To assign a manager to an employee, first navigate into:

People -> Employees

And find the employee you'd like to assign a manager to. Once you're on their employee card click the Change button under "Core Details". More information on changing various employee details can be found here.

Once you're on the Change page scroll down to the Manager field and click into the dropdown, you can now select the desired manager from the list provided. (Is the desired manager not showing up in that list? Here is an article which should help to fix that.)

You can also add a reason for the change at the bottom of the page if required. Once you're done click Submit.