizer. Now that the worst is presumably over, there's something all companies can learn from this swift act of heroism: adaptability is critical. While not every company has the means to shift their focus in the middle of a global emergency, this adaptability can be sewn into your operations moving forward. Rethink the way your company used to do things. How can you amend these choices to ensure they're in alignment with the changed world?

This doesn't have to be anything of massive proportions. Rather, think through how you can give anything that you can. For example, eviivo, an all-in-one booking suite for hotels, AirBNB's, and vacation rentals, has launched multiple campaigns over the past year to adapt to the changing travel industry. In the height of the pandemic, they launched ' Stays for Heroes,' which provided 55,000 rooms of free and low cost housing for essential workers. Now, they're turning their focus to moving forward with their '#StayLocal2021 ' campaign, which helps companies to give safe, socially-distanced one-night stays at resorts to their employees for some much needed R&R in lieu of the big holiday party. Even offering an option like this to employees goes a long way on the corporate responsibility front.

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Put Your Money Where Your Mouth Is
Many companies were quick to deliver statements of support or their values surrounding the Black Lives Matter movement, but many came under fire for their empty words. Statements that tout diversity with no real legwork do more to harm than to help. If you're going to be socially responsible, it's critical to go beyond the cookie cutter statement.

Many brands did it right, and we can take a note from them. For example, Glossier devoted half a million dollars to multiple organizations that focus on combating racial injustice. Lego donated $4 million. Additionally, beyond the money, many companies offered lists of resources and otherwise to support their employees and customers alike in learning more and donating.
Keep The Focus On Interpersonal Relationships
With pressure mounting on CSR, it's also critical to think through the smaller moments within your company - such as how you're contributing to the company culture during such a trying time. One-on-one interactions with employees, clients, and customers go further than you'd think - and this is especially true if you need to cut corners or commit to any layoffs. Harvard Business Review acutely offered, "What companies do to help their laid-off employees - above and beyond what is required or expected - will be remembered and repaid in increased loyalty, higher productivity, and a lasting reputational benefit for many years to come."

Much of this is financial, such as the choice from companies like Lyft or Walmart to continue to pay wages to hourly workers, even as they aren't working. But, if you don't have the financial means to do so (and, many don't), it comes back to the adaptability piece. How can you offer resources, increased flexibility, or just a bit of extra care to those you work with?

At its heart, companies are about people. There is nothing like a global crisis to bring people even closer together. Your contribution through your company is not just a 'responsibility' by way of public perception, but of your responsibility to mankind. The companies who are able to adapt, think quickly, pivot, and keep the intention for collective good at the center of their actions are the ones who will win in the long run.

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Corporate Social Responsibility Is More Important Than Ever-Here's How To Ensure Your Company Is Stepping Up

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2020 was a year that prompted a reshifting of values for everyone globally - not just COVID-19 related, but in social justice movements, as well. As with the changing of the tides, the expectations of what a company should stand for and prioritized have shifted slightly, too.

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Corporate Social Responsibility is a company’s business model and practices are built around financial goals. Investopedia gives a really good breakdown of this concept in this article.

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What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Engaging in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

Understanding Corporate Social Responsibility (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

For a company to be socially responsible, it first needs to be accountable to itself and its shareholders. Companies that adopt CSR programs have often grown their business to the point where they can give back to society. Thus, CSR is typically a strategy that's implemented by large corporations. After all, the more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry.

Types of Corporate Social Responsibility

In general, there are four main types of corporate social responsibility. A company may choose to engage in any of these separately, and lack of involvement in one area does not necessarily exclude a company from being socially responsible.

Environmental Responsibility

Environmental responsibility is the pillar of corporate social responsibility rooted in preserving mother nature. Through optimal operations and support of related causes, a company can ensure that it leaves natural resources better than before its operations. A company can pursue environmental stewardship through:

Reducing pollution, waste, natural resource consumption, and emissions through its manufacturing process.

Recycling goods and materials throughout its processes, including promoting re-use practices with its customers.

Offsetting negative impacts by replenishing natural resources or supporting causes that can help neutralize the company's impact. For example, a manufacturer that deforests trees may commit to planting the same amount or more.

Distributing goods consciously by choosing methods that have the least impact on emissions and pollution.

Creating product lines that enhance these values. For example, a company that offers a gas lawnmower may design an electric lawnmower.

Ethical Responsibility

Ethical responsibility is the pillar of corporate social responsibility rooted in acting in a fair, ethical manner. Companies often set their own standards, although external forces or demands by clients may shape ethical goals. Instances of ethical responsibility include:

Fair treatment across all types of customers regardless of age, race, culture, or sexual orientation.

Positive treatment of all employees including favorable pay and benefits in excess of mandated minimums. This includes fair employment consideration for all individuals regardless of personal differences.

Expansion of vendor use to utilize different suppliers of different races, genders, veteran statuses, or economic statuses.

Honest disclosure of operating concerns to investors in a timely and respectful manner. Though not always mandated, a company may choose to manage its relationship with external stakeholders beyond what is legally required.

Philanthropic Responsibility

Philanthropic responsibility is the pillar of corporate social responsibility that challenges how a company acts and how it contributes to society. In its simplest form, philanthropic responsibility refers to how a company spends its resources to make the world a better place. This includes:

Whether a company donates profit to charities or causes it believes in.

Whether a company enters into transactions only with suppliers or vendors that align with the company philanthropically.

Whether a company supports employee philanthropic endeavors through time off or matching contributions.

Whether a company sponsors fundraising events or has a presence in the community.

Financial Responsibility

Financial responsibility is the pillar of corporate social responsibility that ties together the three areas above. A company might make plans to be more environmentally, ethically, and philanthropically focused; however, it must back these plans through financial investments of programs, donations, or product research. This includes spending on:

Research and development for new products that encourage sustainability.

Recruiting different types of talent to ensure a diverse workforce.

Initiatives that train employees on DEI, social awareness, or environmental concerns.

Processes that might be more expensive but yield greater CSR results.

Ensuring transparent and timely financial reporting including external audits.

Volunteering

Benefits of Corporate Social Responsibility

As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale, and aid both employees and employers in feeling more connected to the world around them. Aside from the positive impacts to the planet, here are some additional reasons businesses pursue corporate social responsibility.

Brand Recognition

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers as opposed to companies that have demonstrated an ability to delivery quality products. Customers are increasingly becoming more aware of the impacts companies can have on their community, and many now base purchasing decisions on the CSR aspect of a business. As a company engages more in CSR, it is more likely to receive favorable brand recognition.

Investor Relations

In a study by Boston Consulting Group, companies that are considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors. For companies looking to get an edge and outperform the market, enacting CSR strategies tends to improve how investors feel about an organization and how they view the worth of the company.

Employee Engagement

Another study by professionals from Texas A&M, Temple, and the University of Minnesota found that CSR-related aligning firms and employees serve as non-financial job benefits that strengthen employee retention. Workers are more likely to stick around a company that they believe in. This in turn reduces employee turnover, disgruntled workers, and the total cost of a new employee.

Risk Mitigation

By adhering to CSR practices, companies can mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, or unethical use of company funds. This type of activity is likely to lead to lawsuits, litigation, or legal proceedings that may harm the company financially or expose it to negative news headlines.

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards meant to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified.

ISO 26000 clarifies what social responsibility is and helps organizations translate CSR principles into practical actions. The standard is aimed at all types of organizations, regardless of their activity, size, or location. And because many key stakeholders from around the world contributed to developing ISO 26000, this standard represents an international consensus.

Examples of Corporate Social Responsibility

Starbucks ( SBUX) has long been known for its keen sense of corporate social responsibility and commitment to sustainability and community welfare. In its 2022 Environmental and Social Impact Report, the coffee giant highlights taking care of its workforce and the planet among its CSR priorities. Starbucks points to its investments in its employees through stock grants and providing additional medical, family, and educational benefits. In terms of environmental sustainability, the company's goals include achieving 50% reductions in greenhouse gas emission, water consumption, and waste by 2030.

As part of its annual reporting on ESG, Home Depot ( HD) highlighted its achievements in focusing on its employees, operating sustainably, and strengthening its communities. The company has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors

General Motors won the Sustainability Leadership Award from Business Intelligence Group in 2022 and was among Diversity Inc.'s top 50 companies for diversity for a seventh consecutive year in 2021. According to its latest Sustainability Report, the automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing that customers will be more likely to do business with brands that they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

Why Is CSR Important?

The movement toward CSR has had an impact in several domains. For example, many companies have taken steps to improve the environmental sustainability of their operations, through measures such as installing renewable energy sources or purchasing carbon offsets. In managing supply chains, efforts have also been taken to eliminate reliance on unethical labor practices, such as child labor and slavery.

Although CSR programs have generally been most common among large corporations, small businesses also participate in CSR through smaller-scale programs, such as donating to local charities and sponsoring local events.

What Are the Benefits of CSR?

CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Are the 4 Types of CSR?

CSR initiatives are often broken down into four categories: environmental, philanthropic, ethical, and economic responsibility. Environmental initiatives focus on preservation of natural resources, while philanthropic initiatives focus on donating to worthy causes that may not relate to a business. Ethical responsibility ensures fair and honest business operations, while economic responsibility promotes the fiscal support of the goals above.

What Companies Have the Best CSR?

There is no single defining rubric for evaluating the CSR of all companies. Various sources will review and compile rankings differently. Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are determined based on employee relations, environment impact, human rights, governance, and financial decisions.

In 2022, the top five ranked companies on the list were Owens Corning ( OC), PepsiCo ( PEP), Apple ( AAPL), H.P. ( HPQ), and Cisco ( CSCO).

The Bottom Line

Companies striving to measure success beyond bottom-line financial results may adopt corporate social responsibility strategies. These strategies may target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell. CSR aims to make the world a better place beyond transacting with customers and may result in company-specific benefits as well.

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Corporate Social Responsibility (CSR) Explained With Examples

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Corporate social responsibility (CSR) is a business model that helps a company be socially accountable to itself, its stakeholders, and the public.

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Globalization and global organization are similar in context. Globalization is when the exchange of goods, services, capital, technology, and knowledge across international borders becomes increasingly interconnected. A global organization is any organization or company that competes outside its native country.

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This a a great video for anyone that's never herd of how globalization or global organizations work.

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Here are examples of Global Organizations that were successful.

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8 Companies That Have Gone Global Successfully

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Here’s a list of 8 businesses that became some of the world’s most successful brands. Ranked 31st on the Fortune 500 list in 2022, Dell is one of the world’s largest tech corporations, reporting annual revenue of $101.197 billion in 2022

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Management has four main functions (planning, organizing, leading, and controlling). Planning is the process of setting goals and defining the actions required to achieve the goals.

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Being a decision maker is self explanatory. Your decision can impact your organization even if you are a customer service representative, manager, or director. It is always important to make a well informed decision.

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As a decision maker, you have the chance to take the organization places it never has been before. Ever heard of work smarter, not harder? You can think out the box and be your own innovator!

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What is an Organization? | Elements, Process, importance of Organization

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What Is an Organizational Structure?

An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities.

The organizational structure also determines how information flows between levels within the company. For example, in a centralized structure, decisions flow from the top down, while in a decentralized structure, decision-making power is distributed among various levels of the organization. Having an organizational structure in place allows companies to remain efficient and focused.

Understanding an Organizational Structure

Businesses of all shapes and sizes use organizational structures heavily. They define a specific hierarchy within an organization. A successful organizational structure defines each employee's job and how it fits within the overall system. Put simply, the organizational structure lays out who does what so the company can meet its objectives.

This structuring provides a company with a visual representation of how it is shaped and how it can best move forward in achieving its goals. Organizational structures are normally illustrated in some sort of chart or diagram like a pyramid, where the most powerful members of the organization sit at the top, while those with the least amount of power are at the bottom.

Not having a formal structure in place may prove difficult for certain organizations. For instance, employees may have difficulty knowing to whom they should report. That can lead to uncertainty as to who is responsible for what in the organization.

Having a structure in place can help with efficiency and provide clarity for everyone at every level. That also means each and every department can be more productive, as they are likely to be more focused on energy and time.

Centralized vs. Decentralized Organizational Structures

An organizational structure is either centralized or decentralized. Traditionally, organizations have been structured with centralized leadership and a defined chain of command. The military is an organization famous for its highly centralized structure, with a long and specific hierarchy of superiors and subordinates. In a centralized organizational system, there are very clear responsibilities for each role, with subordinate roles defaulting to the guidance of their superiors.

There has been a rise in decentralized organizations, as is the case with many technology startups. This allows companies to remain fast, agile, and adaptable, with almost every employee receiving a high level of personal agency. For example, Johnson & Johnson is a company that's known for its decentralized structure.

As a large company with over 200 business units and brands that function in sometimes very different industries, each operates autonomously. Even in decentralized companies, there are still usually built-in hierarchies (such as the chief operating officer operating at a higher level than an entry-level associate). However, teams are empowered to make their own decisions and come to the best conclusion without necessarily getting "approval" from up top.

Types of Organizational Structures

Functional Structure

Four types of common organizational structures are implemented in the real world. The first and most common is a functional structure. This is also referred to as a bureaucratic organizational structure and breaks up a company based on the specialization of its workforce. Most small-to-medium-sized businesses implement a functional structure. Dividing the firm into departments consisting of marketing, sales, and operations is the act of using a bureaucratic organizational structure.

Divisional or Multidivisional Structure

The second type is common among large companies with many business units. Called the divisional or multidivisional (M-Form) structure, a company that uses this method structures its leadership team based on the products, projects, or subsidiaries they operate. A good example of this structure is Johnson & Johnson. With thousands of products and lines of business, the company structures itself so each business unit operates as its own company with its own president.

Divisions may also be designated geographically in addition to specialization. For instance, a global corporation may have a North American Division and a European Division.

Similar to divisional or functional structures, team-based organizations segregate into close-knit teams of employees that serve particular goals and functions, but where each team is a unit that contains both leaders and workers.

Flat (Flatarchy) Structure

Flatarchy, also known as a horizontal structure, is relatively newer, and is used among many startups. As the name alludes, it flattens the hierarchy and chain of command and gives its employees a lot of autonomy. Companies that use this type of structure have a high speed of implementation.

Matrix Structure

Firms can also have a matrix structure. It is also the most confusing and the least used. This structure matrixes employees across different superiors, divisions, or departments. An employee working for a matrixed company, for example, may have duties in both sales and customer service.

Circular Structure

Circular structures are hierarchical, but they are said to be circular as it places higher-level employees and managers at the center of the organization with concentric rings expanding outward, which contain lower-level employees and staff. This way of organizing is intended to encourage open communication and collaboration among the different ranks.

Network Structure

The network structure organizes contractors and third-party vendors to carry out certain key functions. It features a relatively small headquarters with geographically-dispersed satellite offices, along with key functions outsourced to other firms and consultants.

Benefits of Organizational Structures

Putting an organizational structure in place can be very beneficial to a company. The structure not only defines a company's hierarchy but also allows the firm to lay out the pay structure for its employees. By putting the organizational structure in place, the firm can decide salary grades and ranges for each position.

The structure also makes operations more efficient and much more effective. By separating employees and functions into different departments, the company can perform different operations at once seamlessly.

In addition, a very clear organizational structure informs employees on how best to get their jobs done. For example, in a hierarchical organization, employees will have to work harder at buying favor or courting those with decision-making power. In a decentralized organization, employees must take on more initiative and bring creative problem solving to the table. This can also help set expectations for how employees can track their own growth within a company and emphasize a certain set of skills-as well as for potential employees to gauge if such a company would be a good fit with their own interests and work styles.

What Are Some Types of Organizational Structures?

What Are the Key Elements of an Organizational Structure?

What Is an Organizational Structure Example?

What Is an Organizational Structure Chart?

What Is the Best Organizational Structure?

The Bottom Line

There are entire fields of study based on how to optimize and best structure organizations to be the most effective and productive. Senior leaders should consider a variety of factors before deciding which type of organization is best for their business, including the business goals, industry, and culture of the company.

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Organizational Structure for Companies With Examples and Benefits

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An organizational structure organizes a company's activities. Explore four types of organizational structures: functional, divisional, flatarchy, and matrix.

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Strategies for Effective Employee Recruitment and Selection

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Recruitment process. Hiring process. Online job boards. Employee referral program. Professional events. Internal recruiting. Talent acquisition. Employee retention. Employee referrals. Company culture

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The role of HR has evolved. Meet the 21st century HR Leader

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How Leaders Can Effectively Communicate In Today’s Workplace

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Tips for managers to increase their team’s productivity and engagement through better communication despite broken trust and a broken social contract

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Communication isn't just a modality. It is the process of receiving , delivering, and understanding a message amongst a conversation or group.

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Leadership skills are needed to set the vision, and management skills are needed to implement a plan to achieve that vision.

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What Is Leadership?

Leadership in business is the capacity of a company's management to set and achieve challenging goals, take fast and decisive action when needed, outperform the competition, and inspire others to perform at the highest level they can.

It can be difficult to place a value on leadership or other qualitative aspects of a company, versus quantitative metrics that are commonly tracked and much easier to compare between companies. Leadership can also speak to a more holistic approach, as in the tone a company's management sets or the culture of the company that management establishes.

Individuals with strong leadership skills in the business world often rise to executive positions such as CEO (chief executive officer), COO (chief operating officer), CFO (chief financial officer), president, and chair.

Key Takeaways

Understanding Leadership

Leadership provides direction for a company and its workers. Employees need to know the direction in which the company is headed and who to follow to reach the destination. Leadership involves showing workers how to effectively perform their responsibilities and regularly supervising the completion of their tasks.

Leadership is also about setting a positive example for staff to follow, by being excited about the work, being motivated to learn new things, and helping out as needed in both individual and team activities.

The Components of Effective Leadership

Effective leadership includes exhibiting a strong character. Leaders exhibit honesty, integrity, trustworthiness, and ethics. Leaders act in line with how they speak and earn the right to be responsible for others' success in the company.

Strong leadership involves clear communication skills. Leaders speak with and listen to staff members, respond to questions and concerns, and are empathetic. Leaders use effective communication skills for moving the company forward and achieving new levels of success.

True leadership sees where the company is headed and plans the steps needed to get there. Visualizing what is possible, following trends in the industry, and taking risks to grow the business are all required of leaders.

Productive leadership shows optimism and provides positive energy for staff. Good leaders are supportive and are truly concerned about the well-being of others. Leaders find answers to challenges and reassure and inspire workers when things go awry. Leaders find ways for staff to work together and achieve maximum results in an efficient and effective manner.

An Example of Leadership

Jack Welch exhibited leadership as chief executive officer (CEO) of General Electric Co. from 1981 to 2001. He played an integral part in 600 acquisitions in emerging markets and increased GE's market value from $12 billion to $505 billion at the time of his retirement. Because the world is constantly changing, Welch insisted everyone at GE embrace change. To continue evolving company operations and producing greater output, managers, and employees had to continuously reinvent themselves and their work.

Welch hired managers who shared his vision of GE, had endless amounts of energy, and was able to encourage employees to stay engaged in their work. He sought managers who created, developed, and refined ideas for the future and found ways to make them a reality. He also insisted that managers work side-by-side with employees as a way of understanding what they were doing and why.

As a result of Welch's leadership style, managers and employees were more empowered, products gained higher quality, and customer satisfaction and profits increased dramatically.

What Are Some Qualities of an Effective Leader?

There are several qualities that a good leader should have. Among these include the ability to motivate individuals, a willingness to listen, being trustworthy, having competence, decisiveness, good communication skills, and selflessly understanding the goals of the team or organization.

What Are Some Negative Traits in a Leader?

Not all leaders are effective, and even good leaders can have their faults. Some negative qualities commonly found in leaders include selfishness, quickness to anger, impatience, rudeness, inconsistency, micro-managing, and incompetence.

What Are Some Different Leadership Styles?

There are different ways to be an effective leader. One is to lead by example, showing others how to proceed and coaching them. Another is to delegate tasks to others based on their skills and experience. A third is to direct others from a position of authority. Finally, a good leader can be supportive and help team members achieve their goals.

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What Is the Definition of Leadership? Components and Example

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Leadership in business alludes to the ability of a company's management to make sound decisions and inspire others to perform well.

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"It is during our darkest moments that we must focus to see the light."

Aristotle

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This is what makes employees happy at work | The Way We Work, a TED series

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This video is 12min long but it is very insightful. Listen to Chieh give advice and talk about his experience regarding the wrong way to take control of operations.

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Confessions of a recovering micromanager | Chieh Huang

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What Is Operations Management (OM)?

Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.

Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.

Key Takeaways

Understanding Operations Management (OM)

Operations management involves utilizing resources from staff, materials, equipment, and technology. Operations managers acquire, develop, and deliver goods to clients based on client needs and the abilities of the company.

Operations management handles various strategic issues, including determining the size of manufacturing plants and project management methods and implementing the structure of information technology networks. Other operational issues include the management of inventory levels, including work-in-process levels and raw materials acquisition, quality control, materials handling, and maintenance policies.

Operations management entails studying the use of raw materials and ensuring that minimal waste occurs. Operations managers use numerous formulas, such as the economic order quantity formula, to determine when and how large an inventory order to process and how much inventory to hold on hand.

Operations and Supply Chain Management (OSCM)

A critical function of operations management relates to the management of inventory through the supply chain. This process is known as operations and supply chain management (OSCM). To be an effective operations management professional, one must be able to understand the processes that are essential to what a company does and get them to flow and work together seamlessly. The coordination involved in setting up business processes in an efficient way requires a solid understanding of logistics.

An operations management professional understands local and global trends, customer demand, and available resources for production. Operations management approaches the acquisition of materials and the use of labor in a timely, cost-effective manner to deliver customer expectations. Inventory levels are monitored to ensure that excessive quantities are on hand. Operations management is responsible for finding vendors that supply the appropriate goods at reasonable prices and have the ability to deliver the product when needed.

Another large facet of operations management involves the delivery of goods to customers. This includes ensuring that products are delivered within the agreed time commitment. Operations management also typically follows up with customers to ensure that the products meet quality and functionality needs. Finally, operations management takes the feedback received and distributes the relevant information to each department to use in process improvement.

What Operations Managers Do

Operations managers are involved in coordinating and developing new processes while reevaluating current structures. Organization and productivity are two key drivers of being an operations manager, and the work often requires versatility and innovation. As part of their daily responsibilities, operations managers must possess a variety of skill sets, including:

Technical expertise in areas such as production automation, data entry, budget tracking, and design.

Organizational ability and attention to detail to include keeping track of project files, employee reports, budgets, schedules, and other details related to company processes.

Motivational prowess in the form of strong leadership skills that provide the expertise to motivate others, inspire ideas, and foster a supportive and diverse team.

Analytical aptitude, including skill in risk analysis and mitigation when initiating new projects. Operations managers also must analyze processes to identify challenges and offer solutions in the event that negative situations develop.

Decision-making proficiency, especially under stress when there is very little time to assess all factors.

Ability to maintain quality standards, including as they relate to raw materials, machinery, manufacturing procedures, packaging, delivery processes, and the finished product.

A master of business administration (MBA) degree in operations management can provide global perspective on industry trends and an awareness of financial regulations and political uncertainties that can affect an organization. It also provides a solid grasp of the inherent complexities and the tools needed to respond well to change.

What is the purpose of operations management (OM)?

Operations management (OM) is concerned with controlling the production process and business operations in the most efficient manner possible. OM professionals attempt to balance operating costs with revenue to maximize net operating profit.

What are some systems of operations management?

Modern operations management revolves around four theories:

Business process redesign (BPR), which is focused on analyzing and designing workflow and business processes within a company. The goal of BPR is to help companies dramatically restructure the organization by designing the business process from the ground up.

Reconfigurable manufacturing systems, designed to incorporate accelerated change in structure, hardware, and software components. This allows systems to adjust rapidly to the capacity to which they can continue production and how efficiently they function in response to market or intrinsic system changes.

Six Sigma, an approach that focuses on quality. The word "six" references the control limits, which are placed at six standard deviations from the normal distribution mean. Tools used within the Six Sigma process include trending charts, potential defect calculations, and other ratios.

Lean manufacturing, which is the systematic elimination of waste within the manufacturing process. This theory sees resource use for any reason other than value creation for customers as wasteful and seeks to eliminate wasteful resource expenditures as much as possible.

What is an example of operations management?

Operations management is prevalent in the healthcare sector. The current healthcare system overuses expensive, technological, and emergency-based treatment. High costs from care often remain uncompensated due to uninsured patients. A prevalence of services in expensive settings creates a burden on taxpayers, health insurance holders, and healthcare institutions.

The Bottom Line

In simple terms, operations management (OM) is the process of prioritizing and employing business practices designed to achieve maximum efficiency as a means to achieve maximum profitability. Within the process, operations managers utilize organization and productivity to achieve their primary goals.

Balancing the efficient use of resources, including staff, materials, equipment, and technology, is key to a successful OM process and, by extension, to the success of the company.

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Operations Management: Understanding and Using It

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Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization.