Module 2

MODULE 2

DIRECTING AND CONTROLLING

Definition:

Means issuance of orders and leading and motivating subordinates as they go about executing
orders Consists of the process and techniques utilized in issuing instructions and making certain
that operations are carried on as originally planned.

Is a vital in managerial function Is used to stimulate action by giving direction to his subordinates
through orders and also supervise their work to ensure that the plans and policies achieve the
desired actions and results.

To conclude direction is the process of utilizing the techniques in issuing instructions and making
certain that operations are carried out on as originally planned.

Principles of Directing:
1) Harmony of objectives:

 The goals of its members must be in complete harmony with the goals of an organization
 The manager must direct the subordinates in such a way that they that they perceive their goals
to be in harmony with enterprise objectives.
 For Example the company’s profits may be associated with the employee’s gains by giving
additional bonus or promotion.
2) Unity of Command:
The subordinates must receive orders and instructions from one supervisor only the violation of which
may lead to conflicting orders, divided loyalties and decreased personal responsibility for results.
3) Direct supervision
Every supervisor must maintain face-to-face contact with his subordinates which boosts the morale of
the employees, increases their loyalty and provides them with feedback on how well they are doing.
4) Efficient Communication:
 Communication is an instrument of direction through which the supervisor gives orders,
allocates jobs and explains duties and ensures performance.
 Is a two way process which enables the superior to know how his subordinates feel about
the company and how the company feels on a number of issues concerning them.
 In communication comprehension is more important than the content.
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5) Follow-through:

Is an act of following through the whole performance of his subordinates to keep check on their
activities, help them in their cat and point out deficiencies if any and revise their direction if
required.

Leadership Styles:

Three leadership styles widely used:

 Traits approach
 Behavioral approach
 Contingency approach
1. Traits approach:

Trait is basically a character and deals with personal abilities and assumed to be God’s gift and
abilities are identified as mental and physical energy, emotional stability, knowledge of human
relations, empathy, objectivity, personal motivation, communication skills, teaching ability, social
skills, technical competence, friendliness and affection, integrity and faith, intelligence etc.
Traits approaches –
Trait theories argue that leaders share a number of common personality traits and characteristics,
and that leadership emerges from these traits.

Early trait theories promoted the idea that leadership is an innate, instinctive quality that you
either have or don't have.

Now we have moved on from this approach, and we're learning more about what we can do as
individuals to develop leadership qualities within ourselves and others.

Traits are external behaviours that emerge from things going on within the leader's mind
– and it's these internal beliefs and processes that are important for effective leadership.

2. Behavioral approach – (refer ppt for leadership styles)

 Behavioral theories focus on how leaders behave. There are three types of leaders:
a. Autocratic leaders make decisions without consulting their teams. This is considered appropriate
when decisions genuinely need to be taken quickly, when there's no need for input, and when team
agreement isn't necessary for a successful outcome.
b. Democratic leaders allow the team to provide input before making a decision, although the degree of input
can vary from leader to leader. This type of style is important when team agreement matters, but it can be
quite difficult to manage when there are lots of different perspectives and ideas.
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c. Laissez-faire leaders don't interfere; they allow people within the team to make many of the decisions.
This works well when the team is highly capable and motivated, and when it doesn't need close
monitoring or supervision. However, this style can arise because the leader is lazy or distracted, and, here,
this approach can fail.

3. Contingency approach–

Situation influencing good leadership

The realization that there isn't one correct type of leader led to theories that the best leadership style
is contingent on, or depends on, the situation.
These theories try to predict which leadership style is best in which circumstance.

Motivation theories:

1) Maslow’s need hierarchy theory

2) Herzberg’s two factor theory
3) McClelland’s achievement theory
4) Victor Vroom’s Expectancy theory
5) Adams equity theory
6) Skinners behaviour modification theory

1) Maslow’s need hierarchy theory:

An unsatisfied need is the basis for the motivation process and the starting point and begins the chain of
events leading to behaviour as shown in the figure below.
 Motivational Theories
Order of priority of human needs begins with the person’s unsatisfied need at the lowest level-
identification of the need develops in the form of as goal which leads to the fulfilment of the need
to achieve the goal.

These needs are arranged in the form of a ladder of five successive categories as shown in the figure
above.
(i) Physiological needs: Arise of the basic physiology of life like the need for food, water, air, etc
which must be at least satisfied partially for continued survival.
(ii) Security needs: Needs to feel free from economic threat and physical harm which need
protection from arbitrary lay-off and dismissal, disaster and avoidance of the unexpected.
(iii) Egoistic needs: are the needs which relate to respect and prestige the need for dominance for
example.

Can be classified as self-esteem and esteem from others. Self esteem is the need for
worthiness of oneself and the esteem is the necessity to think others that he is worthy

(iv) Self-fulfilment needs: are the needs to realize ones potential that is realizing one’s own capabilities to
the fullest-for accomplishing what one is capable of to the fullest. example a musician must make music
etc.
According to Maslow, people attempt satisfy their physical needs first. as long as the needs are unsatisfied
they dominate and after they become reasonably satisfied and progress to the next level and so on.

Herzberg’s Two-factor theory:

Original study based on the research by Fredrick and Herzberg who interviewed 200
engineers and accountants and were asked about the good times and bad times they think
about their jobs.

Out of these interviews two factors emerged called the

I Maintenance factors
II Motivators or satisfiers.

I Maintenance factors (Factor 1)

1) Fair company polices and administration
2) A supervisor who knows the work
3) A good relationship with ones supervisor.
4) A good relationship with one’s peers.
5) A good relationship with ones subordinates.
6) A fair salary
7) Job security
8) Personal life
9) Good working conditions
10) Status
II) Motivators or satisfiers (Factor 2)

1) Opportunity to accomplish something significant

2) Recognition for significant achievements
3) Chance for advancement
4) Opportunity to grow and develop on the job
5) Chance for increased responsibility
6) The job itself.

Some facts about the two factors:

1) Motivators are job centered
2) Maintenance factors are related working conditions and environmental conditions.
3) These two groups of factors are also known as intrinsic and extrinsic rewards.
4) These two sets of factors are unidirectional.

McClelland’s need for achievement theory:

According to McClelland there are three important

needs (i)The need for affiliation
(ii) the need for power
(iii) the need for achievement

(i) Need for affiliation:

Reflects desire to interact socially with people Concerned about the quality of an important
personal relationship

(ii) The need for power:

Person having high need for power tries to exercise the power and authority Concerned with
influencing others and winning arguments
(iii) The need for achievement (n Ach):

Has three distinct characteristics

 a) preference in setting moderately difficult b ut potentially achievable goals
b) Doing most things himself rather than getting them done by others and willing to take personal
responsibility for his success or failure and does not want to hold responsible for it.
c) Seeking situations where concrete feedback is possible.

4) Victor Vroom’s Expectancy theory:

Works under conditions of free choice where an ind ividual is motivated towards activity which he is most
capable of rendering and which he believes has the highest probability of leading to his most preferred
goal. The basic concepts of this theory are
1) First and second level outcomes:

Job related goals before an individual such as promotion, increase in salary, recognition, and
praise and so on are called second level outcomes.

Each second level outcome can be associated with a value called valence for eachindividual.

The valence can be positive, negative or zero

Valence positive: individual wants to attain promotion Valence
negative: does not want to attain promotion
Valence ze ro: outcome towards which he is indifferent Second level outcomes can be achieved in
different ways:
(i) promotion by leaving the organization , by absenting himself to show dissatisfaction, by joining
a pressure group, by attending a training programme, or developing intimacy with the boss, by
bribing somebody, by improving performance or by bribing somebody and so on.

2) Instrumentality:

All first level outcomes have equal probability of leading the individual to the second level
outcome the individual has subjective estimates of these probabilities ranging from - 1 to +1 which
are called instrumentalities. -1 indicates a belief that second level outcome is certain without the
first level outcome 0 indicates a belief that second level outcome is impossible without first level
outcome 1 indicates a belief that second level outcome is certain with first level outcome

These instrumentalities are helpful in determining the valence of each first-level
outcome The valence of each first-level outcome is the summation of all products
arrived by multiplying its instrumentalities with the related valences of the second
level outcomes.
 3. Expectancy:

It is the probability estimate which joins the individual’s efforts to first level outcome

Expectancy values are always positive ranging from 0 to 1.

4. Motivation:


Motivation is the multiplicative function of the valence of each first- level outcome (V1)
And they believed expectancy (E) that given effort will be followed by a particular first
level outcome, That is M=f(V1*E)

5) Adams equity theory:

In this theory, Equity is defined as the ratio between The individual’s job inputs
(such as effort, skill, experience, education and seniority) to the job re wards (such as
pay or promotion) it is believed that the individuals motivation, performance and
satisfaction will depend on his on his or her subjective evaluation o f his or her
effort/reward ratio and the effort/reward ratio of others in similar situations

6) Skinners behavior modification theory:

The theory developed by researches done by B.F Skinner.

The theory is believed and based on the behavior of the past circumstances which they have learnt
that the certain behaviors associated with pleasant outcomes and certain other behaviors are
associated with unpleasant outcomes.

Example: Obedience to authority leads to praise and disobedience leads to punishment.

The consequences that increase the frequency of a behavior are positive reinforcement (praise or
monitory rewards) or negative enforcement (A manager requiring all subordinates to attend early
morning meetings if the performance falls below a certain desired level of the organization.

Negatives of the above theory proposed: Avoids concern for the inner motivation of the
individual. Skinners behavior modification theory is criticized for two reasons
(i) Overemphasis of extrinsic rewards ignores the fact tha t people are better motivated by intrinsic
rewards.
(ii) The theory is unethical no manager has a right to manipulate and control his employees
behavior life.
Communication
Communication means Exchange of opinions, facts ideas or emotions by two or more persons.
The sum of all things what one does to create an understanding in the minds of others.

Is the process of passing information, correct understanding and with right Interpretation from one
person to another.
Nature of communication
1. It is two way traffic:
Messages,directions,opinions etc .are communicated downward from management to
workers.
likewise grievances,complaints,opinions,point of view etc.are communicated upward from
workers to management.
2. Communication is a pervasive function:
communication is required not only in direction function but in all functions of
management like planning,organising,staffing,directing,controlling
3. Communication is a continous process:
Communication is a regular process just like blood circulation in a human body An organisation
cannot exist without communication.
4. Communication aims at developing mutual understanding and cooperative human relationship
towards the achievement of organisational objectives.

Purpose of communication

1.Flow of information
The relevant information must flow from top to bottom and vice versa.the staff at all levels must
be kept informed about the organisational objectives and other development taking place in the
organisation.
2. Coordination
It is through communication the efforts of all the staff working in the organisation can be
coordinated for the accomplishment of the organisational goals.
3. Learning Mangement skills
The communication facilities flow of information,ideas,beliefs,perception,advice,openion,orders
and instructions etc both ways which enable the managers and other supervisory staff to learn
mangerial skills through experience of others.
4. Preparing people to accept change
The proper and effective communication is an important tool in the hands of management
of any organisation to bring about overall change in the organisational policies,procedures and
workbstyle and make staff to accept and respond positively.
5. Developing Good Human Relations
 Management and workers and other staff exchange their ideas,thoughts and perceptions
with each other through communication.this helps to understand each other better.They realize the
difficulties faced by their colleagues at the workplace.this leads to promotion of good human
relation in the organisation.
6. Ideas of Subordinates Encouraged:
The communication facilities inviting and encouraging the ideas from subordinates on
certain occasions on any task.this will develop creative thinking.

Importance of communication:

The importance of communication rose from the fact that earlier business was considered only
a technical and formal structure.

But by Hawthorne’s experiments it was realized that every organization requires structure is a
social system involving the interactions of the people working at different levels and proper
communication is required to the goals of the organization, organizations existence from the
birth to continuing.

1. Coordination of activities
The manager explains to the employees
.organizational goals
modes of achieving it.
 This requires coordination b/w various employees and also departments
 Through communication top level interact lower level and all employees this
interaction helps in getting the commitment, cooperation and coordination of people.
2. Improves planning and decision making
 Source of information for planning
 Proper communication provide information to the manager i.e useful for decision
making.
 no decision could be taken in the absence of information.
 decision,solves any query,accurate information which comes through communication
only
3. Connect geographically dispersed employees.
 The internet,emails,mobiles,telephone,video conferencing etc
 Helps to create virtual teams
4. Increases mangerial effeciency
 The manager convey the target and issues instructions and allocates job to the
subordinates.
 All these aspects involves communication
 Thus communication is essential for the quick and effective performance of the
manager and entire organization.
5. Maintaining good public relationship
 communicate with media on organization issues.
 press release,press conference,open houses.
 6.Means to motivate people
Through motivation superior try to analyze the need of subordinates.
If there is smooth flow of information b/w superior and subordinates then easy for superior
to recognise,which type of incentive will motivate his subordinate.

Coordination

Is the orderly synchronization or fitting together of the interdependent efforts of individuals

to attain a common goal

For example in hospital the proper synchronization of the activities of the nurses, doctors, wards
attendants and lab technicians to give a good care to the patient.

Can be considered as an essential part of all managerial functions of planning, organizing,

directing and directing if the manger performs these functions efficiently and expertly coordination
is automatically generated and there remains no need for special coordination.
Coordination is required at every level of all managerial functions
In planning: performs his function of planning by coordination of the interrelating the plans of various
departments
In organizing: coordination is required in grouping and various activities to subordinates and in creating
departments
In directing: coordination is required to take effect of his particular action will have on other departments
and executives
In controlling: coordination is required manger evaluates operations and checks whether performance is
in conformity with the desired results.

Techniques of coordination:
The following are the important techniques of coordination
1) Rules procedures and policies:

Helps in coordinating the subunits in the performance of their Repetitive activities.

Standard policies, procedures and policies are laid down to cover all possible situations
If the breakdown of the above occurs more rules, regulations are required to be framed to take care
of the breakdown
2) Planning:
Ensures coordinated effort and targets of each department dovetail with the targets of all other
departments.

Example: fixing the targets of the10000 units of additional production and consequently the sales
requires the coordination of the two departments respectively to meet the demands and achieve the
target.
3) Hierarchy:
 Is the simplest device of achieving coordination by hierarchy or chain of command By putting
together independent units under one boss some coordination among their activities is achieved.

Sometimes defective because makes individuals dependent upon, passive towards and subordinates
to the leader.
4) Direct contact:
Used to solve the problems created at the lower levels which affects the employees can be
resolved by formal informal contacts to prevent overloading to top executives.
5) Task force:
Temporary group made up of representatives from the same departments facing problems and
exists as long as the problems lasts and each participant returns to normal tasks once the solution is
reached
6) Committees:

Arise due the fact when certain decisions consistently become permanent.

These groups are labelled committees.

This device greatly eases the rigidity of the hierarchical structure, promotes effective
communication and understanding, of ideas, encourages the acceptance of commitment to policies
and makes implantation more effective.
7) Induction:

Of a new employee is a social setting of his work is also a coordinating mechanism.

The device familiarizes the new employee with organizations rules and regulations dominant
norms and behaviour, values and beliefs and integrates his personal goals with organizational
goals.
8) Indoctrination:

Device commonly used in religious and military organizations is another coordinating device
which develops the desire to work together for a purpose. The major task of a leader being to
build an organization can be succeeded by the indoctrination and other means by converting
the neutral body into a committed body
9) Incentives: providing independent units with an incentive to collaborate such as profit sharing plan is
another mechanism.
10) Liaison departments : evolved to handle transactions and typically occurs between the sales and
production departments.
11)Workflow: is the sequence of steps by which the organization acquires inputs and transforms them
into outputs and exports these to the environment which is largely shaped by the technological, economic
and social considerations and helps them in coordination.

Importance of Coordination
1) Unity in Diversity
Every large org has a large number of employees,each with and background view or
openions,activities.therefore there are diversity activities in an org.
However ,all these activities would not be highly effective in the absence of coordination.
2) Unity of direction
An org needs to integrate the efforts and skills of different employees in order to achieve common
objectives.coordination also eliminates duplication of work leading to cost efficient operations.
3) Encouragement of team spirit
In an org,there exist many conflicts b/w employees,departments etc.coordination encourages people
and departments to work as one big team and achieve the common objectives of the org.
4) Functional differentiation
An org has many departments or sections performing different functions.All these functions are important
for achieving the overall goals of the organization.if all departments work in isolation from the others then
they might not work in tendem.therefore coordination is essential for integrating the functions.
5) Optimum utilization of resources
Primarily,coordination ensures that employee do not engage in cross-purpose work since it brings together
the human and material resources of the org.therfore less wastage of resources.
6) Grow in size:
Large organization has large no.of employees.
They have different habits,behaviour and approaches in a particular situation.many time they won’t work
in harmony.hence coordination is important.
7) Specialization
one person specialization may be unknown by the other employee that leads to
misunderstanding.coordination playa a major role in bringing them together.
8) Empire building
refers to top level of organization.it is important to achieve coordination among top level and
subordinates.
CONTROLLING
Controlling consists of verifying whether everything occurs in conformities with the plans adopted,
instructions issued and principles established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned goals.

• Controlling is an important function of management

• It verifies that all the allotted tasks are being performed on time
• Controlling ensures that activities in an organization are performed as per the plans.
• Controlling also ensures that an organization’s resources are being used effectively and efficiently
for the achievement of predetermined goals.
• It is a function that brings back the management cycle back to the planning function.

Nature & Purpose of Control

 Control is an essential function of management
 Control is an ongoing process
 Control is forward – working because pas cannot be controlled
 Control involves measurement
 The essence of control is action
 Control is an integrated system

CONTROL PROCESS/STEPS IN CONTROLLING

The basic control process involves mainly these steps as shown in Figure
1) The Establishment of Standards:

Because plans are the yardsticks against which controls must be revised, it follows logically that the first
step in the control process would be to accomplish plans. Plans can be considered as the criterion or the
standards against which we compare the actual performance in order to figure out the deviations.

2) Measurement of Performance:

The measurement of performance against standards should be on a forward looking basis so that deviations
may be detected in advance by appropriate actions. The degree of difficulty in measuring various types of
organizational performance, of course, is determined primarily by the activity being measured.
For example, it is far more difficult to measure the performance of highway maintenance worker than to
measure the performance of a student enrolled in a college level management course.

3) Comparing Measured Performance to Stated Standards:

When managers have taken a measure of organizational performance, their next step in controlling is to
compare this measure against some standard. A standard is the level of activity established to serve as a
model for evaluating organizational performance. The performance evaluated can be for the organization as a
whole or for some individuals working within the organization. In essence, standards are the yardsticks that
determine whether organizational performance is adequate or inadequate.

4) Taking Corrective Actions:

After actual performance has been measured compared with established performance standards, the next step
in the controlling process is to take corrective action, if necessary.Corrective action is managerial activity
aimed at bringing organizational performance up to the level of performance standards. In other words,
corrective action focuses on correcting organizational mistakes that hinder organizational performance.
Before taking any corrective action, however, managers should make sure that the standards they are using
were properly established and that their measurements of organizational performance are valid and reliable.

5) Follow – ups

After taking corrective actions management must do follow up.Follow up is done to find out whether
corrective actions are taken properly.Its also to find out whether deviations and their causes are removed.If
follow up is done properly,the actual performance will be equal or better than established standards.
METHODS OF ESTABLISHING CONTROL
Various methods are used by management for controlling the various deviations in the organization.
i)Traditional Techniques
1.Personal observation
2.statistical reports
3.Break even analysis
4.Budgetary Control

ii)Modern techniques
1.Return on investment
2.Responsibility accounting
3.Management audit
4.PERT
5. CPM
6. Management Information
system 7.Internal audit

i)Traditional Techniques

1.Personal observation
personal observation enables the manager to collect first hand information
It also creates a psychological pressure on the employees to perform well as they are aware that they
are being observed personally on their job
under this technique,manager notes the actual performance of employee
Then the manager decides whose performance is weak and how to improve it.
However,it is a very time consuming exercise and cannot effectively be used in all kinds of jobs
2. Statistical Reports

Statistical analysis in the form of averages,percentages,ratios etc present useful information to the managers
regarding performance of the organization in various areas.
Such information is present in the form of charts,graphs,tables etc.enables the managers to read them
more easily.
It allows a comparision to be made with performance in previous periods and also with the
benchmarks.

3. Break Even Analysis

is a Technique used by managers to study the relationship b/w cost,volume,profits.
It determines the probable profit and losses at different levels of activity.
The sales volume at which there is no profit,no loss is known as breakeven point.
Breakeven point is determined by the intersection of total Revenue and Total cost curves.
It is beyond this point that the firm will start earning profits.
It is a useful technique for the managers as it helps in estimating profits at different levels of
activities.
4. Budgetary control
It is a Technique of managerial control in which all operations are planned in advance in the form of
budgets
The actual results are then compared with budgetary
standards This comparision tells us what necessary action is
required.
Different types of budget are
1.Sales budget
2. Production budget
3. Research and development
budget 4.Advertising budget

Modern Techniques

5.Return on investment
Ratios of net profit to the total investment employed in the business is termed as return on
investment,generally expressed as percentage.
ROI= Profit
Total Investment.
Using this percentage of profit is identified.
if ROI is high then the financial performance of a business is good
It helps to compare its present performance with that of previous year’s performance and also helps
for inter-firm comparisions.
it also shows the areas where corrective actions are needed.

6. Responsibility accounting:
It is defined as the system of accounting under which each department head is made responsible for
the performance of his department.
each department is made a profit center.
i)Profit center- manager is responsible for both revenue and cost incurred
ii)Investment center-center is responsible not only for profit but also for
investments Ex:small start-up company

7. Management audit
It is helpful in identifying the deficiencies in the performance of management functions and suggesting
possible improvements.
It helps the management to handle the operation effectively.

8. PERT(Program Evaluation and Review Techniques)

This was developed during 1957-58 for USA Navy.
A project is split into activities and all the activities are integrated in a highly logical sequence to find the
shortest time required to complete the entire project
PERT was created primarily to handle R&D projects.

9. Critical Path Method(CPM)

This concentrates mainly on cost rather than duration like PERT.

The use of both PERT and CPM has grown rapidly today in controlling time bound projects such as
repairing a weak bridge,construction of huge building This Technique also follows the principles of PERT
i.e.critical activities are identified.more importance is given to completion of these critical activities.

10. Management Information System

In order to control the organization properly the management needs accurate computer based
information.They need information about the internal working of the organisation and also about the
external environment.
Information collected continously to identify problems and find out solutions.
MIS collects data,processes it and provides it to the managers so that appropriate corrective action
may be taken in case of deviations from standards.

11. Internal audit

is conducted by an internal auditor who is an employee of an organization.
He makes an independent appraisal of financial and other operations.
He identifies the defects and deviations and reports to the management.

ESSENTIAL SOUND CONTROL SYSTEM

• Feedback
• Objective
• Simple
• Prompt reporting
• Forward looking
• Flexible
• Economical
• Effective and operational
• motivation

• Feedback
is the process of adjusting future actions
• Objectives
Control System should be objective and understandable
• Prompt reporting
Control system should provide prompt and timely report without any delay.so that necessary
corrective action can be taken
• Forward looking
Effective control system must focus on how the future action meet the plans
• Simple
Control system should be simple and easy to implement
• Flexible
Standards will be altered time-to-time.Hence the control system should be flexible.
• Economical
The benefits from the control system should be more than the cost
• Effective and operational
Control system should not only detect the deviations but it should provide solution to the
problem
• Motivation
A good control system should motivate people to achieve high performance.