Management in Sport - Introduction PDF

University of Ljubljana, School of Economics and Business Management in Sport - Part 1: Introduction to Management in Sport Prof. Tomaž Čater, Ph.D. Management in Sport Part 1: Introduction to Management in Sport...

University of Ljubljana, School of Economics and Business Management in Sport - Part 1: Introduction to Management in Sport Prof. Tomaž Čater, Ph.D. Management in Sport Part 1: Introduction to Management in Sport Types of Organizations Profit vs. non-profit and public vs. private Organization types Profit (for-profit) Non-profit (not-for-profit) Public state-owned corporations (e.g. in government and ministries utilities) governmental bodies (e.g. Police) and agencies (e.g. FURS, UMAR, SURS, etc.) public institutes (schools, hospitals, health insurance institutes, unemployment institutes, etc.) Semi-public/private public companies with the chambers of commerce participation of private capital other chambers (e.g. Chamber of private companies with concession Craft and Small Business of Slov.) Private private companies societies financial institutions (banks, institutes insurance companies) cooperatives (e.g. in agriculture) sole proprietorships political parties trade unions / labor unions charity organizations religious communities others (consumer organizations, professional associations, etc.) In addition: different forms of public-private partnerships Prof. Tomaž Čater, Ph.D. 1 Management in Sport Part 1: Introduction to Management in Sport Types of Organizations Terminology: company, institute, society, organization or something else? – companies, federations, associations, societies, etc. are each only one segment of sport organizations → among these it would be best to use the term company → reasons concepts were initially developed for companies → most are transferrable to other types of organizations especially in competitive sport, the market motive is at the forefront transforming a society into a company usually brings more positive than negative results – except in the presentation of the basics of management, when we use the term company, we will use the term sport organization (SO), although “organization” also means something else (see the chapter on organizing in sport) Prof. Tomaž Čater, Ph.D. 2 Management in Sport Part 1: Introduction to Management in Sport Company and Business Process Companies perform their business activities in a business process Purchasing Production Sales Finance Business process as a whole is too demanding to be carried out by one individual → technical division of work (total task is divided into partial tasks → division of tasks can go on as far as to specifically defined jobs) Prof. Tomaž Čater, Ph.D. 3 Management in Sport Part 1: Introduction to Management in Sport Company and Business Process Reasons for technical division of work – common task is too demanding: physically to tough or too demanding for one person – greater efficiency improved skills of workers savings of material during qualification of workers less time spent for accommodation to specialized tasks less time lost between consecutive jobs less time lost for changing tools cheaper work force automatization of work common preparation for large series – lower costs: specialization of jobs and workers, tools and machines, products and services – greater quality: easier standardization, more specialization Prof. Tomaž Čater, Ph.D. 4 Management in Sport Part 1: Introduction to Management in Sport Company and Business Process Work in a company is technically divided → what now? – it needs to be coordinated and delegated – comparison with a symphony orchestra (Drucker) more than 100 musicians (= workers) each of them is highly qualified specialist in his/her specific area (= specialized knowledge of contemporary experts) only one conductor (= manager) he/she is highly qualified generalist, who can hear all instruments and connects them in a logical totality (= broad knowledge of contemporary managers) – comparison with a football team Prof. Tomaž Čater, Ph.D. 5 Management in Sport Part 1: Introduction to Management in Sport Essence of Management Essence of managers’ work – coordination of technically divided work into a logical totality (coordinating) – execution of a common task of a company by the help of others (delegating) – solving problems in the business process (decision making) Management = coordinating, delegating, decision making – content coordinating (manager as a generalist) delegating (executors as specialists) – method decision making Prof. Tomaž Čater, Ph.D. 6 Management in Sport Part 1: Introduction to Management in Sport Managerial Functions Four basic functions (tasks) of managers – planning = defining goals and ways to achieve them – organizing = defining relatively lasting relationships between employees in the company, which must enable the achievement of the company’s goals – leadership = using influence to motivate employees – control = monitoring achievements and taking action when unwanted deviations occur All four functions (tasks) include coordination, delegation and decision-making All four functions (tasks) take place continuously; hence they do not appear as strictly sequential steps → for example, if there is no plan, control is not possible; and at the same time we control to make planning easier Prof. Tomaž Čater, Ph.D. 7 Management in Sport Part 1: Introduction to Management in Sport Managerial Roles Three basic roles of managers according to Mintzberg – interpersonal roles figurehead (representing the company in public) leader (directing and influencing employees) liaison (connecting the company with the environment) – informational roles monitor (search and review of information) disseminator (informing employees) spokesperson (informing the public) – decisional roles entrepreneur (planning and implementation of innovations) disturbance handler (solving problems in the company) resource allocator (mediation in resource allocation) negotiator (finding a common understanding) Prof. Tomaž Čater, Ph.D. 8 Management in Sport Part 1: Introduction to Management in Sport Managerial Roles Four basic roles of managers according to Adizes – producer (P) – administrator (A) – entrepreneur (E) – integrator (I) Few people (if any) are so “perfect” that they can successfully play all the necessary roles → the idea of a team of managers → the manager must gather a team of people who will complement his/her roles → the whole team represents a “perfect” manager Prof. Tomaž Čater, Ph.D. 9 Management in Sport Part 1: Introduction to Management in Sport Levels of Management Three managerial levels Top-level management strategic goals → company as a whole Middle-level management tactical goals → business units and functions Lower-level management operational goals → departments and teams Execution Prof. Tomaž Čater, Ph.D. 10 Management in Sport Part 1: Introduction to Management in Sport Levels of Management Knowledge required at different managerial levels Technical knowledge Managerial knowledge Lower-level management Top-level management Skills/abilities required at different managerial levels Technical skills Conceptual abilities Communication skills Interpersonal skills Lower-level management Top-level management Prof. Tomaž Čater, Ph.D. 11 Management in Sport Part 1: Introduction to Management in Sport Management and Governance Development of three organizational functions – basic social-economic relationship is between owners and non-owners → owners make decisions about their property – how did this decision-making develop through time? owners make decisions and work alone → execution owners hire other people to execute work; owners direct their work → governance and execution directing is too demanding for the owners; they hire managers → governance, management and execution – three basic organizational function emerge (example of the Manchester City FC) governance → owners (e.g. Sheikh Mansour) management → managers (e.g. Ferran Soriano) execution → executors (administration, players) Prof. Tomaž Čater, Ph.D. 12 Management in Sport Part 1: Introduction to Management in Sport Management, Ethics and Social Responsibility Ethics as a substitute for legislation → importance of ethics is even greater when an area is poorly regulated Two fundamental ethical systems (theories) Reasons, motives Duty-based / Reasons justify Deontological actions undertaken Actions Actions bring results Utilitarian / Results justify actions Teleological Results, effects Prof. Tomaž Čater, Ph.D. 13 Management in Sport Part 1: Introduction to Management in Sport Management, Ethics and Social Responsibility When is a company socially responsible? – traditional view (Friedman): “… there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits...” – modern view: corporation has a responsibility to society, which is much more than just generating profits Four levels of social responsibility (Carroll) – economic – ethical – legal – discretionary Social responsibility Economic Legal Ethical Discretionary (must do) (have to do) (should do) (might do) Prof. Tomaž Čater, Ph.D. 14 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Definition = organizations that are exempt from paying taxes and whose primary goal is to benefit society rather than generate profit The essence of non-profit organizations – provide services that are valuable to (wider) society and that profit-oriented organizations cannot or do not want to provide → mostly public goods, where their benefits are also shared by individuals who do not pay for them (e.g. public lighting) – can make a profit (surplus), but cannot distribute it freely (e.g. they cannot pay it as dividends) → profits are invested in further quantitative and qualitative growth of the services – are exempt from income and property taxes (most countries) – many operate on a voluntary and informal basis, although they may have clear organizational structures – have no classical owners (founders perform the governance function) Prof. Tomaž Čater, Ph.D. 15 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Performance of non-profit organizations – evaluating performance solely on the basis of an economic result would be inappropriate, as these organizations are already designed to operate in a situation where for-profit organizations would not survive – the success of a non-profit organization is therefore assessed by how many services (and in what way) it has offered and how much this has contributed to public welfare One of the quick ways of recognizing a non-profit organization is by looking at its revenue structure – typical revenues of non-profit organizations: membership fees, grants (e.g. EU, government), donations, sponsorships – typical revenues of for-profit organizations: customer payments Prof. Tomaž Čater, Ph.D. 16 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Typical problems of non-profit organizations (often leading to their liquidation) – lack of resources (not in governmental non-profit organizations) – poor resource management (especially in small non-profit organizations with very limited resources) – founder’s syndrome (especially in many private associations after the founder retires and enthusiasm of the younger members to continue with the efforts fades) Typical reasons for problems in non-profit organizations – separation between clients (e.g. homeless) and funders (e.g. donors) → inability to address/satisfy both at the same time – reliance on external funding: contracts with public authorities (EU, national government, local authorities), charitable grant programs, direct donations, etc. – lack of managerial skills and limited time Prof. Tomaž Čater, Ph.D. 17 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Typical reasons for problems in non-profit organizations (continued) – political influence: pressure on managers in governmental organizations, board selected based on political criteria, etc. – prioritizing the needs of individuals within the organization instead of those of the whole organization – poor strategy, including unclear mission (why do we exist?) Key managerial activities in non-profit organizations – fund raising (if non-governmental) and then managing limited financial resources (responsible budgeting) – branding the organization in two ways (towards clients and funders) to meet the interests of both (it must be clear to funders why investing in us actually means investment in their marketing, which may eventually pay off) – managing limited human resources (employees, volunteers) Prof. Tomaž Čater, Ph.D. 18 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Importance of management in non-profit organizations – the non-profit sector as a whole is widening → the gap between available resources and societal needs is growing → the importance of acquiring financial resources is growing – entities financing the non-profit sector are becoming increasingly rational → sources of funding are becoming increasingly scarce → the need for sound management – private and public sources of financing of the non-profit sector depend on the economic situation → the need for new business models also in non-profit organizations – these are often non-essential (although perhaps important) goods → income elasticity of demand > 1 (relative change in demand > relative change in income) → need to understand economic logic in non-profit organizations Prof. Tomaž Čater, Ph.D. 19 Management in Sport Part 1: Introduction to Management in Sport Management in Non-Profit Organizations Non-profit organizations differ a lot in the need to apply classical managerial approaches (i.e. those that are similar as in companies and require more “competitive” thinking) Big charities Universities, (e.g. Red Cross) Hospitals (not so Sport associations much in Slovenia) for disabled UEFA, OCS Local social Local utility service agencies companies Local sport clubs National sport (e.g. bowling club) federations (Upper) Right quadrants requires more classical management Prof. Tomaž Čater, Ph.D. 20 Management in Sport Part 1: Introduction to Management in Sport Types of Non-Profit Organizations Sectors where most non-profit organizations can be found – sport – culture (museums, galleries, ZOOs, etc.) – education (schools, research institutes, universities, etc.) – healthcare (hospitals, emergencies, etc.) – humanitarian (human rights org., charities, etc.) – other areas (politics, religious services, social services, etc.) The most common legal-organizational forms of non-profit organizations – institutes – societies (they also dominate in sport; this is more true for Europe and less so for some other regions (e.g. North America) Prof. Tomaž Čater, Ph.D. 21 Management in Sport Part 1: Introduction to Management in Sport Institutes Definition = organization for performing activities in the field of education, science, culture, sport, healthcare, social care, child, disability and social insurance, and other activities not aimed at generating profit Characteristics – the principle of unprofitability – public activity (education, health, sport, etc.) – legal entity (listed in the Court Register) – in Slovenia the operation of institutes is prescribed by the Institutions Act Prof. Tomaž Čater, Ph.D. 22 Management in Sport Part 1: Introduction to Management in Sport Societies Definition = voluntary, independent and non-profit association of individuals who are uniting because of some common interests they share Characteristics – the principle of unprofitability – activity related to any personal interests (but also to public ones), if they are not contrary to morality – civil law person (registered with the Ministry of the Interior) – voluntary membership of each individual Prof. Tomaž Čater, Ph.D. 23 Management in Sport Part 1: Introduction to Management in Sport Sport as Public and Private Good Is sport a public or private good? – benefits for individuals pleasure, socializing, health – benefits for society higher health level → lower health expenditures less susceptibility to negative influences (alcohol, drugs) promotion of the state (great importance in socialism → emphasis on the rapid development of young people into top athletes) – sport is beneficial for the individual and the society → it is a mixed (public and private) good → it makes sense to finance it from private and public sources another reason for state intervention is the inequality in the society (sport would not be accessible to all) Prof. Tomaž Čater, Ph.D. 24 Management in Sport Part 1: Introduction to Management in Sport Sport as Public and Private Good Characteristics of sports market and financing in Slovenia – competitive (professional) sports market small market → few advertisers → small revenues exceptions are some international events solution: focus on international competitions (Adriatic basketball league, International hockey league, etc.) – recreational sports market active population → large household spending on sports relatively well developed market – youth sports market public funds are relatively small → big burden on parents sponsors present only in commercially interesting sports – sports financing in Slovenia is similar to other EU countries; however, a special feature is the redistributive effect (more competitive sports financed from public sources means more youth sports financed from private sources) Prof. Tomaž Čater, Ph.D. 25 Management in Sport Part 1: Introduction to Management in Sport Sport as Important but Not Urgent Good Sport as an important but not urgent activity → consequences – sport is not independent of socio-economic conditions → changes in funds for sport are positively related to changes in income (on different levels) – but the amplitudes (changes) of funds for sports are much larger than the amplitudes (changes) of GDP and national, municipal and family budgets – economic explanation: income elasticity of demand (relative change in demand due to relative change in income) > 1 → a drop in income by 1% means a drop in funds for sports by more than 1% Prof. Tomaž Čater, Ph.D. 26 Management in Sport Part 1: Introduction to Management in Sport Fundamentals of Sport Management Why do we need management in sport? – growth and development of sport through history → complexity of sport increases → need for regulation → management in sport (even in sport an individual cannot do everything, so the whole process needs to be coordinated, tasks delegated and decisions made accordingly) Definition = coordination of different resources, technologies, processes and situations in sport with the aim of efficient production and exchange of sport products/services (Chelladurai) = organizational function and process that coordinates a technically divided work (coordination) in a sport organization and performs its task with the help of other people (delegation) in the process of planning, implementation and control Prof. Tomaž Čater, Ph.D. 27 Management in Sport Part 1: Introduction to Management in Sport Fundamentals of Sport Management Management vs. administration in sport – part of the theory and practice states the following differences, which are not true management includes preparation and evaluation, while administration is more about the execution of work management is used in for-profit organizations, while administration is used in non-profit organizations – the only relevant difference in management more emphasis is on planning, implementation and control in administration other business topics are also discussed (HRM, purchasing, marketing, finance, etc.) – subjects in foreign schools called Sport Management and Sport Administration are very similar → the content is more about management than administration Prof. Tomaž Čater, Ph.D. 28 Management in Sport Part 1: Introduction to Management in Sport Fundamentals of Sport Management Breadth of management in sport – sport is competitive and recreational – sport organizations are organized very differently (companies, institutes, societies/clubs, federations, etc.) – sport activities are carried out at different levels (local, national, international) – sport is intertwined with tourism, healthcare, education, etc.) Our focus – competitive and recreational – national and international level – companies > societies, institutes and federations Trend: sport is becoming a fast growing business Basic division of management in sport – management in sport for entertainment → recreational sport – management in sport for achievement → competitive sport Prof. Tomaž Čater, Ph.D. 29 Management in Sport Part 1: Introduction to Management in Sport Management in Recreational Sport The goal of recreational sport: to enjoy in physical activity The goal of recreational sport programs – to enable people to satisfy the need for movement as the primary need of every human being – it is essential that people do things in the right way in terms of well-being and health Management in recreational sport – less demanding – shorter process (it is possible to satisfy the primary need for movement relatively quickly) – more volunteering – smaller role of finance Prof. Tomaž Čater, Ph.D. 30 Management in Sport Part 1: Introduction to Management in Sport Management in Competitive Sport The goal of competitive sport: sporting achievement → consequently also earnings, admiration, fame, etc. The goal of competitive sport programs – enable progress and results for active participants (athletes) and enjoyment for passive participants (fans) – it is essential that people do things in the right way in terms of athletic achievement Management in competitive sport – more demanding – longer process (creating a top result usually starts with training at an early age) – more professionalism – greater role of finance: the product is precisely financially evaluated, financial investments and risk are higher Prof. Tomaž Čater, Ph.D. 31 Management in Sport Part 1: Introduction to Management in Sport Sport Manager Definition = a person who coordinates a technically divided work (coordination) in a sport organization and performs its task with the help of other people (delegation) in the process of planning, implementation and control = manager working in sport Necessary knowledge of a sport manager – managerial knowledge – knowledge of the specifics of sport (e.g. on the sociological and psychological effects of sport) Types of sport managers – managers of sport organizations (emphasis on this subject) – sport infrastructure managers (special subject) – sport event managers (special course) – managers as athletes’ agents (partly other subjects) Prof. Tomaž Čater, Ph.D. 32 Management in Sport Part 1: Introduction to Management in Sport Managerial Ethics in Sport Four golden rules of ethics in sport – follow the rules (e.g. not winning at all costs) – avoid the adverse effects (e.g. illegal/illicit stimulants) – be victory-oriented (being defeat-oriented is an insult to the spectators, the opponent and oneself) – admit the defeat The sport manager can have the most influence on the first three rules in particular Ethical guidelines in decision-making by sport managers – is the decision legal? – is the decision balanced, impartial and fair? – what opinion will I have of myself when I make a decision? Prof. Tomaž Čater, Ph.D. 33