UNIT- IVUNIT- IV

LEADERSHIPLEADERSHIP & & CONTROLLING CONTROLLING

LEADERSHIP

“The ability to influence a group towards the achievement of goals.’ The source of leadership may be formal or informal. - S P Robbins

“Leadership is the lifting of man’s vision

to higher sights, the rising of man’s performance to higher standard, the building of man’s personality beyond its normal limitations. - Peter Drucker

“Leadership is the ability to persuade others to seek defined objectives enthusiastically. - Keith Davis

LEADERSHIP

“Leadership is the ability to get other people to do what they don’t want to do and like it.”

FUNCTIONS OF LEADERS Determination of goals Achieving coordination Representation of workers Providing guidance Inspiration of employees Setting Goals Organizing Motivation Control

leadership

FUNCTIONS & ROLES OF LEADERS

Determination of goals : A leader provides guidance to the group by setting and explaining goals to his subordinates. He acts as a guide of his followers by setting the main goals of the group.

Achieving coordination : A leader reconciles individuals and common objectives. He resolves internal conflicts and creates a community of interests in the group. His main task is to develop voluntary cooperation and to foster mutual understanding and teamwork.

Providing guidance : A leader is a guide of the team. He always there to give his guidance as per the requirements to the employees in the organization.

Representation of workers : A leader represents the group to his superiors and peers. An affective leader is the guardian of the interests of the subordinates. He is the personal embodiment of the impersonal organization, inside and outside the organization. He also defends the integrity of the group by reconciling different viewpoint of group members.

Inspiration of employees : A leader creates a strong urge in employees for higher performance. By showing the proper way to do their job, the leader helps employees to give their best to the organization. As pointed out by Terry, “leadership triggers a person’s will-to-do and transforms lukewarm desires for achievement into burning passions for successful accomplishment.

Setting Goals : A leader provides guidance to the group by setting and explaining goals to his subordinates. He acts as a guide of his followers by setting the main goals of the group.

Organizing : The leader creates and moulds the organization by assigning roles appropriates to individual abilities. He shapes the character of the group, shows the way and leads it towards the goals.

Motivation : A leader creates and sustains enthusiasm among the followers. He inspires them to perform the allotted tasks with confidence and zeal. He establishes a motivational system that enables people to meet both organizational and personal goals.

Control : the leader maintains order and discipline and creates positive response on the part of the members of the group. Control also involves management of internal conflict.

Leadership Styles

AutocraticOr

Authoritative

ParticipativeOr

Democratic

Free ReinOr

Laisseg Faire

LEADERSHIP STYLEA. Autocratic leadership : The autocratic leader

gives orders which must be obeyed by the subordinates. He centralizes decision-making power in himself. He takes decision without consulting the group members and simply orders what to do. The autocratic leader gives personal praise or critcism to each member on his own initiative

• Strict autocrat : He relies on negative influences • Benevolent autocrat : follow positive style• Manipulative autocrat : Such a leader makes the

subordinates feels that they are participating in decision making, but he takes all the decision himself.

B. Participative or Democratic leadership :

A democratic leader is one who gives order after consulting the group. Participative leadership increases the acceptance of management’s ideas and reduce resistance to change. It increases their morale. It also leads to reduction in the number of grievances of the workers.

It may lead to following advantages• Active participation in decision-making by the

employees ensure greater productivity and satisfaction• Workers develop a greater sense of self-esteem, due to

importance given to their ideas and their contribution.• Workers become more committed to changes that may be

brought about by policy changes, since they themselves participated in bringing about these changes

• the leadership includes confidence, cooperation and loyalty among the employees

• The morale of the employees is increased.

C. Free rein leadership : A free rein leader does not lead, but leaves the group entirely to itself. The free rein manager avoids using power. He depends largely upon the group to establish its own goals and work out its own problems. Group members work themselves and provide their own motivation. The manager serves as a contact man with the outsiders to bring for his group the information and resources it needs to accomplish its goals.

The possible advantages of free rein leadership are as under

• It increases an environment of freedom, individually as well as team spirit.

• With a free and informal work environment, it is highly conductive to creative work.

• It is very suitable where people are highly motivated and achievement oriented

Basis Autocratic Style Participative Style

Free-rein Style

1. Decision-making

Leader is the sole decision-maker

Leader makes decisions in consultation with subordinates

Subordinates themselves make decisions

2.Communication One way communication

Two-way communication

Free flow communication

3.Motivational Techniques

Fear and punishment (negative incentives)

Rewards and involvement (positive incentives)

Self-direction and self-control

4.Needs of Subordinates

Physiological and safety needs

Ego needs Self- actualisation need

5. Focus Task-oriented style

People-oriented style

People-oriented style

MANAGER/BOSS

1. Planning, Organising, Staffing, Directing and Controlling process.

2. Formulating broad policies to guide organisational operations.

3. Adapts organisation to external forces.

4. Drives & orders5. Depends on authority6. Knows all answers7. Believes in “I”

LEADER1. Influencing group process

for higher level of goal attainment and satisfaction

2. Showing the way through demonstrating & initiating activity.

3. Influence in establishing and modifying organisational climate.

4. Coaches & advises5. Depends on confidence &

goodwill6. Consults & seek advice7. Believes in “We” & “You”

TRAITS OR QUALITIES OF A GOOD TRAITS OR QUALITIES OF A GOOD LEADERLEADER

Intelligence Physical Features MaturityVision and Foresight Inner Motivation Sense of Responsibility Empathy Human relations Attitude Emotional Balance

0 1 2 3 4 5 6 7 8 9( Low ) – Concern for Production ( High )

( Low

) –

Con

cern

for

peop

le (

Hig

h )

1

2

3

4

5

6

7

8

9 1-9

(Country Club)9-9(Team)

9-1(Task)

1-1(Impoverished)

5-5(Middle Road)

The 9, 1 Managerial Style (Task)Under this style, the leader has maximum concern

for production (level 9) by using authority and power to achieve control over subordinates combined with minimum concern for people.

The 1, 9 Managerial Style (Country Club)The managers who employ this style have a

minimum concern for production coupled with a maximum concern for people. The 1, 9 manager may be highly motivated motivated to hard work, but that motivation is based on a need for approval & acceptance rather than on a commitment to the production goals of the organisation.

The 1, 1 Managerial Style (Impoverished)Such a manager exerts minimum influence on the

contacts with the group members. He expresses little concern for production or people.

The 9, 9 Managerial Style (Team)The 9, 9 style meets the people’s need to be

involved and committed to work. A major difference b/w 9, 9style and other managerial styles is in goal setting and its use as a basic management approach to a large variety of problems. The 9, 9 orientation aims at integrating the people and production dimension of work under conditions to high concern for growth.

The 5, 5 Managerial Style (Mid of the Road)

The 5, 5 style seeks to maintain a balance the people dimention & production dimention. A basic assumption of this style is that people work willingly and do as they are told if the reasons for doing so are explained to them. Enough concern is shown for the people so that adequate production may be achieved.

Leadership Theories

TRAIT BEHAVIOURAL SITUATIONAL/CONTINGENCY

RECENT/CONTEMPORARY

Traits Theories of Leadership Theories that consider personality, social,

physical, or intellectual traits to differentiate leaders from non leaders

Leadership TraitsExtraversionCarefulnessOpenness Emotional IntelligenceLimitationsNo universal traits found that predict

leadership in all situationsUnclear evidence of the cause and effect of

relationship of leadership and traitsBetter predictor of the appearance of

leadership than distinguishing effective and ineffective leaders

Trait ApproachTrait Approach

Traits (examples)◦Extraversion◦Carefulness◦Openness

Assumption: Leaders are bornGoal: Select leadersProblems

◦Traits do not generalize across situations

◦Better at predicting leader emergence than leader effectiveness

Behavioral TheoriesBehavioral TheoriesBehavioral Theories of LeadershipTheories proposing that specific

behaviors differentiate leaders from nonleaders

Behavioral TheoryLeadership behaviors can be taught.

vs. Trait Theory

Leaders are born, not made

SITUATIONAL THEORY OF LEADERSHIPSITUATIONAL THEORY OF LEADERSHIPAccording to the situational approach, the

effectiveness of a leader depends upon the situation in which leadership is exercised. Leadership is a function of the leader, the led or followers and the situation. Leadership is situational i.e., effectiveness of leadership is affected by the situation from which a leader emerges and in which he works. The situation-the group, the problem and its environment will effect the type of leadership. This theory emphasis that there is no one best style of leadership universally applicable to all situations and that the leader has to change its style of leadership from situations to situations. If the leader adopts the same style under all situations, he may not be successful.

ORGANIZATION

(Objectives, People, StructureAnd Technology)

Leader Followers

EXTERNAL ENVIRONMENT

International Economic

Politico-legalTechnological

Socio-culture

FIEDLER’S CONTINGENCY THEORYFIEDLER’S CONTINGENCY THEORYFred Fiedler developed a contingency theory

which described successful leadership as a direct result of matching manager’s styles with situational variables.

LEADERSHIP DEVELOPMENT PROCESS• Assess organization’s direction and current state, the

speed at which business results must be achieved and implication for leadership.

• Assess organization’s culture, define required shifts and create action plans for leaders to change the culture to enable new business goals to be met.

• Coach individual executives on personal behavior, actions, and communication-contrasting what they do today with is needed tomorrow.

• Coach executive teams on individual leadership and effective teamwork

• Create executive communication strategies for key constituencies-board of directors, shareholders, employee, union officials, customers, and suppliers.

CONTROLLING “ Controlling is the process of checking

actual performance against the agreed standards of plans with a view to ensuring adequate progress and satisfactory performance”

Control is the process of taking the necessary preventive and corrective actions to keep thing on the track

“ The managerial function of controlling is the measurement and correction of the performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished”

CHARACTERISTICS Pervasive Function : Control is a function of every

manager alongwith other managerial functions like planning, organizing, staffing, directing. It is, in fact, a follow-up action to other functions of management. Managers at all levels have to perform this function to the achievement of organizational objectives.

Review of Past Events : Control leads to appraisal of past activities. The deviations in the past are revealed by the control process. This is also known as feedback information. It helps in knowing the reasons of poor performance so that corrective actions can be initiated accordingly.

Forward Looking : Control is linked with future as past can not be controlled. A manager can take corrective actions only in regard to future operations.

Action-Oriented : Control implies taking corrective measures. Action is the essence of control. The purpose of control is achieved only when corrective action is taken on the basis of feedback information.

Continuous Process : Control is a continuous activity. It involves constant analysis of validity of standards, policies, procedures etc. it also suggests corrective actions in various processes. A manager has to perform this function continuously alongwith other functions.

Dynamic Process : Control is a dynamic process. It is flexible not rigid. Control involves continuous review of standards of performance and results in corrective action which may lead to change in the performance of other functions of management. Since management is managing a business entity which keeps on changing, managerial control is also dynamic.

Control does not Curtail the Rights of Individuals : To some people, control is opposite of freedom. It is not so. It is a preventive action so that losses may be avoided in future. It is, in fact, an act of guidance. Control in an enterprise is based on facts and figures and not on the whims of managers. Its purpose is to achieve and maintain acceptance productivity form all the resources of an enterprise.

TYPES OF CONTROL Feed forward control: is active anticipation of problems and

their timely prevention Rather than passive reaction. E.g. carpenters have their own instructive version of their feed forward control “Measure twice cut once” feed forward control address the issue “what can we do ahead of time to help our plan succeed”

product design , preventive maintenance on machinery and equipment are also qualifies as feed forward system. preliminary control, precontrol, preventive control, or steering control.

Feedforward control focuses on the regulation of inputs (human, material, and financial resources that flow into the organization) to ensure that they meet the standards necessary for the transformation process.

Concurrent control :is also called as real time control because it deals with present rather than with the future or past.

Monitoring ongoing process and activities to ensure compliance with standard. Concurrent control sometimes is called screening or yes-no control, because it often involves checkpoints at which determinations are made about whether to continue progress, take corrective action, or stop work altogether on products or services.

Concurrent control

Monitoring processesAdjusting ongoing

activities

Feedback control system

Monitoring productLearning from Past mistakes

outputsProductive

processes and activities

Inputs

Feed forward control

Monitoring inputsAnticipating and

Preventing problems

Three types of control

Feedback control : feedback control is gathering information about a complete activity, evaluating that information and taking step to improve similar activities in future. Feed back control permits managers to use information on past performance to bring future performance into line with planned objectives and acceptable standards. Sometimes called post action or output control, The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done

It creates a good public image of the enterprise by helping it to provide goods and services of higher quality to the society.

There is better utilisation of materials, machines, capital, human resources, etc

Steps in control process

1.Establish standards2.Measure performance3.Compare performance against standards4.Determine need for corrective actions (i) Maintain the status quo (ii) Correct the deviation (iii) Change standards

Levels of control

1. Operations control: Focuses on the processes the organization use to transform the resources into product or services

2. Financial control :Concerned with organizations financial resources.

3. Structural control :Concerned with the organizations structure are serving their intended purpose .

4. Strategic control: Focuses on how effectively the organization’s strategies are succeeding in helping the organization meet its goals

Financial controlFinancial control is control of financial resources as they flow in to the organization(revenues , share holder investment), are held by the organization(working capital and retained earnings) and flow out of the organization (pay and expenses) Budgetary controlBudget is a plan expressed in numerical terms. The usual time for budget is one year. Budget are generally expressed in in financial terms but hey may occasionally expressed in units of out put, time and other quantifiable factors. Because of their quantitative nature , budget provide standards for measuring performance and facilitates comparisons across department. Types of budgetsFinancial budgets: sources and uses of cash i.e. cash flow/capital expendituresOperating budgets: Planned operation in financial terms i.e. sales and revenue budgets, expense budgetsNonmonetary budgets: Plan operation in nonfinancial terms i.e. Labor budgets, Production budgets etc.

Other tools for financial control

1. Financial statements: A profile of some aspects of the organization ‘s financial circumstances . The two most basic financial statements prepared and used by virtually all organizations Are balance sheet and an income statement

2. Ratio analysis :Ratio analysis is the calculation of one or more financial rations to asses some aspects of the organization’s financial health.

organization use a variety of different financial ratios as a part of financial control. E.g. liquidity ratio, Debt ration, return ratio etc

3 Financial Audits: An independent Appraisal of an organization’s accounting , financial and operational systems. Two major type of financial audits are: External audit and Internal audit

QUALITY “The totality of features and characteristics of a

product or service that bear on its ability to satisfy stated or implied need.”

Quality is a relative term.

FACTORS AFFECTING QUALITY1. Technological advancement2. Quality of human resources3. Availability of finance4. Management commitment5. Natural factors Steps to improve quality1. Improve raw material2. Better technology3. Scientific selection worker4. Harmonious relation5. Industrial research

Machines and Methods: To must high standards of quality, companies are investing in new machines and following new procedures and methods these days.

DEVELOPING QUALITY CONTROL SYSTEMSTEP-1 Determination of quality standards-specification

of desired quality level in terms of weight, specific dimension, etc.STEP-2 The design of the production system which would be compatible (suited to) to the achievement of

the specified quality.STEP-3 Control action to ensure that established quality standards are met.STEP-4 Inspection of produced to see if the over all

quality of lots satisfies the specifications.

Evolution of TQM – New Focus

Quality Evolution

Inspection

Quality Control

Quality Assurance

Total Quality Management

Reactive Approach

Proactive Approach

DetectionFinding & Fixing mistakes

PreventionStop defects at source. Zero defects

1

2

3

4

Inspect products

Incorporates QC/QA activities into a company-wide system aimed at satisfying the customer.(involves all organizational functions)Planned and systematic actions to insure that products or services conform to company requirementsOperational techniques to make inspection more efficient & to reduce the costs of quality. (example: SPC)

Evolution of Quality Management

Inspection

Quality Control

Quality Assurance

TQM

Salvage, sorting, grading, blending, corrective actions, identify sources of non-conformance Develop quality manual, process performance data, self-inspection, product testing, basic quality planning, use of basic statistics, paperwork control.

Quality systems development, advanced quality planning, comprehensive quality manuals, use of quality costs, involvement of non-production operations, failure mode and effects analysis.

Policy deployment, involve supplier & customers, involve all operations, process management, performance measurement, teamwork, employee involvement.

Quality Control

The purpose of quality control is to uncover defects and have them corrected so that defect-free products will be produced.

Quality control is limited to looking at products . Quality control is testing the final product against

product quality standards. Quality control is operational techniques that are

used to fulfill requirements for product quality.

Quality AssuranceQuality Assurance Quality assurance is oriented toward preventing defects. It is defined by those activities that modify the development

processes to prevent the introduction of defects. Quality assurance is more concerned with the processes

that produce the final product, and making sure that quality is part of each phase.

QA is about maturing the process towards minimum defect. It is about balancing methodology, leadership, and

technology. It is about taking into account human factors as well as

technological ones.

TOTAL QUALITY CONTROL/TOTAL QUALITY MANAGEMENT

“TQM may be defined as creating an organizational culture committed to the continuous improvement in every regard i.e. skills, teamwork, processes, and product and service quality and customer satisfaction”

Total Quality Management Philosophy of TQM revolves around customer

driven management. Its major emphasis is on determining customer

need or expectation from the product. Total Quality is the culture of the organization. It is attitude of people how they perform their

assigned work with aims to provide, customers with products and services that satisfy their needs.

The culture change means all members of the organization participate in the improvement of process, products, and services.

Pillars of TQM1- Customer Focus: Studying customer needs, gathering customer requirements, and measuring and managing customer satisfaction. Customer satisfaction is seen as the company's highest priority. The company believes that it will only be successful if its customers are satisfied. 2- Process Management: Develop a production process that reduce the product variations. Applying the same process; the same product should be produces with the same level of quality every time. Teams are process-oriented, and interact with their internal customers to deliver the required results. Management's focus is on controlling the overall process, and rewarding teamwork.

3- Human side of Quality: TQM environment requires a committed and well-trained work force that participates fully in quality improvement activities. On-going education and training of all employees supports the drive for quality.

4- Continuous Improvement: TQM recognizes that product quality is the result of process quality. As a result, there is a focus on continuous improvement of the company's processes. Kaizen Japanese word for continuous improvement.

Pillars of TQM

Continuous Improvement (through measurement and analysis)

Customer Focus

ProcessManagement

Employee Training & Empowerment

T. Q. M.

•Reduce rework activities (Cost reduction)

•Shorter development cycle (Cost reduction)

• Increased customer satisfaction (Quality improvement)

Pillars of TQM

Seven Problem Solving Seven Problem Solving ToolsTools

Cause-and-Effect DiagramsFlowchartsChecklistsControl ChartsScatter DiagramsPareto AnalysisHistograms

FLOW CHART:FLOW CHART:GRPHICAL DISPLAY OF

SEQUENCE OF ACTIVITIES AND DECISIONS

Run chart: a trend chart for tracking a variable over timeControl chart: visual aid showing acceptable and unacceptable variations from the norm for repetitive operations

Run ChartsRun Charts

Oil consumption of a specific machine over a period of time.

Time

Mea

sure

men

t

Control ChartsControl ChartsY

X

Upper limit

Lower limit

Average/Spec

HistogramsHistograms Histograms provide an easy way to evaluate the distribution of Data over different categories

BAR CHART INDICATING DEVIATION FROM A STANDERED

HistogramsHistogramsExample: take the failure rate of a machine over a period

of x weeks. Now Assign every week the number of failures that occurred. Draw the Histogram. Let the bar represent the weeks. The height of the Bar on the y-axis is the number of failures that occurred during that week.

LSL USL

Scatter DiagramsScatter Diagrams

Y

X

Diagram that plots the relation ship between two variables

Pre-Control Of InputsPre –control: The method that focuses on the acquisition of inputs.1.Pre-Control of human resource: Pre-control depends on job requirements. Job requirements predetermine skills needed by the job holders .A variety of tools are available to managers to assess the organization’s culture and the skill requirements of a job. These data are than used to develop a questionnaire for job applicants. These tools are a form of pre-control- They ensure a high degree of accuracy that a person being hired match the needs and culture of the organization.Appropriate attention to pre- control of human resources ensure that organization will meet its need through the skills ,abilities and attitudes of its employee. With the increasing focus on knowledge as an important organizational asset, the search, screening ,selection and training of new employees become very vital.

2.Precontrol of Materials: Pre- control of material involves ensuring that the raw materials a firm purchases meet quality standards. At the same time , sufficient inventory or just in time delivery system must be in places to ensure that a firm can meet customers demand.

3.Prelimanary control of capital: Capital pre-control can be achieved by establishing criteria of potential profitability. There are several tools that a managers are used to control capital three of these are:

(a) Payback methods: The payback method calculates the number of years needed for the proposed capital acquisition to repay(payback) its original cost out of future cash earnings.Drawbacks : it does not produces measurement of profitability, it does not take into account the time value of money.

(b)Rate of return on investment: The ratio of annual returns to the initial cost of the investment. This used to measure the profitability, often called as return on investment or ROI.

(c) Discounted rate of return : is a measurement of profitability that takes into account the time value for money. The rate of return that equal future cash proceeds with initial cost of an investment.

Integrated control system: An integrated control system is the interlinked process of controlling various management functions by utilizing different method of controlling at a time simultaneously.

Feed forward control

Concurrent control

Feedback

control,

Out putProcessingInputs

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

-----corrective action Flow of information

Integrated control system

Management control techniques

1 Traditional techniques(a)Personal observations: Formal/informal(b)Statistical data:(c)Special reports and analysis(d)Budget and budgetary control

2 Modern techniques(a)Return on investment(b)Responsibility accounting:(c) Human asset accounting: