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Planning
Planning is the fundamental management function, which involves deciding beforehand, what
is to be done, when is it to be done, how it is to be done and who is going to do it. It is an
intellectual process which lays down an organisation’s objectives and develops various courses
of action, by which the organisation can achieve those objectives. It chalks out exactly, how to
attain a specific goal.
Planning is nothing but thinking before the action takes place. It helps us to take a peep into
the future and decide in advance the way to deal with the situations, which we are going to
encounter in future. It involves logical thinking and rational decision making.
According to Koontz and O’Donnel, “Planning is deciding in advance what to do, how to do
it, when to do it and who is to do it. It bridges the gap from where we are to where we want to
go.”
Planning is the continuous managerial process of anticipating and forecasting the future.
environment of the business organization, the formulation of the long term and short term
goals. to be achieved and selecting the strategies for their realization.
Planning is also a management process, concerned with defining goals for a company's future
direction and determining the missions and resources to achieve those targets. To meet
objectives, managers may develop plans, such as a business plan or a marketing plan.
The planning process provides the information top management needs to make effective
decisions about how to allocate the resources in a way that will enable the organization to reach
its objectives. Productivity is maximized and resources are not wasted on projects with little
chance of success.
Importance
 It helps managers to improve future performance, by establishing objectives and
selecting a course of action, for the benefit of the organisation.
 It minimises risk and uncertainty, by looking ahead into the future. It facilitates the
coordination of activities. Thus, reduces overlapping among activities and eliminates
unproductive work.
 It states in advance, what should be done in future, so it provides direction for action.
 It uncovers and identifies future opportunities and threats.
 It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.

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Planning is present in all types of organisations, households, sectors, economies, etc. We need
to plan because the future is highly uncertain and no one can predict the future with 100%
accuracy, as the conditions can change anytime. Hence, planning is the basic requirement of
any organization for the survival, growth and success.
Types of Plans

1. Strategic Plan: Strategic plan is also called grand plan. It has a strong external orientation
and covers the total organization. It begins by asking question regarding the purpose or mission
and the operation to which an organization is devoted. Senior executives are responsible for
the development of these plans.
2. Tactical plan: Tactical plans translate broad strategic goals and plans into specific goals and
plans. It mainly focuses on functional areas of the organization. Middle level managers who
are responsible for major division or branches in an organization develop the tactical plan.
Tactical plans focus on the major actions that a unit must take to fulfill its parts of the strategic
plan.
3. Operational plan: Operational plans identify the specific procedures and process required
at the lower level of the organization. These plans are prepared by frontline managers and
supervisors. It mainly focuses on daily activities and routine jobs. They translate the tactical
objectives into specific operational activities to be assigned to individual or groups.

Besides above classification, business plans are also classified according to the time period for
which they are established, they are called, long-range, medium range, and short range plans.
Similarly, plans are further classified according to their frequency of use, they are known as
standing plans (such as, policy, procedure rule), and single use plan, (such as, program, project,
budget etc)
Process/Steps in Planning

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A plan can help to avoid mistakes and to recognize hidden opportunities. Preparing a
satisfactory plan is essential and the management should understand the planning process
clearly what they want to achieve, and how and when to do it. Planning involves number of
steps; the main steps of planning are as follows.
1.Aware of business opportunities: It is necessary to analyse the internal and external
environment to know the trends in near future. Business activities are influenced by
Government regulations, technological changes, availability of raw material, labour etc. The
business men have to look for opportunities by observing the business environment.
2. Setting Objectives: plans are prepared with a view to achieve certain goals. so establishing
the objectives is an important step in planning. The overall objective of the enterprise must be
stated along with the specific objectives of individual department and divisions in the
organisation. The objectives must be stated in measurable terms i.e., Percentage, Production,
Sales, number of units etc.
3. Considering planning premises: Planning premises are the anticipated environment in
which plans are expected to operate. As planning is for future, certain assumption about the
future is uncertain. It is necessary to make assumption about the factors influencing internal
environment and external environment. The factors which affect the plan must be identified
and evaluated.
4. Identifying the alternative course of action: For doing a work there are always certain
alternatives. The planners should study the entire alternative, considering the strong and weak
points of them and finally identify the most promising one to reach the goal.

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5. Evaluating alternative course of action: once the alternative course of action are identified,
the next step is to evaluate the same. Evaluation means studying the merits and demerits of
each alternative. Each alternative should be closely studied to determine its suitability.
6. Choosing the best alternatives: once the alternative courses of action have been evaluated
the next step is to select the best. The alternative selected should help the organisation in
making an optimum use of available resources and help to attain the objective set in the most
effective manner.
7. Formulation of supporting plans: The main plan should be supported by number of
supporting plans to attain the goal. Ex: Once the production plan is ready the supportive plans
such as purchase of raw materials, tools, equipments, engaging workers etc, have to be
formulated. Without supportive plans it is not possible to carry out the main plan.
8. Implementation of plans: Implementation of plan means putting the plans into action so as
to achieve the business objectives. After implementation of plans, it is necessary to ensure that
the activities of the enterprises proceed in the right direction.
Benefits of Planning
1. Better Utilization of Resources:
Strategic planning facilitates the efficient allocation of resources, ensuring optimal
use of time, money, and manpower.
2. Helps in Achieving Objectives:
The planning process sets clear goals and provides a roadmap for organizations,
guiding efforts toward the successful accomplishment of objectives.
3. Minimizes Future Uncertainties:
Through careful analysis and foresight, strategic planning identifies potential risks
and uncertainties, enabling proactive measures to mitigate them.
4. Improves Competitive Strength:
Strategic planning enhances competitive advantage by aligning organizational
strengths with market opportunities, fostering adaptability and resilience.
5. Prevents Hasty Judgment:
By encouraging a systematic approach, planning discourages impulsive decision-
making, ensuring that choices are well-considered and aligned with long-term goals.
Planning tools and techniques
The useful tools and techniques of managerial planning include the following:

- Forecasting
- Contingency planning
- Scenarios
- Bench marketing
- Participative planning
- Use of staff planners
Forecasting: Forecasting is the process of predicting what will happen in the future. Almost
every plan involves forecasts of some sort. The economist regularly report forecasts of
economic conditions interest rates, unemployment, and trade deficits. among other issues.
There are some based on qualitative forecasting. Qualitative forecasting uses experts opinions

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to predict the future. Also, it is involved to use mathematical models and statistical analysis of
historical data and surveys to predict the future events.
Contingency Planning: It identifies alternative courses of action that can be implemented to
meet the needs of changing circumstances. Although it is not possible for anyone to predict
when things will go wrong, it can be expected that they will. It is unlikely that any plan will
ever be completely perfect. Changes will occur in the environment. When crisis and
emergencies occur, managers and the organizations have contingency plans that are ready to
be implemented. Contingency plans contain "trigger points" that indicate when pre-selected
alternative plans should be activated.
Scenario Planning: It involves identifying several alternative future scenarios that may occur.
Plans are then made to deal with each scenario as it occurs. For example, the Heart and Stroke
Foundation of Ontario set out to design a new model for the health care funding, they wanted
to challenge the organization to think in different ways about the future. The scenario planning
process benefited them by helping the board and other invited experts to rehearse strategic
development plans and tactics in five different realistic scenarios.
Benchmarking: It is a technique that uses external comparisons to better evaluate one's current
performances and identify possible actions for the future. The purpose of it is to find out what
other people and organizations are doing well at and plan how to incorporate these ideas into
one's own operations. One of the benchmarking techniques are used to search for best practices.
Best practices are things that lead to superior performance. It is considered that the best run
organizations also emphasize internal benchmarking that encourages all members and work
units to learn and improve by sharing one another's best practices.
Organising

Organization is a social unit of people, systematically structured, and managed to accomplish

a task or to achieve collective goals on a continuous basis. For example, Mc Donald’s as an
organization is a global player in fast food category with the mantra of enhancing ‘quality’,
‘service’, ‘cleanliness’, and ‘value’. The organization from its inception has been engaging in
massive product promotion and aligning the customer’s preferences and experience to their
organizational goal for quick growth, turnover, and scalability. As an organization, it is focused
on keeping its key assets, the employees, satisfied by providing opportunities, nurturing talent,
delegating authority, enhancing leadership abilities, and forming diverse groups for
experiential learning.
Organization Viewed in Four Different Senses
 As a Framework of Relationships: Organization refers to the structure and
interactions among various job positions which are created to realize certain objectives.

 As a Process: Organization is viewed as an active process and a management activity

which is essential for forecasting the utilization of company’s resources.

 As a System: Organization is also viewed as a system. System concepts diagnose that

organizations are made up of constituents, each of which has exclusive properties,
abilities, and reciprocated associations.

 As a Group of Persons: Organization is very often viewed as a group of persons

contributing their efforts towards certain goals.

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Definitions

Organizations may be defined as a group of individuals large or small that are cooperating
under the direction of executive leadership in accomplishment of certain common object. Keith
Davis

Organization is a system of cooperative activities of two or more persons. Chester Barnard

Organization Structure
Formal Structure
The formal organization refers to the structure that is designed and prescribed by the
management of the enterprise. ‘It is a hierarchical concept of subordination of entities that
collaborate and contribute to serve a common goal.’ A formal organization has its own set of
rules and regulations that are to be followed by each individual in the organization. For
example, college, hospital, company, and so on.
Informal Structure
Informal organization is any human group interactions that occur spontaneously and naturally
over a long period of time. This is a shadow organization made up of the informal, but often
critical, relationships between members of the organization. The informal structure has its
presence in all the formal structures. For example, most Information Technology (IT)
companies have an informal organization to promote innovation amongst the employees.

Types of Organisation structures

1.Functional organizational structure

A functional organizational structure organizes employees based on specialized functions, such
as marketing or finance. Key features include clear specialization, a well-defined chain of
command, operational efficiency through expertise, centralized control, and clear career paths.
While it promotes efficiency and expertise development, it may face challenges in inter-
departmental communication and coordination.

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Divisional Structure
In the divisional structure, the organization is organized into various divisions based on four
criteria—product, market, process, and location. Thus, divisional structure is most suited for
the organizations having a wide range of products, area of operation, work processes, or
customers. Each of the division has its own set of functional units like marketing,
manufacturing, finance, HR, and so on.

Matrix Structure
The matrix structure comes into existence when one organizational structure is superimposed
on the other. In this structure, an employee is answerable to two immediate supervisors: a
functional supervisor and a divisional supervisor. The functional supervisor is in charge of
overseeing employees in a functional area, such as marketing or engineering. Divisional
supervisors manage specific projects. For example, the diagram below depicts the absorption
of employees from operations, finance, and marketing for projects A and B.

Flat Organizational Structure

Organizations that require more autonomy and self-control have flat organizational structure.
In this structure, there are fewer levels of management. The flat organizational structure is
usually adopted by small business firms. Here, the management shows confidence in the
decision-making capability of the employees. It focuses on empowering the employees rather
than following the chain of command. In this organizational structure, the span of control is
wide.

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Line-and-staff organization:
Line functions have direct responsibility of achieving the objective of the venture. In this form
of organization, a supervisor exercises direct control over a subordinate, authority flows from
top to bottom of the organization. Here, the chief executive heads the organization. This type
of organization is also called as scalar organization. For example:

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Project organizational structure

A project organizational structure assembles temporary, cross-functional teams led by a project
manager to efficiently execute specific projects. This approach promotes collaboration,
adaptability, and efficient resource utilization, focusing on well-defined project objectives.
After project completion, teams disband or move to new projects, allowing organizations to
effectively manage diverse and unique endeavors.

Directions in organisation structures

Organizational structures have evolved in various directions to meet the changing demands of
the business environment. Traditional hierarchical structures, flat organizations, matrix setups,
network structures, and team-based models are some of the common approaches. Recent trends
include boundaryless organizations, virtual structures, agile frameworks, and eco-centric
approaches. Organizations often adopt hybrid structures to balance flexibility and efficiency,
and the choice depends on factors such as size, industry, and goals. The dynamic nature of
work and the ongoing pursuit of innovation continue to shape the diverse landscape of
organizational structures.

Elements of Directing

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Leading/Leadership
Definitions
According to Livingston – ‘Leadership is the ability to awaken the desire to follow a
common objective’.

According to C.I. Bernard – ‘Leadership is the quality of behaviour of the individuals

whereby they guide people or their activities in organised efforts’.

According to Bernard Keys and Thomas – ‘Leadership is the process of influencing and
supporting others to work enthusiastically towards achieving objectives’.

Nature
An essential part of management is co-ordinating the activities of people and guiding their
efforts towards the goals and objectives of the organisation. This involves the process of
leadership and the choice of an appropriate form of action and behaviour. Leadership is a
central feature of organisational performance. The manager must understand the nature of
leadership influence and factors which determine relationships with other people, and the
effectiveness of the leadership relationship.

In the twenty-first century, leaders must create an atmosphere in which people believe in
strategy, believe in management decisions, and believe in their work. Once people believe in
management decisions, there is an excitement within an organization. Such an atmosphere
makes an organization prosper. Successful leaders create this sort of environment both inside
and outside the organization.

APPROACHES TO LEADERSHIP

Due to its complex and variable nature there are many alternative ways of analysing leadership.
It is helpful, therefore, to have some framework in which to consider different approaches to
study of the subject. One way is to examine managerial leadership in terms of:

1. The Qualities or Traits approach

2. Leadership as a behavioural category
3. The Contingency approach
4. Transformational leadership

The Qualities or Traits approach

The first approach assumes that leaders are born and not made. Leadership consists of certain
inherited characteristics, or personality traits, which distinguish leaders from their followers:
the so-called Great Person theory of leadership. The qualities approach focuses attention on
the man or woman in the job and not on the job itself. It suggests that attention is given to the
selection of leaders rather than to training for leadership. For example, Drucker (writing
originally in 1955) makes the point that:

Leadership is of utmost importance. Indeed there is no substitute for it. But leadership cannot
becreated or promoted. It cannot be taught or learned.

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Intelligence
Intelligence or intellectual ability is positively related to leadership. Based on their analysis of
a series of recent studies on intelligence and various indices of leadership, Zaccaro et al. (2004)
found support for the finding that leaders tend to have higher intelligence than nonleaders.
Having strong verbal ability, perceptual ability, and reasoning appears to make one a better
leader. Although it is good to be bright, the research also indicates that a leader’s intellectual
ability should not differ too much from that of the subordinates. If the leader’s IQ is very
different from that of the followers, it can have a counterproductive impact on leadership.
An example of a leader for whom intelligence was a key trait was Steve Jobs, founder and CEO
of Apple who died in 2011. Jobs once said, “I have this really incredible product inside me and
I have to get it out” (Sculley, 2011, p. 27). Those visionary products, first the Apple II and
Macintosh computers and then the iMac, iPod, iPhone, and iPad, have revolutionized the
personal computer and electronic device industry, changing the way people play and work.
Self-Confidence
Self-confidence is another trait that helps one to be a leader. Self-confidence is the ability to be
certain about one’s competencies and skills. It includes a sense of self-esteem and self-
assurance and the belief that one can make a difference. Leadership involves influencing others,
and self-confidence allows the leader to feel assured that his or her attempts to influence others
are appropriate and right. Again, Steve Jobs is a good example of a self-confident leader. When
Jobs described the devices he wanted to create, many people said they weren’t possible. But
Jobs never doubted his products would change the world, and, despite resistance, he did things
the way he thought best. “Jobs was one of those CEOs who ran the company like he wanted to.
He believed he knew more about it than anyone else, and he probably did,” said a colleague
(Stone, 2011).
Determination

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Many leaders also exhibit determination. Determination is the desire to get the job done and
includes characteristics such as initiative, persistence, dominance, and drive. People with
determination are willing to assert themselves, are proactive, and have the capacity to persevere
in the face of obstacles. Being determined includes showing dominance at times and in
situations where followers need to be directed.
Integrity
Integrity is another of the important leadership traits. Integrity is the quality of honesty and
trustworthiness. People who adhere to a strong set of principles and take responsibility for their
actions are exhibiting integrity. Leaders with integrity inspire confidence in others because they
can be trusted to do what they say they are going to do. They are loyal, dependable, and not
deceptive. Basically, integrity makes a leader believable and worthy of our trust.
Sociability
A final trait that is important for leaders is sociability. Sociability is a leader’s inclination to
seek out pleasant social relationships. Leaders who show sociability are friendly, outgoing,
courteous, tactful, and diplomatic. They are sensitive to others’ needs and show concern for
their well-being. Social leaders have good interpersonal skills and create cooperative
relationships with their followers.
LEADERSHIP AS A BEHAVIOURAL CATEGORY
This approach draws attention to the kinds of behaviour of people in leadership situations. One
of the most extensive research studies on behavioural categories of leadership was the Ohio
State Leadership Studies undertaken by the Bureau of Business Research at Ohio State
University. The focus was on the effects of leadership styles on group performance.
Questionnaires were designed which comprised a list of descriptive items each dealing with a
specific aspect of leadership behaviour. The questionnaires were used repeatedly in different
kinds of organisations and in a variety of leader–group member situations.
Results of the Ohio State studies indicated two major dimensions of leadership behaviour,
labelled ‘consideration’ and ‘initiating structure’.
■ Consideration reflects the extent to which the leader establishes trust, mutual respect and
rapport with the group and shows concern, warmth, support and consideration for subordinates.
This dimension is associated with two-way communication, participation and the human
relations approach to leadership.
■ Structure reflects the extent to which the leader defines and structures group interactions
towards attainment of formal goals and organises group activities. This dimension is associated
with efforts to achieve organisational goals. Consideration and initiating structure can be seen
as the same as maintenance function (building and maintaining the group as a working unit and
relationships among group members) and task function (accomplishment of specific tasks of
the groups andachievement of goals)
Another major research study was carried out at the University of Michigan Institute for Social
Research at the same time as the Ohio State studies. Effective supervisors (measured along
dimensions of group morale, productivity and cost reduction) appeared to display four common
characteristics:
■ delegation of authority and avoidance of close supervision;
■ an interest and concern in their subordinates as individuals;
■ participative problem-solving; and
■ high standards of performance.

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Likert, who has summarised the findings of the University of Michigan studies, used the terms
employee-centred and production-centred supervisors.38 These terms are similar to the
dimensions of consideration and structure. The first three of these supervisory characteristics
are examples of consideration. The fourth characteristic exemplifies structure. Like
consideration and structure, employee-centred and production- centred supervision need to be
balanced. Likert concluded that employee-centred supervisors who get best results tend to
recognise that one of their main responsibilities is production. Both the Ohio State studies and
the University of Michigan studies appear to support the idea that there is no single behavioural
category of leadership which is superior. There are many types of leadership behaviour and
their effectiveness depends upon the variables in any given situation.

Contingency approaches to Leadership

Contingency theories are based on the belief that there is no single style of leadership
appropriate to all situations. Major contingency models of leadership include:
■ Favourability of leadership situation – Fiedler
■ Quality and acceptance of leader’s decision – Vroom and Yetton, and Vroom and Jago
■ Path–goal theory – House, and House and Dessler
■ Maturity of followers – Hersey and Blanchard

FIEDLER’S CONTINGENCY MODEL

One of the first leader–situation models was developed by Fiedler in his contingency theory of
leadership effectiveness.42 Fiedler’s contingency model was based on studies of a wide range
of group situations, and concentrated on the relationship between leadership and organisational
performance. In order to measure the attitudes of the leader, Fiedler developed a ‘least preferred
co-worker’ (LPC) scale. This measures the rating given by leaders about the person with whom
they could work least well. The questionnaire contains up to 20 items. Examples of items in
the LPC scale are pleasant/ unpleasant, friendly/unfriendly, helpful/frustrating, distant/close,
co-operative/ unco-operative, boring/interesting, self-assured/hesitant, open/guarded. Each
item is given a single ranking of between one and eight points, with eight points indicating the
most favourable rating. For example:

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The LPC score is the sum of the numerical ratings on all the items for the ‘least preferred co-
worker’. The less critical the rating of the least preferred co-worker and the more favourably
evaluated, the higher the leader’s LPC score. The more critical the rating, the lower the LPC
score. The original interpretation of the LPC scale was that the leader with a high LPC score
derived most satisfaction from interpersonal relationships and, when relationships with
subordinates need to be improved, is motivated to act in a supportive, considerate manner. The
leader with a low LPC score derived most satisfaction from performance of the task and
achieving objectives.
Favourability of leadership situation
Fiedler suggests that leadership behaviour is dependent upon the favourability of the leadership
situation. There are three major variables which determine the favourability of the situation
and which affect the leader’s role and influence.
■ Leader–member relations – the degree to which the leader is trusted and liked by group
members, and their willingness to follow the leader’s guidance.
■ The task structure – the degree to which the task is clearly defined for the group and the
extent to which it can be carried out by detailed instructions or standard procedures.
■ Position power – the power of the leader by virtue of position in the organisation, and the
degree to which the leader can exercise authority to influence (for example) rewards and
punishments, or promotions and demotions.

VROOM AND YETTON CONTINGENCY MODEL

Another contingency model of leadership is provided by Vroom and Yetton.They base their
analysis on two aspects of a leader’s decision: its quality and its acceptance.
■ Decision quality, or rationality, is the effect that the decision has on group performance.
■ Decision acceptance refers to the motivation and commitment of group members in
implementing the decision.
A third consideration is
■ the amount of time required to make the decision.

The Vroom and Yetton model suggests five main management decision styles:
■ Autocratic
A.I: Leader solves the problem or makes the decision alone using information available at the
time.
A.II: Leader obtains information from subordinates but then decides on solution alone.
■ Consultative
C.I: The problem is shared with relevant subordinates, individually. The leader then makes the
decision which may or may not reflect the influence of subordinates.
C.II: The problem is shared with subordinates as a group. The leader then makes
the decision which may or may not reflect the influence of subordinates.
■ Group
G.II: The problem is shared with subordinates as a group. The leader acts as chairperson, rather
than an advocate. Together the leader and subordinates generate and evaluate alternatives and
attempt to reach group consensus on a solution.

THE VROOM AND JAGO REVISED DECISION MODEL

In a revised version of the original model Vroom and Jago retain the five main decision making
styles but incorporate a larger number – 12 – of contingency variables. The new model specifies
that any of the five decision styles may be effective in given situations.
The contingency variables relate to:
■ quality requirement;

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■ commitment requirement;
■ leader information;
■ problem structure;
■ commitment probability;
■ goal congruence;
■ subordinate conflict;
■ subordinate information;
■ time constraint;
■ geographical dispersion;
■ motivation time; and
■ motivation development.

PATH–GOAL THEORY

A third contingency model of leadership is the path–goal theory, the main work on which has
been undertaken by House, and by House and Dessler. The model is based on the belief that
the individual’s motivation is dependent upon expectations that increased effort to achieve an
improved level of performance will be successful, and expectations that improved performance
will be instrumental in obtaining positive rewards and avoiding negative outcomes.

The path–goal theory of leadership suggests that the performance of subordinates is affected
by the extent to which the manager satisfies their expectations. Path–goal theory holds that
subordinates will see leadership behaviour as a motivating influence to the extent that it means:
■ satisfaction of their needs is dependent upon effective performance; and
■ the necessary direction, guidance, training and support, which would otherwise be
lacking, is provided.

House identifies four main types of leadership behaviour.

■ Directive leadership involves letting subordinates know exactly what is expected of them
and giving specific directions. Subordinates are expected to follow rules and
regulations. This type of behaviour is similar to ‘initiating structure’ in the Ohio
State Leadership Studies.
■ Supportive leadership involves a friendly and approachable manner and displaying
concern for the needs and welfare of subordinates. This type of behaviour is similar
to ‘consideration’ in the Ohio State Leadership Studies.
■ Participative leadership involves consulting with subordinates and the evaluation of
their opinions and suggestions before the manager makes the decision.
■ Achievement-oriented leadership involves setting challenging goals for subordinates,
seeking improvement in their performance and showing confidence in subordinates’
ability to perform well.

Path–goal theory suggests that the different types of behaviour can be practised by the same
person at different times in varying situations. By using one of the four styles of leadership
behaviour the manager attempts to influence subordinates’ perceptions and motivation, and
smooth the path to their goals.

TRANSFORMATIONAL LEADERSHIP

As its name implies, transformational leadership is a process that changes and transforms
people. It is concerned with emotions, values, ethics, standards, and long-term goals. It includes

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assessing followers’ motives, satisfying their needs, and treating them as full human beings.
Transformational leadership involves an exceptional form of influence that moves followers to
accomplish more than what is usually expected of them. It is a process that often incorporates
charismatic and visionary leadership. The term transformational leadership was first coined
by Downton (1973). Its emergence as an important approach to leadership began with a classic
work by political sociologist James MacGregor Burns titled Leadership (1978).

Components of transformational leadership

According to Bass, the transformational leader motivates followers to do more than originally
expected and the extent of transformation is measured in terms of the leader’s effects on
followers. Applying the ideas of Burns to organisational management, Bass proposed a theory
of transformational leadership which argues that the leader transforms and motivates followers
by:

1. generating greater awareness of the importance of the purpose of the organisation and
task outcomes;
2. inducing them to transcend their own self-interests for the sake of the organisation or
team; and
3. activating their higher-level needs.

Transformational leadership is comprised of four basic components:

■ idealised influence – the charisma of the leader, and the respect and admiration of the
followers;

■ inspirational motivation – the behaviour of the leader which provides meaning and
challenge to the work of the followers;

■ intellectual stimulation – leaders who solicit new and novel approaches for the performance
of work and creative problem solutions from followers; and

■ individualised consideration – leaders who listen and give special concern to the growth
and developmental needs of the followers.

Controlling

Controlling is the process of ensuring that actual activities conform to the planned activities. It
is the controlling process that deals with setting up the standards and taking corrective action
whenever the performance is deviated from the stated standards.

Definitions

‘Control is checking current performance against pre-determined standards contained in the

plans, with a view to ensure adequate progress and satisfactory performance.’—E. L. F.
Breach

‘Controlling is the measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are accomplished.’—Koontz and
O’Donnell

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Importance

1. Accomplishing Organizational Goals: Controlling is essential for ensuring that

organizational activities are aligned with the overall goals and objectives. By regularly
monitoring performance and comparing it against predetermined benchmarks,
managers can identify whether the organization is on track to achieve its goals. If
deviations are detected, corrective actions can be taken to realign activities with the
desired outcomes, thus increasing the likelihood of goal accomplishment.

2. Judging Accuracy of Standards: Controlling involves setting standards and benchmarks

against which actual performance is measured. These standards serve as a yardstick for
evaluating the accuracy and effectiveness of organizational processes and procedures.
By assessing whether actual performance meets these standards, managers can identify
areas where standards may need to be adjusted or improved to better reflect
organizational needs and realities.

3. Making Efficient Use of Resources: Controlling helps organizations make efficient use
of their resources by monitoring resource allocation and utilization. By comparing
actual resource consumption with planned allocations, managers can identify instances
of overutilization or underutilization of resources. This information allows them to
make adjustments in resource allocation, reallocate resources to areas of greater need,
and eliminate waste, thereby enhancing overall resource efficiency and productivity.

4. Improving Employee Motivation: Controlling can contribute to improving employee

motivation by providing clear performance expectations and feedback mechanisms.
When employees understand what is expected of them and receive feedback on their
performance, they are more likely to feel motivated to meet or exceed those
expectations. Controlling also allows managers to recognize and reward high-
performing employees, further incentivizing motivation and commitment to
organizational goals.

5. Ensuring Order and Discipline: Controlling helps maintain order and discipline within
the organization by establishing systems of accountability and responsibility. When
employees know that their performance is being monitored and evaluated, they are
more likely to adhere to organizational policies and procedures. This fosters a culture
of discipline and accountability, which is essential for the smooth functioning of the
organization and the achievement of its objectives.

6. Facilitating Coordination in Action: Controlling facilitates coordination by providing a

mechanism for integrating various organizational activities towards common goals. By
monitoring performance across different departments and functions, managers can
identify areas of overlap, duplication, or inconsistency and take corrective actions to
ensure alignment and coordination. This helps prevent conflicts, minimize bottlenecks,
and promote synergy among different parts of the organization, leading to more
effective and efficient operations.

Prof. Immaculate Joseph Kirthika | AIT, BENGALURU

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Steps in the control process

The steps involved in the control process are explained in detail with examples as follows.

Establish Standards and Performance Measures: A standard is a benchmark against which

the actual performance is measured. The standards that can be defined and measured easily are
called quantitative standards, for example, number of units manufactured, number of units sold,
and so on. And the standards that cannot be defined and measured easily are called qualitative
standards, such as the effect of training on the individual’s performance, and so on.

For example, the marketing department has established standard that 1,000 units of product
‘A’ should be sold in the east region, 2,000 units in the north region, and 1,500 units in the
south region per month.

Measure Performance: We then need to measure the actual performance of the subordinates.

Prof. Immaculate Joseph Kirthika | AIT, BENGALURU

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For example, after one month, it was observed that 700 units were sold in the east region, 2,200
units were sold in the north region, and 1,500 units were sold in the south region. These are
actual performance output of the respective regions.

Compare Actual Performance against Established Standards: Here, the actual

performance is compared with the standard to identify the deviation, if any, so that necessary
action could be taken.

Corrective Action: Comparing the actual performance with the established standards makes
it clear whether corrective action has to be taken.

Types of Control

1. Feedforward Control: Feedforward control is proactive in nature, focusing on

preventing problems before they occur by anticipating potential issues and taking
corrective actions in advance. This type of control involves identifying potential
deviations from the desired course and implementing measures to prevent them.
Example: Imagine a manufacturing company that produces electronic devices. Before
starting a new production run, the quality control team conducts thorough inspections
of the production equipment to ensure it's in optimal condition. They also review the
production schedule to anticipate any potential bottlenecks or material shortages. By
identifying and addressing these issues beforehand, the company aims to ensure smooth
production without delays or quality issues.
2. Concurrent Control: Concurrent control involves monitoring activities and processes
as they occur, ensuring that they are in line with predetermined standards and
objectives. This type of control allows managers to intervene in real-time to address
any deviations from the desired course.
Example: In a retail store, supervisors use concurrent control by regularly observing the
cashier stations to ensure that transactions are handled accurately and efficiently. If a
cashier is found to be making mistakes or taking longer than expected, the supervisor

Prof. Immaculate Joseph Kirthika | AIT, BENGALURU

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can provide immediate feedback and support to rectify the situation, maintaining
service quality and customer satisfaction.
3. Feedback Control: Feedback control involves evaluating performance after the fact,
comparing it to established standards or objectives, and taking corrective actions based
on the results. This type of control provides valuable information for improving future
performance and ensuring alignment with organizational goals.
Example: A software development team implements feedback control by conducting
regular code reviews and retrospectives after completing each sprint. During the code
review, team members assess the quality of the code, adherence to coding standards,
and overall functionality. Based on the feedback received, developers can make
necessary adjustments to improve the code quality and performance in subsequent
sprints.

Prof. Immaculate Joseph Kirthika | AIT, BENGALURU