Profit versus not for Profit:
Does a manager who works for the Ministry of External Affairs in Delhi, the CBI in India, or the Red Cross do the same things that a manager in a business firm does? Putting another way is the manager’s job the same in both profit and not for profit organizations, the answer is for the most part. Regardless of the type of organization a manager works in, the job has commonalities with all other managerial positions. All managers make decisions, set objectives, create workable organization structures, hire and motivate employees, secure legitimacy for their organization’s existence, and develop internal political support in order to implement programs. Of course, some differences are noteworthy. The most important is measuring performance. Profit or the bottom line acts as an unambiguous measure of the effectiveness of a business organization. No such universal measure is used in not for profit organizations. Measuring the performance of schools, museums, government agencies, or charitable organizations, therefore, is more difficult. But don’t interpret this difference to mean that managers in those organizations can ignore the financial side of their operations. Even not for profit organizations need to make money to survive. It’s just that making a profit for the ‘owners’ of not for profit organizations is not the primary focus. Consequently, managers in these organizations generally do not face a profit maximizing market test for performance.
Our conclusion is that, although distinctions can be made between the management of profit and not for profit organizations, the two are far more alike than they are different. Managers in both types of organizations are alike with planning, organizing, leading, and controlling.
Size of organization:
Would you expect the job of a manager in a print shop that employs 12 people to be different from that of a manager who runs a printing plant for the Times of India group? This question is best answered by looking at the jobs of managers in small business firms and comparing them with our pervious discussion of managerial roles. First, however, let’s define small business and the part it plays in our society.
No commonly agreed upon definition of a small business is available because different criteria are used to define. For example, an organization can be classified as a small business using such criteria as number of employees, annual sales, or total assets. For our purposes, we will call a small business independently owned and operated profit seeking enterprise that has fewer than 500 employees. Small businesses may be little in size, but they have a major effect on the world economy. In India, small and medium industries play a vital role in the growth of the economy. Small industries have a 40 percent share in Industrial output, producing over 8,000 value added products. They contribute nearly 35 percent in direct export and 45 percent in the overall export from the country. They are one of the biggest employment providing sectors after agriculture, providing employment to 28.28 million people.
Now to the question at hand: Is the job of managing a small business different from that of managing a large one? Some differences appear to exist. For example, the small business manager’s most important role is that of spokesperson. The small business manager spends a large amount of time performing outwardly directed actions such as meeting with customers, arranging financing with bankers, searching for new opportunities and stimulating change. In contrast, the most important concerns of a manager in a large organization are directed internally – deciding which organizational units get what available resources and how much of them. Accordingly, the entrepreneurial role looking for business opportunities and planning activities appears to be least important to managers in large firms, especially among first level and middle mangers.
Compared with a manager in a large organization, a small business manager is more likely to be a generalist. His or her job will combine the activities of a large corporation’s chief executive with many of the day to day activities undertaken by first line supervisor.
Moreover, the structure and formally that characterize a manager’s job in a large organization tend to give way to informality in small firm. Planning design will be less complex and structured and control in the small business will rely more on direct observation than on sophisticated, computerized monitoring systems. Again, as with organizational level, we see differences in degree and emphasis but not in activities. Managers in both small and large organizations perform essentially the same activities: only how they go about those activities and the proportion of time they spend on each are different.