PAMPANGA INSTITUTE, INC.

Masantol, Pampanga

Grade 11-ABM

Organization and Management

Module 5:
2nd Quarter (1st Semester)

Week 11-13
Chapter 5- Leading
Chapter 6-Controlling

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the module. Use a NOTEBOOK
answering the exercises.
2. Read the instruction carefully before doing each task.
3. Observe honesty and integrity in doing the tasks and checking your answers.
4. Finish the task at hand before proceeding to the next.

If you encounter any difficulty in answering the tasks in this module, do not hesitate to consult your teacher or
facilitator. Always bear in mind that you are not alone.

We hope that through this material, you will experience meaningful learning and gain deep understanding of the
relevant competencies. You can do it!

Prepared by:

Abigail G. Zabala
SUBJECT TEACHER

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 1
Chapter 5-Leading

At the end of this chapter, the students are expected to:

be aware and understand the fundamentals of the leading functions in business organizations and
discuss and integrate the leading function to present issues, such as the gender issue in management and leadership

5.1 Leading and Managing

There is an oft-repeated saying that a ‘manager is not necessarily a leader.’ Many managers find
themselves in their positions because of exemplary performance in ‘follower’ positions, or even due to
longevity and loyalty to their enterprise. Whether this is true or not, the managers in leadership positions have
ample opportunity to build their leadership character traits.
A sample differentiation of managers and leaders in figure 5.1 is helpful for this exercise in character
building and management performance.

Leaders Managers
Orchestrate important change effectively Deal with day-to-day organization complexities
Create a vision and direct path toward the vision Engage in planning and budgeting routines
Empower and motivate personnel Structure the organization

Figure 5.1. Leaders and managers

5.2 Approaches to Leadership

A plethora of management methods, theories, training manuals and self-help books elucidate skills,
attitudes, and aptitudes required of managers. What these information sources sometimes fail to emphasize is
that management and truthful leadership really requires character. Leaders must possess certain character traits
and virtues found to be requisites in the performance of the management functions.

The United States Army, considered a bastion of courage and derring-do, listed leadership traits found to
be desirable for its organization and constituents, as follows:
integrity
justice
maturity
self-improvement
will
assertiveness
discipline
empathy
flexibility
sense of humor
self-confidence
creativity
endurance
bearing
decisiveness
humility
coolness under stress
tact
initiative

A leader’s self-confidence is habitually due to deep wisdom, genuine sincerity, compassionate

humanity, and audacious courage. All these traits manifest in diverse situations of success, failure, doubt, and
challenges. If and when the traits and virtues are deeply-rooted and built to last, the management functions and
performance standards of his team and unit are upheld and maintained.

Discussion Points
1. The class is assigned to find the definition of at least five character traits listed desirable for the United
States Army
2. The students ‘personalize’ the terms and their meanings by finding occasions where they possessed, or
found themselves lacking, in the said trait.

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 2
 There is a general conviction that people are naturally good, and conduct themselves according to the law.
In her Obligations and Contracts book, Feliciano (2000) broadly defines law to include physical, natural, moral,
divine, and state law. Natural laws are laws of conscience, and considered universal to men. Men generally
know what is right and wrong instinctively. Although this may be open to arguments an exceptions, the human
instinct is natural, and conscience conducts their behavior.

Alternative Assignments and Exercises

Get the students to list women managers and leaders. Discuss perceived differences, if any,
with male leaders, on leadership traits and virtues.

Figure 5.2 shows Blake and Mouton’s Leadership Grid, a well-known leadership training model
developed to help managers rate their performance or maintenance orientation in the workplace. Performance
orientation, or concern for production, is plotted in the x-axis or horizontal line, while maintenance orientation,
or concern for people, is plotted in the y-axis or vertical line.

The grid explains five management or leadership orientations, as follows:

1. Impoverished Management (1,1), ranking low concern for people and low concern for production
2. Country Club Management (1, 9), rating low concern for production and high concern for people.
3. Middle of the Road Management (5,5), showing balanced concern for management and people
4. Team Management (9,9), ranking high concern for production and people, and
5. Authority-Compliance Management (9,1), rating low concern for people and high concern for
production.

Figure 5.2. Blake and Mouton’s leadership grid

It is noted that the use of the grid shows that scores can fall between the five orientations. Simply
classifying managers and leaders into the cited categories fail to recognize the situational quality of
management. The grid, however, remains to be a useful tool for training purposes.
Apart from leadership approaches, principles, and attitudes adjustments that serve as guidelines for
managers in their leading function, studies on people needs serve as superior compasses for ‘mobilizing human
resources’ and motivating them into action.
The most important motivational theories on describing people’s needs are Maslow’s Hierarchy of
Needs, Alderfer’s ERG Theory, and McClelland’s Acquired Needs Theory.

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 3
 Maslow’s Hierarchy of Needs

The theory indicates that people satisfy their needs in a specific order, from bottom to top, as follows:

1. physiological needs- food, water, sex, and shelter;

2. safety and security- protection against threat and deprivation;
3. social needs- friendship, affection, belonging, and love;
4. ego-independence, achievement, freedom, status, recognition, and self-esteem; and
5. self-actualization- realizing one’s full potential, becoming everything one is capable of being.

The theory specifies that people satisfy their physiological needs first, then proceed to gratify their safety
and security needs, then social, ego, and then self-actualization. Once a set of needs is satisfied, it is no longer
considered a potent motivator.
Maslow’s theory is considered simplistic and found to be an inaccurate human motivation theory. For
instance, workers in hazardous jobs often do not ignore their safety and security needs because they need to
fulfill their physiological desires first.
An essential learning from this theory, however, is the need for self-actualization, which directs
organizations to look at human resource not just as a business cost, but an asset that should be developed.

Alderfer’s ERG Theory

Existence, relatedness, and growth (ERG) are the three sets of needs under the Alderfer theory.
Existence needs are all material and physiological needs, relatedness needs are satisfied through mutual
sharing of thoughts and feelings, as they are about relationships, while growth needs encourage people to
creatively and efficiently change themselves or their environments.
The ERG theory postulates that the needs can occur simultaneously, unlike Maslow’s theory. The
importance of both theories for managers in their leadership functions is the knowledge that self-actualization
and/or growth needs are essential motivators for work accomplishment.

McClelland’s Acquired Needs Theory

The key needs for managers, according to McClelland, are achievement, affiliation, and power needs.
Achievement means an orientation toward success and goal realization. Affiliation reflects a strong wish to be
liked, while power refers to the need to persuade or be in command of other people.
The need theories have been used in job design, training needs, and empowerment advances by
managers and leaders of diverse industries.
“ If a general is not courageous, he
will be unable to conquer doubts
or create great plans. It is the
“…Principles, unlike values, business of the general to be
are objective and external. serene and inscrutable, impartial
They operate in obedience to and self-controlled. If serene, he is
natural laws, regardless of not vexed; if inscrutable,
conditions…” unfathomable; if upright, not
-Stephen R. Convey improper; if self-controlled, not
confused…”
(Source: Convey, 2009)
-Shen Pao-hsu

(Source: McNeilly, 1996)

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 4
 5.3 The Leadership Grid: Caselet

The Lucky Telecompany, Incorporated (LTI) was awarded the fiber optic connections for
the PLTC customers in Santa Rosa, Laguna, for a three-year period.

The LTI director, who worked with PLTC before retirement, was elected president after the
transfer.

The newly elected president reorganized the enterprise. LTI Sta. Rosa now has three fiber
optic teams. Each team has two fiber optic technicians and a driver-messenger per service vehicle.
The three teams are assigned to different districts in Sta. Rosa, and they work on eight-hour shift
for sic day work weeks.

One team is assigned to stay in living quarters of the new office on a bi-weekly basis, to
reduce their commuting time and budget. A senior technician stays in the living quarters on a
monthly basis. All teams do round-robin shifts for the Santa Rosa office stay.

The newly elected LTI president budgeted allowances for the Sta. Rosa stay teams. The
human resources officer has observed that productivity of the teams increase during their in-houses
stay, due to early movement from the office-warehouse, while productivity decreases once they are
out of their in-house stays.

However, the teams have developed a fellowship that often discourages teamwork and
professional relationships. Senior technicians sometimes assign housework to the driver-messenger
and younger technicians. The LTI Board think the newly elected president often lets the senior
technicians get away with shortened work hours, especially for teams that do not stay in the Sta.
Rosa office.

What style of management should the team leader or senior technician use? What should the
human resource officer do with the fluctuating productivity? Is the shortened working hours the
LTI President’s prerogative? Why or Why not?

Discussion Points

1. The students are assigned to list their needs, based on the theories of Maslow. Alderfer, and/or
McClelland.
2. Groups tally their personal needs lists and group/class discussions may me initiated on the results.

Alternative Assignments and Exercises

Let the students read on people they admire in business, political, sports entertainment, and other
industries. In interactive class sessions, encourage them to discuss the qualities and/or traits that they
admire in their selected personalities.

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 5
Exercise 9

Identify which need in Maslow’s Hierarchy (of Needs) is described below. Write PN for physiological
needs, SS for safety and security, SN for social needs, E for ego, and SA for self-actualization.

_________1. Self-esteem _________11. Achievement

_________2. Food and water _________12. Belonging
_________3. Friendship _________13. Status
_________4. Shelter _________14. Recognizing one’s full potential
_________5. Affection _________15. Recognition
_________6. Becoming everything one is capable of doing
_________7. Sex
_________8. Freedom
_________9. Love
_________10. Protection against threat and deprivation

Exercise 10
Column B
Match column A with column B. Write the letter only.

Column A
impoverished management
A_______ orchestrate important change
effectively. power
_______ shows low concern for people and low
concern for production. team management
_______ show high concern for people and
production manager
A _______ deals with day-to-day organization
complexities Stephen Covey
_______reflects a strong wish to be liked,
according to McClelland. affiliation
Under Alderfer’s ERG theory, leaders need to
address _______, or encourage people to growth needs
creatively and efficiently change themselves or
their environments. Sheryl Sandberg
‘Make your partner a real partner.’ _______
‘Seven Habits of Highly Effective People’ leader
_______
_______ is the facility to take action and achievement
provides the strength and daring to achieve
something.
_______ means an orientation toward success
and goal realization.

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 6
Chapter 6-Controlling

At the end of this chapter, the students are expected to:

understand and explain the fundamentals of the controlling function in business organizations and
communicate and discuss the controlling function to current issues.

6.1 Managerial Control

Control is defined to be any process that directs the activities of individuals toward the achievement of
organizational goals (Bateman and Snell, 2008).

Organizational or managerial control is the systematic process through which managers regulate
organizational activities to make them consistent with established expectations detailed plans, targets, and
standards of performance.

The control process is shown in figure 6.1

Establish performance standards.

Measure actual performance

..

Compare actual performance versus

performance standards
.
..

Take corrective action.

Revise standards when necessary.

..
Figure 6.1. Control process
Standards are established prior to performance. For example, the school grading system is planned and
put in place before students are accepted. Student grades are based on their day-to-day performance in class,
such as in class recitations, tests, projects, and participation in class activities.
Grades are monitored and compared with the passing and failing marks. If many students receive failing
marks, corrective action is probably necessary, such as changes in teaching methods. If many students still get
failing marks after the change in teaching methods is affected, a revision in the grading system may be
compulsory to meet student expectations.
This process is also applied in business organizations. For example, a reward may be given to an
employee who has never been late in reporting for work over a five-year period. Office time is set at 8 a.m. to
12 noon and 1 p.m. to 5 p.m. A daily time record (DTR) needs to be punched in a bundy clock every time an
employee comes into and gets out the office to determine punctuality. The DTR is periodically reviewed and
kept for future reference. However, a five-year standard may be difficult to achieve, so a six-month to one-year
period may be used instead.

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 7
Types of Control

1. Feed Forward or Preliminary Quality Control- which focuses on the human, material, and financial
resources that flow into an organization;
2. Concurrent Control- which consists on monitoring of ongoing employee activities to ensure their
concurrence with established standards;
3. Feedback or Output Control-which utilizes rules, policies, hierarchy of authority, reward systems, and
other formal mechanism to influence employee behavior and assess performance.

Qualities of Effective Control Systems

Effective control systems are generally linked to strategy, accepted by members, accurate, flexible,
timely, equipped to point out exceptions, within reasonable costs, and able to provide corrective measures.
Control systems should be linked to strategy to be effective. For strategy citing motivated personnel for
the achievement of goals, a reward system is set. The reward system should be accepted by the employees, so
they are willing to submit reports and occasionally work beyond office hours. The reports and DTRs must be
accurate. If the strategy schedule of implementation was set for a one-year period and found to be unrealistic,
the period maybe shortened to six months. The control system should, therefore, be flexible, to enable the
employees to meet the standards. Exceptions are also included to clarify credentials for the standards. For
example, the reward system must indicate that supervisors and managers are not included in the reward system.
Rewards are often limited, and the cost of the reward of the system should be equated to the set
standard. For example, a motivational strategy for report submission and occasional overtime work over a six-
month period cannot be equated to a ₱ 100,000 reward.
It is also important to reiterate that corrective measure are essential if the system is found to be
defective. For example, overtime work that was not signed nor approved by the supervisor cannot be included
as performance for the reward system.

The Importance of Control

Control systems allow for effective implementation of the planning and organizing concepts detailed in
chapters 3 and 4. The control system ensure that activities are done according to plans and that goals are
attained. They also assist the managers and supervisors in the delegation of authority, as controls often motivate
managers to dispense authority.

Areas of Control

A control system is applied in the areas shown in figure 6.2

INFORMATION

CONTROL
OPERATIONS FINANCE
SYSTEM

EMPLOYEE
BEHAVIOR

Figure 6.2. Areas of control

Control system ensure (1) orderly and efficient conduct of business and (2) adherence to management
policies. The areas of control are (1) information, (2) finance, (3) employee behavior, and (4) operations.
Information should be available at the right time and at the right place. Often, in the desire to have
complete and accurate information, there is a need to wait long to the point that information become stale.
Internal and external deadlines are imposed on financial reporting. For example, at the end of each banking day,
the bank balances actual cash with balance per records. At the end of the month, result of operations and
financial position are determined. The deadlines set by the SEC, BIR, SSS, PhilHealth, and HDMF are to be
met, monthly, quarterly, and annually. Failure to meet deadlines means penalties and interest for the delayed
compliance. In obtaining loans, reports to prove credit worthiness are required by credit grantors.
Chapter 5: Leading
Organization and Management Chapter 6: Controlling 8
 The accounting and government forms are designed to contain information needed by internal users as
well as external users. The sales invoice, for example, shows relevant data for the seller and buyer. Signatures
on business forms (1) pinpoint responsibility, (2) grant authority, and (3) consummate a transaction as when the
buyer acknowledges delivery of products in good condition.
Review of forms is done by systems analyst and government units to better serve their purpose.
Frequently used government forms are those of the BIR for tax compliance and those of SSS, HDMF, and
PhilHealth for reports on employees.
Finance controls include budgets. Actual transactions are compared with budget. Overbudget and
underbudget call for explanations. Standard costs are set and compared with actual costs. Variances are
analyzed and explained. There should be immediate recording of transactions to minimize opportunity for
manipulation. No one person should be in control of a transaction. There should be counterchecking. However,
make sure that controls do not lead to too much delay.
Equipment enhances control. Use of computers speeds up recording and reporting. Equipment leads to
efficiency in operations, producing outputs on scheduled time and at budgeted costs.
Another significant control area is employee behavior. At point of entry, the employee fills up an
application form and submits papers to support resume. Employee is subjected to tests and interviews. Physical
medical examinations cap the hiring process. The documents form part of the hire’s permanent file. This file
together with current file keep track of the employee’s performance. The permanent file as well as the current
file become a monitoring file.

Control Methods and Systems

Bureaucratic control consists of the standards operating procedures and policies that prescribe correct
employee behavior. Examples of these are the use of time cards for attendance, wearing of uniform, proper use
of company facilities, among others. A reward system recognizes employees’ adherence to company rules and
regulations.
Information technology (IT) is now an important area for concern. Admittedly. Efficiency is enhanced
with IT. However, it is important to monitor time spent for personal use of IT by employees. Security measures
are to be installed to detect fraud. How much of the company resources is lost through unauthorized use by
employees?
Internal control system consists of all policies and procedures adapted to enhance adherence to company
policies, promote operational efficiency, safeguard assets, prevent and detect frauds and errors, and lead to
accurate, complete, and timely financial information. More visible are the accounting controls. Sales
transactions are documented with sales invoices, delivery receipts, and receivables. Cash transactions are
evidenced by official receipts, cash vouchers, banks checks, banks statements, among others.
Control environment includes the management philosophy and operating style. Company culture is
defined by the functions of the Board of Directors and its committees. External controls is done by the Central
Bank when they audit Philippine banks. Personnel policies and procedures may be strict or lax. Authority and
responsibility are clearly defined or ambiguous. The organizational structure may be tall (top management way
above rank and file) or flat (top management close to rank and file). There are entities where the workers never
get to see the president of the company. In some companies, social activities like annual excursions, Christmas
parties, and anniversary celebrations are opportunities for employers and employees to meet. Company policies
of (1) “no minimal testing”, (2) “no child labor”, (3) assumption of corporate social responsibility, among
others, define company culture.
Characteristics of State Law
It is promulgated by legitimate The Art of Politics
state authority.
“It must be considered that there is
It is intended for common nothing more difficult to carry out,
observance. nor more doubtful of success, nor
more dangerous to handle, than to
initiate a new order of things.”
It is intended for the common good

(Source: The Prince and the

(Source: Feliciano, 2000) Discourses, Readings in Social
Science, UP, 1997)

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 9
 Company Vision-Mission: A Tool for Control Medical Diagnostics, Inc.

VISION
A community of dedicated people committed to lead in providing efficient and effective medical
diagnostic services through, maintenance of health, diagnoses, researches, and prevention of disease.

MISSION
We are community whose…
First priority is to provide accurate, ethical, total quality, and cost-efficient medical-diagnostic
services;
Second priority is the holistic development of its members and the promotion of each member’s
rights, integrity, and dignity;
Third priority is to seek and develop new opportunities for growth in terms of technology and
coverage in providing medical diagnostic services; and
Fourth priority is to generate fair business profit and provide reasonable returns to stockholders.

The Balanced Scorecard

The balanced scorecard was founded on the belief that performance measurement systems relying
largely on financial measures gets in the way of organizational growth and progress. This framework and
management methodology was based on research done by Kaplan and Norton in 1990.
The framework was designed to address common issues faced by executive officers such as single
measures of performance and focus on past accomplishments, as financial measures are wont to do. Other issues
poorly addressed by financial measures include the strategic aspect-the vision, mission, and goals were not
linked to the tasks at ground level. The actions in the battlefield had fragile links to the strategic direction of
enterprises-perhaps also failure of management to communicate the top-level directions of the business
organizations to field personnel.
The balanced scorecard adds a strategic dimension to managerial control, as the framework offers
multiple performance measures, balances future and past actions, communicates the top-level vision, and
defines the cause-and-effect of operational tasks to the business mission and vision.
There are four perspectives offered by the framework:
o Financial perspective
o Customer perspective
o Internal perspective
o Organizational learning perspective

The financial perspective includes profitability, growth, shareholder value, and the established ratios, while
the customer perspective measures customer satisfaction, service, and repeat business aspects. The internal
perspective processes operational facets such as productivity, cycle time, and cost, and the organizational
learning perspective assesses continuous learning, market innovation, and intellectual assets.
Although the terms seem tedious and difficult to interpret, the experience of companies who have used the
framework attest to its capability to communicate, not simply control the enterprise performance.
Implementation of the framework establishes links between the perspectives that allow top-level direction to
filter down to the field personnel.
The links between perspectives and the use of the framework through a sample of common enterprise
objectives is demonstrated in figure 6.3
Organizational
Financial Customer Internal
Learning
Improve gross profit Develop customer Increase effectiveness of Build skills and offer
margin partnerships based on sales force portfolio for creative
trust, professionalism, solutions
and shared values
Reduce manufacturing Become preferred Improve delivery Create customer and
and purchase costs supplier performance project-focused teams
Pursue economic value- Outperform other Improve responsiveness Build capability to
added opportunities suppliers to opportunities differentiate on service
provision
Improve responsiveness Build technological
and reliability in supply capabilities
of products and services
Figure 6.3. Balanced Scorecard (BSC) perspectives and objectives

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 10
 Dependent on the situation of the enterprise, objectives may be linked to ‘balance’ the firm’s
performance measures, while simultaneously use the same as communication tool to ‘direct’ goals toward the
business vision-mission. Figure 6.4 is a sample communication and ‘control’ or performance tool.
Financial Improves gross profit margin
Customer Develop customer partnerships based on trust,
professionalism, and shared values
Internal Increase effectiveness of sales force
Organizational Learning Create customer and project-focused teams
Figure 6.4. Sample scorecard

6.2 The Balanced Scorecard: Caselet

The Balanced Scorecard
The family business, a fast-food franchise, has two outlets-one in a Quezon City mall and the other,
in a Caloocan City mall. The family business is considering borrowing funds or adding additional equity to
open more outlets in other malls and cities in the National Capital Region. As they developed their vision,
mission, goals, and strategies, they have found out that the control systems do not sufficiently evaluate their
present and future plans.
Create a balanced scorecard to manage the business growth.
Problem Statement: To create the balanced scorecard for the family food service outlets.
Case Facts: The students complete the case facts, alternatives, evaluation of alternatives, and
recommendation.
Case Facts:
Alternatives:
Evaluation of Alternatives:
Recommendation:

Alternative Assignments and Exercises

The students create personal balanced scorecards, with four perspectives, with a strategic goal of
being a manager over a ten-year period.
Exercise 11
Match column A with column B. Write the letter only.
Column A Column B
_______1. Any process that directs the activities
of individuals toward the achievement of
organizational goals.
control
_______2. The type of control that utilizes rules,
policies, hierarchy of authority, reward systems,
accounting system
and other formal mechanisms to influence
employee behavior and assess performance.
bureaucratic control
_______3. An area of control that includes
budgets or standards; actual data is compared
internal control
against budgets and analyzed
_______4. A control method or system that
finance
includes all the policies and procedures adopted
by the management of an enterprise to assist in
achieving management objectives.
_______5. An internal control structure that
includes the series of tasks and records of an
entity by transactions that are processed as a
means of maintaining financial records.

Reference:
Organization and Management: Concepts, Caselets, and Exercises
Copyright 2016
By: The Phoenix Publishing House, Inc.
Chapter 5: Leading
Organization and Management Chapter 6: Controlling 11
Victoria Geralde-Orjalo, and Solita A. Frias

Chapter 5: Leading
Organization and Management Chapter 6: Controlling 12