Defining the Manager’s Role

Note to Readers: I begin this article by describing the managerial role of the U.S. president in order to make people aware of what they should expect from their country’s topmost manager. Please don’t let presidential politics distract from the fundamental message presented. The primary purpose of this piece is to demonstrate how ALL managers, including the president, should function as arbiters of stakeholder interests within their respective organizations. This is an extremely important concept, and most managers fail to understand and execute it effectively in their daily leadership practice. If you’re a manager or supervisor, DARE to be DIFFERENT! 

Voters are generally unaware of the most important function of the President of the United States (“POTUS”) as manager-in-chief. Why is this role so crucial? Whoever is in charge of our federal bureaucracy must be capable of organizing, leading, directing, and inspiring approximately 3 million civil servants and military personnel plus countless thousands of consultants needed to deliver the objectives we the people set for them. A fundamental aspect of managing anything involves negotiating with stakeholders who continuously seek to gain advantages over other stakeholders. If this stakeholder arbitration function is ignored or done poorly, the organization will struggle in a quagmire of conflict and drama and, as a result, will fail to fulfill its mission. Indeed, this is exactly what we’ve experienced from government over the past 30 years! 

Note: Within this paper, the term “manager” refers to a leader of employees at any level. A manager’s organization can encompass a work unit, a team, a brigade, an agency, an enterprise, a nation, or any size workgroup between. 

                          Managers as Organizational Role Players 

The rub with public and private sector management is that too many managers see their role in very limited terms like “team leader,” “supervisor,” or “manager” of x, y or z function. Having worked over the years with numerous organizations (both public and private) and with managers of all levels, I believe this definition falls short. In fact, managers have a much broader scope of roles to play, and this applies to all managers regardless of whether they’re a first time supervisor, experienced CXO, or the POTUS. 

The concept of the manager as a role player has an illustrative parallel in team sports. In baseball, for example, the utility fielder is a role player with innate talents for playing multiple positions. His ability to adapt to a variety of position roles on demand enables his team’s management to replace on-field skills quickly with no loss of team proficiency. Hence, by providing proven skills at several positions, the utility fielder enables his coach to balance team strengths and weaknesses as game conditions warrant. Additionally, his diverse athleticism gives the coach the flexibility to replace first team players with near equivalent talent whenever they’re unexpectedly sidelined by injury or illness, which often occurs during a long, physically demanding season. Finally, by contributing balance and flexibility on the field, the utility fielder raises his team’s performance capabilities and thus raises its odds of winning. 

Like a utility fielder, the manager is a multidimensional role player whose innate talents add value to her organization. She, too, has natural abilities; however, her talents are specifically suited to organizational leadership. And as such, she strives to play various roles in order to balance her team’s strengths and weaknesses as operating conditions change. Finally, by leading with balance and flexibility, the manager improves her team’s performance capabilities thus enhancing its probability of success. [1] 

A manager’s primary role is to arbitrate power-sharing among stakeholders while advocating their collaboration to achieve enterprise objectives. 

Note: Specifically regarding the POTUS, we must replace “enterprise objectives” above with the phrase “citizen objectives.” I’ll concede that history proves politicians don’t often fulfill or even marginally satisfy citizen objectives. We can only dream that someday voters’ wishes will be honored at least as well as stakeholders’ demands are satisfied in the private sector. That’s called accountability. How sweet would that be?

                                  Management: It’s a Balancing Act 

So, as a stakeholder arbitrator, where does the manager fit within the enterprise? In Figure 1.1, the organization is depicted as a triangle with the manager positioned at the center of the organizational power interests (stakeholders) represented by customers, owners, and employees.

Starting at the triangle’s apex, we have customers who seek to purchase the organization’s goods or services with their finite resources. Customers’ stakeholder interest, then, is the acquirement of the highest quality products or services at the lowest possible cost. In other words, customers seek to extract value from the organization in exchange for giving up their purchasing power. 

Next, in the lower left lobe, we see owners/shareholders who contribute their financial wealth as invested capital in the organization. In exchange, owners expect to receive a reasonable rate of return on their investment. Therefore, owners’ stakeholder interest is to realize a competitive return on their capital investment through management’s orchestration of increased revenues, rising profits, and greater dividends, which ultimately lead to a higher stock price. 

Note: Now put your government hat on for a moment. With public sector organizations, like a federal agency, there’s a slightly different ownership structure than depicted in Figure 1.1. With government agencies, taxpayers (or their elected representatives) replace the private sector owners/shareholders in the triangle’s lower left lobe. Hence, the organizational power interest of taxpayers, the true owners of government, is to receive more and better services in exchange for the lowest possible tax burden while giving up the least amount of freedom. The other stakeholders represented above, customers and employees, are the same in government as in the private sector. 

Next, in the lower right lobe, we find employees who seek to gain personal income, job security, and job fulfillment from the organization. In exchange for these benefits, workers provide their labor, experience, and knowledge capital, which fuel the organization's productive activities. Logically, then, employees’ stakeholder interest is to gain more or better employee benefits including compensation, job safety, job security, and job satisfaction in exchange for supplying labor for the enterprise’s productive activities.  

Finally, returning to the triangle’s center, there’s the manager who seeks to fulfill her goal of organizational success by effectively arbitrating the interests of the competing stakeholders. By the way, if she’s successful, the enterprise owners will reward her with increased wealth, greater job satisfaction, or both. If not, she’ll likely move on to managerial opportunities elsewhere.

                  The HOW TOs of Organizational Power-sharing

 To repeat, the manager’s primary role is to arbitrate power-sharing among stakeholders while advocating their collaboration to achieve enterprise objectives. Referring again to Figure 1.1, recall from your high school geometry that the sum of the angles of a triangle is fixed at 180?. Hence, if one angle changes, the other angles must change proportionally in order to maintain the 180? sum total. 

Organizations have a similar relational structure between stakeholders—customers, owners, and employees. When one stakeholder is granted a request by management, the other stakeholders must accommodate by either relinquishing access to or providing a share of their resources. Stated another way, when management satisfies the demands of one stakeholder, the other stakeholders must curtail the fulfillment of their interests in some way or provide some kind of resource support to the favored stakeholder. 

In the short run, an organization’s resources are fixed. Therefore, when one stakeholder gains management’s commitment for additional resources, other stakeholders must give up resources in the form of cost savings, profits, labor benefits, raw materials, etc. In effect, this represents a transfer of power among stakeholders. It’s the manager’s job to arbitrate the sharing of this power to fulfill stakeholder interests but always within the context of strategic organizational needs and goals. 

A logical question: Why do stakeholders look to managers to play the role of arbiter of stakeholder power? The answer is that managers control the organization’s productive resources; therefore, stakeholders know that in order to get what they desire from the organization, they must secure the support and cooperation of management. The challenge for managers, however, is to maintain progress toward achieving strategic objectives while effectively managing pressure from stakeholders to allocate resources to fulfill their needs. 

A typical way in which a manager arbitrates stakeholder power is by mediating short- and long-term objectives. For example, owners often pressure managers to improve quarterly earnings because higher earnings drive up stock prices and, as a result, raise the value of the owners’ investment portfolios. In practice, however, managers accommodate such demands at the expense of other stakeholders, e.g., employee job stability or customer satisfaction, both of which have strategic implications. In this example, the manager’s challenge is to fulfill the owners’ short-term demands while ensuring that other stakeholders and the organization’s strategic objectives are not compromised. Failing to do this effectively could result in adverse organizational outcomes in the long run. 

One approach to satisfying owners’ short-term profitability demands might involve cost cutting, such as a sharp reduction in employee benefits. Although this action would provide owners the short run earnings boost they desire, a cut in job benefits would come at the expense of employee stakeholders. The company’s highest demand “star” employees, those with the best performance records and proven talents and therefore the greatest marketability to competitors, would thus be motivated to leave their jobs for better opportunities elsewhere. This would be detrimental to the company’s strategic goal of minimizing employee turnover and retaining the best talent. Over time, production costs would spike due to lower productivity and higher training costs for replacement personnel. Customer satisfaction would eventually falter due to less experienced employees providing lower quality customer care. The unintended consequences of cutting employee benefits to satisfy owners’ demands thus would cause company earnings and its stock price to fall in the long run. 

In this situation, a practical management alternative for arbitrating owner demands for immediate earnings growth would be to offer employees noncash incentives, such as days off, recognition rewards, or a deferred bonus pool, for achieving current quarter cost savings and increased sales. By taking this approach, managers would satisfy the owners’ desire for short-term earnings gains while leaving mostly intact the strategic objective of minimizing employee turnover and retaining the best talent. 

One managerial rule of thumb is that when arbitrating resource sharing, no stakeholder should be allowed to gain an enduring advantage over other stakeholders. Put another way, a manager cannot allow any one stakeholder interest to dominate the organization for too long. Resource consumption translates into organizational power. If a single stakeholder group garners too much power over an extended period, such as employees forming a union that inflates the cost of labor or owners repeatedly convincing management to cut costs in order to raise the company’s stock price, the resulting imbalance will lead to enterprise strife, malaise, or, in some instances, organizational collapse. 

A well-managed organization is one where stakeholder power is equitably shared, creating a work environment where there is productive equilibrium. 

It’s important to note that achieving organizational equilibrium does not require a manager to engage in self-serving manipulation, political subterfuge, or taking shortcuts. Instead, a manager must be forthright, honest, and assertive with customers, owners, and employees, making each aware of the consequences of their decisions or desired courses of action and how these could affect their long-term interests as well as the viability of the organization. [2]             

The organizational benefit of effective stakeholder power-sharing: When enterprise equilibrium is achieved, resistance and distractions are minimized, thus creating conditions for optimal performance. 

[1] For more information on how scientific aptitude testing can help you know for sure whether you’ve got the innate talents to be a great supervisor or manager, visit the Johnson O'Connor Research Foundation homepage.

[2] Natural Born Manager (Indianapolis, IN: Dog Ear Publishing, 2009), pgs. 21-27.

Concepts discussed in this article and many other essential management principles are explained in-depth in my book Natural Born Manager: A Handbook for Accountability Management.

If you’re a manager and want to know more, visit my LinkedIn articles page.

If this article helped you and you wish to learn more, please visit edparr.com or Amazon.com and buy my book "Natural Born Manager: A Handbook for Accountability Management” in either hardcopy or ebook format. In my book, you'll find many helpful ideas similar to those presented here, ideas that will empower you and your friends to resolve your most difficult job and career challenges. For more information on “aptitudes” and how they can bring more success and joy to your life, visit the Johnson O’Connor Research Foundation homepage to learn what scientific aptitude testing has done for the careers of tens of thousands of others like you and me. I promise you won’t be disappointed. 

Cheers,

Ed Parr 

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