directing and controlling(2)

8/2/2019 Directing and Controlling(2)

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MODULE 4



• “ Directing is the process of instructing, guiding,

counseling, motivation and leading the human resources

to achieve the organizational objectives .”

• It is issuing orders and instructions by superior to hissubordinates (communication)

• Guiding, advising and helping subordinates in the propermethods of work ( leadership)

• Motivating them to achieve goals by providing incentives,good working environment etc. (motivation)

• Supervising subordinates to ensure compliance withplans ( supervision)



• It deals with people

• It is pervasive at all the levels

• It is dynamic and continuous process

• It seeks performance



• Direction initiates action

• Direction integrates employee’s efforts

• Direction attempts to get maximum out of individual

• Direction facilitates changes in the organization• Direction provides stability and balance in the

organization



• Principle of harmony of objectives

• Principle of unity of command

• Principle of appropriateness of direction techniques

• Principle of maximum individual contribution• Principle of managerial communication

• Principle of follow-up

• Principle of use of informal organization

• Principle of leadership



DIRECTION

• Direction includesmotivating and leading

employees andcommunicating with thembesides guiding them.

SUPERVISION

• Supervision is an elementof direction. It involves

guiding the efforts ofothers to achieve statedobjectives.

• It is guiding and directing

efforts of employees andother resources toaccomplish the statedwork outputs.



• Orders and instructions

• Follow-up orders and instructions

• Standard practices and procedures

• Behavioral pattern ( autocratic pattern, participativepattern, free-rein pattern)



• Creativity is the generation of a new idea. It is the abilityand Power to develop new ideas.

• Innovation is the use of new ideas.

• Innovation is the translation of new idea into a newcompany, new product, new service, new process or anew method of production.



• Generation of new ideas

• Idea development

• Implementation



• It depends upon the flow of people and informationbetween the firm and its environment.

• For e.g. the vast majority technological innovations havebeen made in response to conditions in the marketplace.

• Outside consultants, experts and new employees aremost important source of information.

• If the organization managers are unaware that there ispotential demand for new products, they are not likely toseek innovations.



• It is dependent on the organizational culture andprocesses within the organization. Organizationalcharacteristics, values and processes can support thedevelopment and use of creative ideas.

• The org. structure also plays an important role. Rigid org.structure that inhibit communication betweendepartments will often keep potentially helpful peoplefrom even knowing that a problem exist.

• Management information system ( MIS), decision supportsystem ( DSS) and expert systems store and retrievegenerated ideas and aid managers in idea development.



• It is the last stage that brings solution or invention to themarketplace.

• For manufactured goods, these steps includeengineering, tooling, manufacturing, test marketing andpromotion.

• Ex: Organization using newly developed software for thechange.



• Getting the desired outputs involves transforming inputs.These inputs include creative people and groups withinthe organization. But having creative people isn't enough.

• The right environment is needed to help to transforminputs into innovative products or work methods.

• The right environment that is, an environment thatstimulates innovation, includes three variables: theorganizations structure, culture and human resources

practices.



• There are three innovation variables

1) Structural variables

2) Human resource variables3) Cultural variables



• Organic organizational structure: low in formalization,centralization and work specialization. It facilitates the flexibilityand sharing of ideas that are critical to innovation.

• Abundant resources: with abundant resources managers

can afford to purchase innovations, can afford the cost ofinstituting innovations and can absorb failures.

• Communication: frequent communications betweenorganizational units helps break down the barriers toinnovation.

• Minimal time pressure enhances individual creativity

• Support like encouragement, open communication, readinessto listen encourages innovation.



• Accept ambiguity: too much emphasis on objectivityand specificity constrains creativity

• Tolerate the impractical: what at first seems impracticalmight lead to innovative solutions.

• Keep external controls minimal: rules, regulations,policies and other controls are to be kept minimal

• Tolerate conflict: diversity of opinions is encouraged.

• Tolerate risk: employees are encouraged to experimentwithout fear of consequences. Mistakes are treated aslearning opportunities.



• Focus on ends rather than means: individuals areencouraged to consider alternative routes towardmeeting the goals.

• Use and open-system focus: managers closely monitorthe environment and respond to the changes as theyoccur.

• Provide positive feedback: managers provide positivefeedback, encouragement, and support so employees

feel their creative ideas receive attention.



• Training and development: innovative organizationsactively promote the training and development of theirmembers so their knowledge remains current.

• High job security: innovative org offer their employeeshigh job security to reduce the fear of getting fired andencourage the individuals to become idea champions.

• idea champions : an individual who actively andenthusiastically supports new ideas, builds support,

overcomes resistance and ensures that innovations areimplemented



• Productive use of resources

• Increased efficiency and output

• Achievement of goals

• Development of friendly relationships• Stability of workforce

• High performance level

• Low employee turnover and absenteeism

• Acceptance of organizational change



Self

Esteem

Social

Safety

Physiological



• Recognize individual differences.• Match people to jobs• Use goals• Ensure that goals are perceived as attainable• Individualized rewards• Link rewards to performance• Check the system for equity• Don’t ignore money • Show care and concern for your employees

• Open-book management ( financial statements are shared)• Employee-recongnition programs• Pay-for-performance• Stock-options



• Factors like the organization, leadership, co-workers, thenature of work, work environment, the self-concept of theemployee, rewards, job satisfaction etc. affects themorale of an employee.

• High morale-high productivity, high morale-lowproductivity, low morale-high productivity, low morale-lowproductivity.

• Morale building can be done by better remuneration, job

security, participation, job enrichment, organizationstructure, grievance redressal, sound leadership andsupervision, promotions, team spirits, recognition of work.



• It is the ability to influence people toward theaccomplishment of organizational goals.

• It is the process of directing and influencing the task-related activities of group members.

• Leaders are people who are able to influence others andwho possess managerial authority.

• Leaders have followers.

• Leadership involves an unequal distribution of powerbetween leaders and group members.



leadership

• It exists in unorganizedgroup

• Leadership is the activityof influencing people tostrive willingly for groupgoals

• Leaders get authority by

virtue of their skills andabilities. Followers mustalso consent to beinginfluenced

managership

• Requires an organizedstructure

• Managership impliesexercising functions likeplanning, organizing,directing and controlling toachieve group goals.

• Managers get the formalauthority delegated fromabove



• Leader develop teamwork

• Leader is representative of subordinates

• Leader uses power properly

• Leaders strives for effectiveness• Leaders drives the team

• Leader inspires employees

• Leader secures co-operation

• Leaders creates confidence• Leader provides good working climate



• Intelligence

• Communication skill

• Technical skills

• Inner drive

• Energy

• Motivating

• Human relations skill

• Teaching skills

• Influencing personality

• Self-confident

• extrovert



• Importance of effective communication

• Communication process

• Barriers and overcoming it

• Communications in organizations• Managing organizations knowledge resources



CONTROLING



• Controlling is determining what is being accomplished- that isevaluating the performance and if necessary, applying thecorrective measures so that the performance takes placeaccording to the plans.

• It is the process of ensuring that the actual activities areconfirming to the planned activities

• It is to determine whether the actual performance is matchingwith the planned performance, and to take the correctiveactions if there is any deviation.

• Control helps managers monitor their effectiveness of theirplanning, organizing and their leading activities.

• An essential part of the control is process is taking correctiveactions as needed.



• Improves the organizational efficiency and effectiveness

• Helps in creating better quality as its forward looking

• Promptness in reporting deviations

• Pointing out exceptions at critical point• Facilitates total quality management

• Helps in decision-making

• Improves employee morale

• Helps in better coordination• Helps in better planning



• Helps in coping with changes ( the control functions helpsmanagers in responding to the resulting threats oropportunities, by helping managers detect changes thatare affecting their organizations products and services)

• It helps in creating faster cycles ( creating and delivering)

• Helps in achieving competitive edge.

• Helps in reducing the cost and increase the valueaddition



• Management control is a systematic effort

to set performance standards with planning objectives

to design information feedback systems

to compare actual performance with these predeterminedstandards

to determine whether there are any deviations and tomeasure their significance

And to take any action required to assure that allcorporate resources are being used in the most effectiveand efficient way possible in achieving corporateobjectives.



• Feedback

• Objective

• Suitability

• Prompt reporting• Forward looking

• Pointing out exceptions

• Flexible

• Intangible• Suggest remedial action

• motivation



• Actual performance

• Measurement of performance

• Comparison of actual and standard

• Identification of deviation• Analysis of causes of deviation

• Corrective action plan

• Implementation of correction

• Desired performance



• The goals and objectives established during planningprocess will already be stated in clear, measurable termsthat include specific deadlines.

• Standards are established criteria against which actual

results are measured. For setting standards for controlpurpose, it is important to identify clearly and preciselythe results which are desired.

• After setting the standards, it is also important to decideabout the level of achievement of performance which will

be regarded as good or satisfactory.• The desired level should have flexibility in terms of some

range ( upper limit, lower limit). It is called tolerance limits



• The actual performance is measured against thestandard performance or the desired performance.

• Appropriate methods to measure the performance shouldbe devised.

• Tangibles like profits, sales can be easily measured andthe deviations can be worked out.

• The intangibles like employee morale, satisfaction,human relations etc. cannot be measured precisely. So

there are different techniques to measure it like opinionsurvey, customers feedback, psychological tests etc.



• It involves two step.

Finding out the extent of deviation

Identifying the causes of such deviations.

• When adequate standards are developed and actualperformance is measured accurately, any variation will beclearly revealed. Deviations can be measured in the formof the graphs, charts etc.

• When the deviation between standard performance andactual performance is beyond the prescribed limit, ananalysis is made of the causes of such deviation.



• Actions should be taken to maintain the desired degreeof control in the system or operation.

• Once the deviations are determined what correctivesteps to be taken has to be determined.



BUDGETORY CONTROL

• BUDGET: a budget is a statement of planned allocationof resources expressed in financial or numerical form.

• Budget is prepared in advance and for a definite period oftime. It is in terms of money or quantity or both.

• It is prepared to attain the objectives and goals.

• It represents the plans, objectives and goals of anorganization in numerical terms.

• Budgets establish clear and quantitative standards ofperformance for a set time period



• “ Budgetary control is the process of

comparing the actual results with the budget

data, in order to check the actual

performance, and to take the corrective actions for the differences between actual

performance and budgeted data or the

budget estimates are adjusted or revised”

• It secures control over costs and performance in various parts of an organization



• Budgetary control as a tool for planning

Realistic goals and policies

Planned way to secure economy

Reduces uncertainty

• Budgetary control as a tool for control

It is very exact, accurate and precise

Prevents waste

Deviations can be easily and effectively noticed

• Budgetary control as a tool for coordination

Established coordination for the flow of information,preparing budgets



• Accuracy is open to doubt: budgetary control begins withformulation of budgets which are mere estimates. Due tothe changes in situations, budgets do not remain reliableand meaningful

• Constant review of budgets is required

• Budgetary control, may hamper the basic and importantfunctions in the organizations. Once the budgets areprepared, they become the basis for the further course of

action. The budgets of future years are prepared on thebasis of previous budgets. Meanwhile, the situations maychange.



• RESPONSIBILITY CENTERS: any organizational orfunctional unit headed by a manager who is responsiblefor the activities of that unit is called responsibility center.All responsibility centers uses resources to producesomething. Typically responsibility is assigned to arevenue, expense, profit, and investment center.

• Revenue center: organizational unit in which outputs aremeasured in monetary terms nut not directly compared toinput costs. E.g. sales dept. the effectiveness of the

center is not judged by the extent to which revenue ( inthe form of sales) exceeds the cost of the center(salaries, rent)



• EXPENSE CENTRES: in expense centers or costcenters inputs are measured by the control system inmonetary terms, but outputs are not. The reason is thatthese centers are not expected to produce revenues.Example: administration, service, research department.

• PROFIT CENTRES: performance is measured by thenumerical difference between revenues(outputs) andexpenditures(inputs).

• INVESTMENT CENTRES: the control system measures

the monetary value of inputs and outputs but also itassesses how these outputs compare with the assetsemployed in producing them.



• MIS is the formal method of making available tomanagement the accurate and timely informationnecessary to facilitate the decision making process andenable the org planning, control and operational functions

to be carried out effectively.• The system provides information about the past, present

and projected future and about relevant events insideand outside the organization.



• EDP: electronic data-processing

• CBIS: computer-based information systems which wasalso known as MIS

• DSS: decision support system is an interactive computersystem that is easily accessible and operated by, peoplewho are not computer specialists, who use the DSS tohelp them plan and make decisions. The use of DSSs isexpanding as recent advances in computer hardware and

software allow managers and other designatedemployees to gain “on-line” access to the database in

MIS’s.



• The design of MIS must take into account the informationneeds of the various managerial levels as well as theroutine transaction-processing needs of the totalorganization.

• OPERATIONAL CONTROL: An MIS for operationalcontrol must provide highly accurate and detailedinformation on daily or weekly basis. The MIS must

provide a high volume of timely and detailed informationderived from daily operation.



• MIDDLE MANAGEMENT: middle-level managers areconcerned with present and future performance of theirunits. The type of information they require consists ofsummarized data from within the organization as well as

from sources outside the organization• TOP MANAGEMENT: MIS must provide information for

strategic planning and management control. For strategicplanning, the external sources of information is required.

For management control functions of top managers thesources of information must be both internal andexternal.



• It is an interactive computer system that is easilyaccessible to, and operated by, those who are notcomputer specialists to assist them in planning anddecision-making functions.

• DSS is directly operated by its users. When they need toaccess information, they can immediately consult theirown on-line system. Without having to wait days orweeks for results from the MIS department.

• DSS helps managers make non-routine decisions inunstructured situations, whereas MIS cannot respond tonon-routine, unstructured or ad hoc situation.



• Expert systems are built on a framework of known factsand responses to situation. They rely on artificialintelligence.

• Artificial intelligence refers to the use of the computer to

stimulate characteristics of human thought by developingcomputational approaches to intelligent behavior.

• So expert systems use artificial intelligence techniques todiagnose problems, recommend strategies, and offer a

rationale for the recommendations.• Expert system acts like a human “expert” in analyzing

unstructured situation.



• Expert systems perform like human experts. They candiagnose problems, recommend alternative solutions andstrategies, offer rationales for their diagnoses andrecommendations and in some instances learn from

previous experiences by adding information developed insolving problems to their current base of knowledge.



• Feedback is vital in the process of control as it completesthe process of control. If the comparison of the actual andplanned performance is not matching, then the feedbackis given and the deviation is reported. If the deviation is

reported beyond the tolerance limits then the correctiveaction is taken.

directing and controlling(2)

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