Unit 4 - Directing And Controlling 665c40

DIRECTING AND CONTROLLING Module – 4

Topics to be covered

Directing and Controlling : Meaning and nature of directing, leadership styles, Motivation theories Communication – Meaning and importance, Co-ordination – Meaning and importance, techniques of co-ordination Meaning and steps in controlling, essentials of a sound control system, methods of establishing control.

Meaning of Directing





Direction means issuance of orders and leading and motivating subordinates as they go about executing orders. According to Haimann, “Directing consists of the process and techniques utilized in issuing instructions and making certain that operations are carried on as originally planned. According to Koontz and O’Donnell, “Direction is the interpersonal aspect of managing by which subordinates are led to understand and contribute effectively and efficiently to the attainment of enterprise objectives. Directing function consists of issuing orders and instructions, guiding and helping subordinates to perform tasks assigned to them, motivating them by deg a good work environment and providing rewards in line with their expectation and performance.

Functions of Direction

Giving orders to employees. Leading and motivating them.

The three important components of directing function are: Communicating Leading Motivating

Requirements/ Nature of effective Direction





Harmony of Objectives – An organisation functions best when the goals of its are in complete harmony with and complementary to the goals of the organisation. Unity of Command –This principle implies that the subordinates should receive orders and instructions from one superior only. The violation of this principle may lead to conflicting orders, divided loyalties and decreased personal responsibility for results. Direct Supervision – Every superior must maintain direct face-to-face with his subordinates. Direct supervision boosts the morale of employees, increases their loyalty and provides them with immediate on how well they are doing.





Efficient Communication – It is through communication that the superior gives orders, allocates jobs, explains duties and ensures performance. Efficient communication not only enables the superior to know how his subordinates feel but also helps the subordinates to know how the company feels on a number of issues concerning them. Follow-through – The manager should follow through the whole performance of his subordinates not merely to keep a check on their activities but to help them in their act, to show them where their deficiency, if any, lies and to revise their direction if it needs revision, and so on.

Leadership



According to Peter Drucker, “ Leadership is the lifting of man’s visions to higher sights, the raising of man’s performance to a higher standard, the building of man’s personality beyond its normal limitations. Leadership is the ability to persuade others to seek defined objectives enthusiastically. Leadership is defined as the ability to influence people towards accomplishment of goals. It is the ability to influence behavior of others and direct them towards achievement of group behavior of others and direct them towards achievement of group or organisational goals.

Characteristics of Leadership

Leadership possess great influential power. Leaders have followers and they influence the behavior of followers. Leaders have a great vision for future. There is a reciprocal relationship between leaders and followers. Leaders create a shared vision among followers and direct them to work towards the achievement of common goals. Leadership is situational and effectiveness of leaders is influenced by situational variables like environment, interpersonal relationship, job content, group relations, size of group, group norms etc.

Importance of Leadership

Leaders guide and inspire subordinates: leaders motivate their followers and guide them towards accomplishment of group goals which in turn contributes to the accomplishment of organisational goals.



Leaders build good work environment: leaders create a work environment in which employees can contribute by performing to the best of their abilities. The environment creates a relationship based on trust.



Leaders build confidence in followers: leaders recognise abilities of their followers and encourage them to develop to their potential by building confidence in them.



Leaders secure cooperation from the group: leaders influences the group- in such a way that all the work collectively towards group objectives and thus in still cooperation among all .



Leaders act as change agents: organisations operate in an environment which is subjected to continuous changes, and if the organisations do not respond to these changes, then survival of the organisation may be difficult. But organisational resist any changes, as they are accustomed to particular methods of work. It requires great leadership to reduce the resistance to change and convince the employees to accept the change. Thus leaders act as change agents of the organisation and helps in implementing successful positive changes in the organisation.



Leaders are representatives of the followers: on one hand leaders direct the employees of the organisation, but on the other hand they are also representatives of their followers. They always take personal interest in helping their followers. They always take personal interest in helping their followers and protect the interest of the followers while taking any major organisational decisions.



Leaders develop great vision: leaders are known for their great vision and they develop the vision for building great organisations.

Difference between managers and leaders Managers • Managers position is based on formal authority defined by organisational structure. • Managers gets the things done by subordinated by exercising their authority. • Managers are rationale in their decisions. • Managers execute plans, implement them and produce results. • Managers exercise positional power.

Leaders • Leaders position is based on their personality and is not formally defined. • Leaders inspire their followers and make them work towards common shared objectives. • Leaders are visionary • Leaders inspire followers, articulate vision and motivates them to achieve common objectives. • Leaders exercise personal power.

Leadership Styles

Autocratic Leadership – In this type of leadership, the leader alone determines policies and makes plans. He tells orders what to do and how to do it. He demands strict obedience and relies on power. The formula used by him is “Do what I say or else …” meaning thereby that an employee will be punished if he does not follow orders. This style of leadership is also called as dictatorship. Advantages: • • •

Quick and consistent decisions are made. Leaders enforce strict discipline among followers and get the work done by making use of fear of punishment and rewarding power. Suitable when subordinates are inexperienced and need direction from leaders.

Disadvantages: • • •

Low motivation among subordinates. One way communication may result in misunderstanding. Too much dependence on leadership.



Democratic Leadership – In this type of leadership (also known as participative or person-oriented leadership), the entire group is involved in and accepts responsibility for goal setting and achievement. Subordinates have considerable freedom of action. The leader shows greater concern for his people than for high production. A part of the leader’s task is to encourage and reinforce constructive inter-relationships among and to reduce intra-group conflict and tensions. Advantages: • • •

Better decisions are made. Provides opportunity for managerial development. Interests of followers are protected.

Disadvantages: • • •

Very slow decision making and timely decisions are not made. Maintaining discipline is very difficult. Requires high maturity in followers.



Free Rein – In this type of leadership, the leader exercises absolutely no control. He only provides information, materials and facilities to his men to enable them to accomplish group objectives. This type can be a disaster if the leader does not know well the competence and integrity of his people and their ability to handle this kind of freedom. Hence this style of leadership may not be suitable in all the situations and it requires subordinates who are knowledgeable, well trained and highly self motivated. Advantages: • Brings in innovation and creativity. • Can bring high motivation among subordinates and thus develop managerial skills among subordinates. • Highly flexible. Disadvantages: • Lack of control • May result in confusion and chaos. • Needs highly matured and knowledgeable subordinates.

Motivation





Motivation is the process of stimulating people to action to accomplish desired goals. Motivation represents inner drive within an individual which directs him to behave in specific way. Motivation is the process of challenging a person’s inner drives so that he wants to accomplish the goals of the organisation. The three key elements of motivation are:

Energy Direction Persistence

Relation between motivation and needs

Unsatisfied Need

Tension

Drives

Reward

Need Satisfaction Or Dissatisfaction

Performance

Behaviour

Reduction in tension or increase in tension

Maslow’s Theory of Motivation – Maslow’s Hierarchy of Needs Theory

Maslow’s Hierarchy of needs According to Abraham Maslow, motivation of individual depends on his or her individual needs. These needs operate along a hierarchy and once a lower need is satisfied, individuals would like to satisfy next higher level need in the hierarchy. Need

Description

Job Related factors which can satisfy the need

Physiological Needs

Food, shelter, clothing, water, Job with pay air etc.

Security Needs

Security from physical and emotional threats

Job security, insurance, retirement benefits.

Social Needs

Love, affection, belongingness etc

Good colleagues, informal work groups, good quality supervision etc.

Esteem Needs

Status, prestige, recognition etc.

Job title, designation, recognition, responsibility

Self actualisation Needs

Realization of life time ambitions

Reaching a position one is capable of.





Physiological needs are those which arise out of the basic physiology of life, for example, the need for food, water, air etc. Security needs are the needs to feel free from economic threat and physical harm. Social needs are needs to associate with other people and be accepted by them: to love and be loved. Esteem needs are those which relate to respect and prestige. A need for dominance may be thought of as one of the egoistic needs. Self-fulfillment needs are needs for realising one’s potential. These include the need for realising one’s capabilities to the fullest-for accomplishing what one is capable of accomplishing, a musician must make music, a poet must write if he is to be ultimately happy.



Abraham Maslow sought to explain why people are driven by particular needs at particular times. According to Maslow, human needs are arranged in a hierarchy, from the most pressing to the least pressing. In their order of importance, they are physiological needs, safety needs, social needs, esteem needs and self actualization needs. People will try to satisfy their most important needs first. When a person succeeds in satisfying an important need, that need will cease being a current motivator, and the person will try to satisfy the nextmost important need. For example, a starving man (need 1) will not take an interest in Yoga, Meditation (need 5), nor in how he is viewed by others (need 3 or 4), nor even in whether he is breathing clean air (need 2), But when he has enough food and water, the next most important need will become salient.

Limitations





It has been found that needs not be along the hierarchy as proposed by Maslow. For example individuals who are not able to satisfy their lower level needs, may be already operating on higher level needs. It is also found that needs priority vary from country to country. For example it is found that esteem needs are more important for workers in Spain and Belgium than security needs. Individual behaviours may be directed at multiplicity of motives and thus Maslow’s argument that one need is satisfied at a time is not valid.

Herzberg’s Two-Factor Theory

According to Herzberg, the absence of certain job factors tend to make workers dissatisfied. However, the presence of these same factors in themselves does not produce high levels of motivation. They merely help avoid dissatisfaction and the problems it creates, such as absenteeism, turnover and grievances. Herzberg called these factors maintenance or hygiene factors since they are necessary to maintain a reasonable level of satisfaction. Ten maintenance factors, namely:

Fair company policies and istration. A supervisor who knows the work. A good relationship with one’s supervisor. A good relationship with one’s peers. A good relationship with one’s subordinates. A fair salary. Job security Personal life Good working conditions Status

To build high levels of motivation, a different set of factors is necessary. However, if these factors are not present, they do not in themselves lead to strong dissatisfaction. Herzberg called these the motivators or satisfiers. These are six in number: Opportunity to accomplish something significant Recognition for significant accomplishments. Chance for advancement. Opportunity to grow and develop on the job. Chance for increased responsibility. The job itself. In the absence of maintenance factors, workers may feel dissatisfied. There may be more absences, more quits and more grievances in union organisations. But the presence of these factors does not motivate them. Similarly, in the presence of motivators, workers may feel motivated but their absence does not make them dissatisfied.

Theory X and Theory Y

According to Douglas McGregor managers hold two sets of assumptions about their subordinates. Mangers assume that their subordinates belong to either of two categories called category X and category Y. Theory X assumptions

Theory Y assumptions

1. Employees inherently dislike work and will try to avoid it.

1. Employees like work just like play and rest.

2. Since employees dislike work and try to avoid it, they must be threatened with punishment to get the work done and they must be closely monitored and controlled.

2. People are capable of exercising self direction and self control if they are committed to work.

3. Employees do not like to take responsibilities and always like to seek formal direction.

3. Employees at all levels are capable of taking up any responsibility.

4. Employees place job security above all and display very little ambition.

4. Decision making ability is widely spread across population and people at lower level are capable of making creative decisions.

McGregor proposed that theory X and theory Y are important tools in understanding human behaviour at work and deg work environment. Neither the two sets of assumptions are applicable in all situations. But theory X is more applicable to unskilled and uneducated lower level employees who may be working for satisfaction of lower level needs. Theory Y is applicable to educated, skilled and professional employees who are capable of taking up responsibility. However they can be exceptions.

McClelland’s Need for Achievement Theory



According to McClelland, the three important needs are the need for affiliation, the need for power and the need for achievement. The need for affiliation reflects a desire to interact socially with people. A person with a high need for affiliation is concerned about the quality of an important personal relationship. Thus, social relationships take precedence over task accomplishment for such a person. A person who has a high need for power concentrates on obtaining and exercising power and authority. The person is concerned with influencing others and winning arguments.

A person who has a high need for achievement has three distinct characteristics. These are: 1. Preference for setting moderately difficult but potentially achievable goals. 2. Doing most things himself rather than getting them done by others. He wants to take personal responsibility for his success or failure and does not want to hold others or chance responsible for it. 3. Seeking situations where concrete is possible. If the needs of employees can be accurately measured, organisations can improve the selection and placement processes. For eg. An employee or recruit with a high need for achievement could be placed in a position that would enable the person to achieve.



Definition - Communication

Communication – Latin word ‘communis’ means common.



According to Allen Louis-Communication is the sum of all the things, a person does when he wants to create an understanding in the mind of another. It involves a systematic and continuous process of telling, listening and understanding.



According to George Terry -Communication is an exchange of facts, ideas, opinions or emotions, by two or more persons.



Communication is the process of transmission of information or message from one person to another. It involves exchange of information, facts, ideas, feelings etc between two or more individuals.

Example of Two way communication Ideation

An organization’s policy to be circulated among all employees through news bulletin.

Encoder

The editor/person who writes the policy.

Message

The content (policy details) and the words/pictures used to convey the policy to the employees.

Channel

The medium – in this case the news bulletin.

Receiver

The audience of the message – for whom the policy is intended and who read the bulletin.



Employee’s reaction to the policy communicated.

Importance of communication in Management



Sense of unity of purpose and commitment to a single organisational goal can be developed only through the inspiring and persuasive power of communication. Training and development programmes can be conducted through effective communication. In order to appraise employees, performance standards must be properly and clearly communicated. In order to increase employee’s job performance and effectiveness by updating their knowledge. To promote employees sense of belonging and commitment. To effect changes smoothly. To inform and convince employees about decisions and the reasons behind those decisions. To develop employees’ clear understanding of their roles and future growth opportunities in the organization. Resolving disputes in organizations , which lead to huge losses of time, money and good human relations.

Communication according to organisational structure

Formal Channel of Communication – Means of communication that is formally controlled by managers or people occupying positions in an organization.This ensures that the information flows orderly, in a timely and accurate manner. Any information, decision, memo or reminder etc. will also follow this path.



Informal Channel of communication- Side by side with the formal channel of communication every organization has an equally effective channel of communication namely that is the informal channel. Given the name ‘grapevine’ precisely because it runs in horizontal, vertical and diagonal directions. It flows around water coolers, down hallways, through lunch rooms and wherever people get together in groups.

Communication according to Direction/ Dimension of expression Communication is multidimensional or multidirectional. There are various directions in which it flows. • Vertical Communication: Downward

Communication: Communication which flows from supervisor to the subordinate is known as downward communication. They include orders, rules, instructions etc. their nature is directive.

Upward

Communication: this is just reverse of the downward communication. It flows from subordinate to supervisor. Each communication includes reactions and suggestions from workers, their grievances etc. the contents of the upward communication are reports, suggestions, reaction, statements and proposals prepared for submissions to the supervisor.

Vertical Communication

MARKETING MANAGER UPWARD COMMUNICATION

---------------------------

MARKETING SUPERVISOR

DOWNWARD COMMUNICATIO N

Lateral or horizontal communication When communication takes place between two or more persons who are subordinates working under the same person, or those who are working at the same level, it is called lateral or horizontal communication. A good example of this kind of communication is that between functional managers. They are serving the organisation in different capacities but their goals are common and their interaction is necessary to maintain co-ordination. The best example of lateral communication can be seen in the interaction of production and marketing departments. Strategies of marketing cannot be fruitful unless plans are communicated to the production department. The Marketing Manager has to be in constant touch with the Production Manager, in order to meet customer orders as per schedule. Marketing Manager

Production Manager

Communication according to the way of expression

Oral communication: in this type of communication both parties to the process of communication exchange their ideas orally either face to face or through devices like phone, intercoms etc, meetings, conference, lecturers, interviews etc.



Written communication: in this type of communication, written words, graphs, diagrams, pictures etc are used. They may take forms of circulars, rules, manuals, reports, memos etc.

Barriers to communication Individual barriers Conflicting signals: difference in what one says and what he does Lack of reliable information sources Lack of interest to communicate Poor listening skills

Overcoming Individual Barriers Develop good listening skill Encourage two way communication

Organizational Barriers Semantics : Misinterpretation of words, same word having different meaning Noise Language differences

Overcoming Organizational Barriers Have proper follow up Reduce factors which causes noise Regulate information flow Be aware of language and meaning

Coordination

Coordination is the management of interdependence in work situations.



Coordination can be defined as the orderly synchronization or fitting together of the interdependent efforts of individuals, in order to attain a common goal.



Coordination deals with the task of blending efforts in order to ensure the successful attainment of an objective. It is accomplished by means of planning, organizing and controlling.

Importance of Coordination





Unity in diversity: organisations are made up of people and people do have their own individual interests. Hence good coordination ensures that people works towards common goal rather than their own personal interests. Specialization: the splitting of work into smaller and smaller units through division of work creates the need for coordination among many individuals who need to complete the full task. Teamwork: employees work in form of teams to complete a project or activity undertaken by the organisation. Hence individual efforts has to be synchronized to obtain overall outcome of the team. This in turn creates a sense of shared vision among the team.







Communication: effective communication is very much essential for coordination. Communication ensures harmonious relations among the individuals and different departments. Recognition of goals: defining clear objectives ensures clarity of role and responsibility among individuals resulting in better coordination. Interdependency: organisation are made up of various units and departments, which are interdependent. For example, Marketing department depends on production department for timely supply of products and services to customers. Coordination function ensures that this interdependence needs are met by ensuring good relations among all departments.

Techniques of Coordination







Rules, Procedures, and Policies – Common device to coordinate sub-units in the performance of their repetitive activities. Standard policies, procedures and rules are laid down to cover all possible situations. Planning – Under planning targets of each department, coordinate with the targets of all other departments. For eg. By fixing the target of 10000 units of additional production and sales for the production and sales departments respectively, the head of the organization can be fairly sure that the work of the two departments would be coordinated since their target so demand. Hierarchy – By putting interdependent units under one boss, some coordination among their activities is ensured. Direct - In order to prevent top executives from becoming overloaded with problems, as many problems as possible are resolved by the affected employees at lower levels. Task force – This is a temporary group made up of representatives from those departments which are facing a problem. It exists only as long as the problem lasts.











Incentives- incentives like profit sharing ensures that people work towards common objectives and they motivate them to work with each other for timely completion of tasks. Committees – As certain decisions consistently arise the task forces become permanent.These groups are labeled committees. This device greatly eases the rigidity of the hierarchical structure, promotes effective communication and understanding of ideas, encourages the acceptance of the commitment to policies and makes their implementation more effective. Induction – The device familiarizes the new employee with the organization's rules and regulations, its dominant norms of behavior, values and beliefs, and integrates his personal goals with the organisational goals. Liaison Departments – In some cases where there is a large volume of between two departments, a liaison department evolves to handle the transactions. This typically occurs between sales and production departments. Workflow – A workflow is the sequence of steps by which the organization acquires inputs and transforms them into outputs and exports these to the environment. It helps in coordination.

Control

Control is checking current performance against predetermined standards contained in the plans, with a view to ensuring adequate progress and satisfactory performance.



George Terry: “controlling is determining what is being accomplished that is evaluating the performance, and if necessary, applying correct measures so that the performance takes place according to plans”

Purpose of control Adapt to environmental change

Limit the accumulation of error

Control helps the organization

Cope with organizational complexity

Minimize costs

Steps in a Control Process

Step 1. Establishing standards Control standard is a target against which subsequent performance will be compared Some key areas in all business organizations are: profitability, market position, productivity and personnel development. 1. It should be defined as far as possible in quantitative . For eg. “overheads must be reduced by 12%”. 2. Standards need to be flexible in order to adapt to changing conditions. 3.

It should be consistent with organizational goals.

Step 2: Measuring performance

Performance measurement is a constant and ongoing activity Performance measures must be valid. Daily, weekly and monthly sales numbers measure sales performance Product quality or units produced or unit cost measure production performance Quality or quantity of output measure employees performance

Step 3: Comparing performance against standards



Measured performance will be compared against established standards Performance may be higher than, lower than or identical [equal] to the standard If performance is lower than expected manager has to decide how much deviation from standard can be allowed before taking remedial action Comparison is mainly based on the importance and complexity of the activity

Step 4: Corrective action

Courses of Action

“Doing nothing” – maintaining status quo Only



if deviation is judged to be insignificant.

Correcting actual (current) performance or deviation Immediate

corrective action to correct the problem at

once. Basic

corrective action to locate and to correct the source of the deviation.

Corrective Actions Change

strategy, structure, compensation scheme, or training programs; redesign jobs; or fire employees

Contd..

Revising or change the standard

Examining the standard to ascertain whether or not the standard is realistic, fair, and achievable. Upholding Resetting

too high

the validity of the standard.

goals that were initially set too low or

Essentials of effective Control System







Suitable - The control system should be appropriate to the nature and needs of the activity. Controls used in the sales department will be different from those used in finance and personnel. Timely and forward Looking – The control system should be such as to enable the subordinates to inform their superiors expeditiously about the threatened deviations and failures.The system should be as short and quick as possible. Objective and Comprehensible – Objective controls specify the expected results in clear and definite and leave little room for argument by the employees. Flexible – The control system should be flexible so that it can be adjusted to suit the needs of any change in the environment.







Economical – The benefit derived from a control system should be more than the cost involved in implementing it. Prescriptive and Operational – A control system in order to be effective and adequate must not only detect deviations from the standards but should also provide for solutions to the problems that cause deviations. Acceptable to Organization Motivate people to High Performance – Since most people respond to a challenge, successfully meeting a tough standard may well provide a greater sense of accomplishment than meeting an easy standard. Should not lead to less attention to other Aspects.

Types of Control

Managers can implement controls before an activity begins, during the activity is going on, and after the activity has been completed

Comparison of past-oriented and futureoriented controls

Input

Process

Outputs

Information

Future-oriented control Feedforward

Past-oriented control

Types of Control Methods

Past-oriented Control – These are also known as post-action controls and measure results after the process. They examine what has happened in a particular period in the past. Examples of such controls are most ing records, inspection of goods and services and school grade reports. These controls can be used to plan future behavior in the light of past errors or successes.



Concurrent Control-Takes place while an activity is in progress. Best known form of this type is DIRECT SUPERVISION. When managers use management by walking around, where they visit floor and employees directly, they are using concurrent control. Ex: while typing in a word document, miss spelt words or grammar errors are highlighted in a green or red color. Though delay in managerial response to problem is there, it is minimal. One can reduce the wastage because of damages, as you are preventing major damages



Future-oriented control – These are also known as steering controls or feed forward controls and are designed to measure results during the process so that action can be taken before the job is done or the period is over. They serve as warning-posts principally to direct attention rather than to evaluate. Examples of such controls are cash flow and funds flow analysis, network planning etc. which enable managers to see that they will have problems in such areas as cash or on-time delivery.

Control Techniques





Budgeting – A budget is a statement of anticipated results during a designated time period expressed in financial and non-financial . Standard costing – One of the techniques of control and it is being increasingly used by modern business concerns for the purpose of cost reduction and cost control. Financial Statement and Ratio analysis – The trading profit and Loss and the Balance Sheet of a company are the usual financial statements which are prepared ex-post to indicate what financial events occurred since the last statements.







Break-even analysis – It involves the use of a chart to depict the overall volume of sales necessary to cover costs. It is that point at which the cost and revenue of the enterprise are exactly equal. Internal and External Audit – Internal Audit is conducted by an internal auditor who is an employee of the organisation. He makes an independent appraisal of financial and other operations. External Audit is an independent appraisal of the organisation’s financial s and statements. Reports – Preparing Reports to provide information to the management for purposes of control and planning.

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