Learn the 6 main types of business management and see which one fits your company best

Anyone who owns a company or holds a decision-making role deals with management every day. What many people do not know is that there are several types of business management, and that each one calls for a different business and leader profile.

Management is a set of methodologies and strategies that executives combine to achieve financial and operational efficiency. To choose the type of management that best suits your company, consider three factors:

• the nature of the business;
• the organizational culture;
• the leader’s profile and leadership style.

Keep reading to learn the 6 main types of business management and identify which one fits your company.

1. Democratic management

Democratic management involves every member of the team in decision-making. A leader who adopts this type of management needs to value communication and create effective channels for professionals to exchange information.

The leader also needs to know how to delegate, because in democratic management employees have a degree of autonomy to decide on the tasks that fall to them.

One of the main advantages is team engagement. Everyone feels responsible for the success or failure of an action and, for that reason, stays committed.

The caution is about pace: since everyone takes part in decisions, the process can slow down and the company may miss the right moment to act.

2. Centralized management

Centralized management is almost the opposite of the previous one. Strategic decisions are made by senior leadership, and the model repeats at the other hierarchical levels, with managers directing their teams.

The great advantage is speed in decision-making, because the “yes” or the “no” rests with a single person. On the other hand, the manager who chooses this model may pay a high price in motivation and engagement.

The line between healthy centralization and authoritarianism is thin. The manager may give the impression of not trusting the team, which gradually loses motivation. The burden of deciding and taking on all the responsibility can also overload the manager.

3. Process-focused management

In process management, the central concern is that all the company’s operations are standardized and organized. Processes sit at the center of the model.

A leader who takes this path usually seeks to constantly improve how things are done, to gain efficiency and results.

One advantage is that the model does not depend on individuals. If a team member leaves, whoever replaces them takes over the routine more easily, because the processes are clear and described in detail.

The biggest risk is the leader getting stuck, in search of the perfect process.

You can use a spreadsheet to manage projects, such as this one from Pluga (in Portuguese):

• Free project manager: organize your tasks and deliveries more easilyopens in a new tab

4. Results-focused management

In management by results, the most important thing is to reach, or exceed, the goal. The path is up to those involved, and the leader pays little attention to the intermediate steps.

The model gives each employee freedom to choose the most efficient approach for themselves. On the other hand, it calls for caution: processes need to be documented to some degree, or the team will have to reinvent the wheel with every new challenge.

To track goals, take a look at Siteware’s goal tracking spreadsheet (in Portuguese)opens in a new tab.

5. Value chain-focused management

The value chain was proposed by Michael Porter in 1985. It starts from the principle that a company only thrives if consumers see value in the products or services it sells. For that reason, the focus of management is to generate value.

In this model, every stage of the chain is considered, from the conception of the product or service to after-sales. By knowing the value generated at each stage and the costs involved, the company gains financial efficiency, reduces costs and increases gains.

6. Continuous improvement-focused management (PDCA cycle)

The PDCA cycle is a methodology based on continuous improvement. The acronym stands for the four stages:

• Plan: plan;
• Do: do;
• Check: verify;
• Act or adjust: act or adjust.

It all starts with planning, according to the company’s strategic objective. Then the plan is put into practice.

In the third stage, the results are checked, with an assessment of what worked and what can improve. Finally, adjustments follow from that analysis.

Still have questions about the PDCA cycle? Watch the video below:

How to track management with indicators

Any type of management requires tracking. In process management and the PDCA cycle, it matters even more, because the decision to adjust depends on data. In management by results, the indicator is what shows whether the goal is on track.

Regardless of style, the manager needs to know which indicators measure each objective, who is responsible for each one and how often they are updated.

In the Stratws goal and KPI deployment solution, each indicator has a defined formula, owner and frequency, and the goal is deployed from the corporate level down to the individual level.

This way, the company tracks results whatever its management model, and the deviation shows up at the exact point where the goal stops being sustained. See, in the Grupo SBF caseopens in a new tab, how the company deployed goals to more than 10,000 employees.