Co-ordinating & Controlling

Co-ordination is that hidden unseen and intangible factor which gives a sense of unity and
purpose to the activities of a group or an organization. Co-ordination helps the manager in
integrating and synchronising the efforts of the employees for attaining the organizational
goals.

Importance of Co-ordination:

Following points explain the important role that co-ordination plays in the

1) Primary Condition to Succeed: In any collaborative effort, whether it is a

organisation:family or a sports team or an organisation, co-ordination and harmony among
the involved parties is a must. Most roles are interdependent, and without co- ordination they
cannot be performed in unison for the achievement of mutual organisational objectives.
Hence, co-ordination is a primary condition for success.

2) Handling Complexity: The level of complexity in the organisations is increasing with the
changes in the business environment. People working in large corporations have to perform
different, multiple and challenging tasks to achieve success and realise the organisational
goals. Efficient co- ordination between various departments and subsidiaries helps the
organisations in achieving success.

3) Unity of Objectives and Efforts: Co-ordination provides harmony and unity to the efforts
of all the employees working towards the achievement of organisational goals.

4) Staff Stability: Employees in well-co-ordinated organisations tend to be more productive,

effective and therefore happier. This instils a sense of loyalty amongst them and helps
organisations to retain them, which provides the much needed staff stability. Thus, co-
ordination inculcates a sense of belongingness within the employees and helps in minimising
the turnover rate in the organisation.

5) Balancing of Employee Efforts: All employees are not equal in terms of skills, talent and
performance. Hence, it is important to balance the efforts of all employees in order to achieve
organisational success. Efforts of employees are balanced via the 'co-ordination function' for
realising the core organisational objectives by utilising the contribution of over-achievers to
compensate the poor performance of the under-achievers.

6) Optimum Use of Resources: Co-ordination also ensures the best possible use of all
resources, both human and material. This is done by ensuring that appropriate amount of
resources, with minimum wastage are used for performing business operations. This
automatically enhances organisational profitability and competitiveness.
7) Adapting with External Environment: Modern businesses operate in a fluid and dynamic
environment and are required to constantly react and adjust as per the changing external

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forces. Better co-ordination enables the organisation to combine its internal strengths and
competencies so as to exploit the external business opportunities and avoid the threats.

8) Increases Company Image: Companies with an effective co-ordination system tend to be

more profitable and successful and therefore, carry a good image and command respect in the
market.

9) Smooth and Undisruptive Functioning: Co-ordination function also helps an organisation

in inculcating smooth functioning and minimising disruptions. This ensures that the
organisation is equipped to harness market opportunities and achieve long-term growth.

Principles of Co-ordination

1) Early Stage Principle This principle states that coordination must start at a very early
stage. So, in the management process, this is very vital. Thus, it can be said that this should
start at the planning stage. So, this will ensure that the best plans are made. Also, it is
necessary to implement these plans successfully.

2) Continuity Principle According to the second principle, coordination is a process that

requires continuity. Thus, it means that the process should not be only a one-time process. So,
the process of coordination should begin at the time the organization starts. This shall also
continue until an organization exists.

3) Direct contact Principle This principle believes in direct contact. It states that managers
should directly contact their subordinates. Thus, it will help in building good relations for
managers with their subordinates. Also, because of this principle, any misunderstanding will
be avoided. Along with this, misinterpretations and disputes will be avoided between the
subordinates and the managers.

4) Reciprocal relation Principle The actions and decisions of the people working in the
organization and their departments are inter-related. Thus, the actions and decisions of one
department or the person will affect other departments and people in the organization.So,
before taking any decision every manager must find out the effect of that decision on the
other departments. This is the principle of reciprocal relations. Thus, the coordination in the
organization will be followed properly only if the principles are followed.

5) Clarity of objective Principle Coordination in an organization is possible only when there

are clear objectives set in the organization. Everyone working in the organization should be
clear about the objectives. Thus, there should not be any doubt regarding the objectives of the
organization. Thus, the objective of the organization is can be achieved quickly and easily.

6) Effective communication Principle Coordination in the organization will be achieved

only if there is a presence of effective communication. So, there should be good
communication present between all the different departments in an organization.
Furthermore, effective communication should also be present between the manager and their
subordinates as well as within the employees.

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 Controlling

Meaning of Controlling: Controlling is one of the important functions of a manager. In

order to seek planned results from the subordinates, a manager needs to exercise effective
control over the activities of the subordinates. In other words, the meaning of controlling
function can be defined as ensuring that activities in an organization are performed as per the
plans. Controlling also ensures that an organization’s resources are being used effectively &
efficiently for the achievement of predetermined goals.

Steps in Controlling

Set Performance
standards

Measure
Performance

Measure Take corrective

Performance actions

Compare Standards

Determine Deviation

Meet Standards No

Yes

Reinforce and
continue work
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1. Establishing Standards and Methods for Measuring: Performance Standards are, by
definition, simply the criteria of performance. They are the selected points in an entire
planning program at which performance is measured so that managers can receive signals
about how things are going and thus do not have to watch every step in the execution of
plans. Standard elements form precisely worded, measurable objectives and are especially
important for control.

In an industrial enterprise, standards could include sales and production targets, work
attendance goals, safety records, etc.

In service industries, on the other hand, standards might include several time customers have
to wait in the queue at a bank or the number of new clients attracted by a revamped
advertising campaign.

2. Measuring the Performance: The measurement of performance against standards should

be done on a forward-looking basis so that deviations may be detected in advance of their
occurrence and avoided by appropriate actions. Several methods are used for measuring the
performance of the organization. If standards are appropriately drawn and if means are
available for determining exactly what subordinates are doing, appraisal of actual or expected
performance is fairly easy. But there are many activities for which it is difficult to develop
accurate standards, and there are many activities that are hard to measure.

It may be quite simple, for example, to establish labor-hour standards for the production of a
mass-produced item and it may be equally simple to measure performance against these
standards, but in the less technical kinds of work. For example, controlling the work of the
industrial relations manager is not easy because definite standards cannot be easily
developed. The superior of this type of manager often rely on vague standards, such as the
attitude of labor unions, the enthusiasm, and loyalty of subordinates, the index of labor
turnover and/or industrial disputes, etc. In such cases, the superior’s measurements are often
equally vague.

3. Determining whether Performance Matches the Standard Determining whether

performance matches the standard is an easy but important step in the control process. It
involves comparing the measured results with the standards already set.If performance
matches the standard, managers may assume that “everything is under control”. In such a
case the managers do not have to intervene in the organization’s operations.

4. Taking Corrective Action: This step becomes essential if performance falls short of
standards and the analysis indicates that corrective action is required. The corrective action
could involve a change in one or more activities of the organization’s operations.For
example, the branch manager of a bank might discover that more counter clerks are needed to
meet the five-minute customer-waiting standard set earlier. Control can also reveal
inappropriate standards and in that case, the corrective action could involve a change in the
original standards rather than a change in performance. It needs to be mentioned that, unless
managers see the control process through to its conclusion, they are merely monitoring
performance rather than exercising control. The emphasis should always be on devising
constructive ways to bring performance up to a standard rather than merely identifying a past
failure.

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 Essentials of Effective Control System

The Essentials of Effective Control system in Management are

1) Suitable: The control system should be appropriate to the nature and needs of the activity.
A large firm calls for controls different from those needed for a small firm. In other words,
control should be tailored to fit the needs of the organisation. The flow of information
concerning current performance should correspond with the organizational structure
employed. If a superior is to be able to control overall operations, he must find a pattern that
will provide control for individual parts. Budgets, quotas and other techniques may be useful
in controlling separate departments.

2) Timely and Forward Looking: The control system should be such as to enable the
subordinates to inform their superiors expeditiously about the thre atened deviations and
failures. The feedback system should be as short and quick aspossible. If the control reports
are not directed at future, they are of no use as they will not be able to suggest the types of
measures to be taken to rectify the past deviations. A proper system of control should enable
the manager concerned to think of and plan for future also.

3) Objective and Comprehensive: The control system should be both, objective and
understandable. Objective controls specify the expected results in clear and definite terms and
leave little room for argument by the employees. This is necessary both for the smooth
working and the effectiveness of the system.

4) Flexible: The control system should be flexible so that it can be adjusted to suit the needs
of any change in the environment. A sound control system will remain workable even when
the plans change or fail outright. It must be responsive to changing conditions. It should be
adaptable to new developments including the failure of the control system itself. Plans may
call for an automatic system to be backed up by a human system that would operate in an
emergency.

5) Economical: Economy is another requirement of every control. The benefit derived from a
control system should be more than the cost involved in implementing it. Asmall company
cannot afford the elaborate control system used by a large company. A control system is
justifiable if the savings anticipated from it exceed the expected costs in its working.

6) Acceptable to Organisation Members: The system should be acceptable to organisation

members. When standards are set unilaterally by upper level managers, there is a danger that
employees will regard those standards as unreasonable or unrealistic.

7) Motivate People to High Performance: A control system is most effective when it

motivates people to high performance. Since most people respond to a challenge, successfully
meeting to tough standard may well provide a greater sense of accomplishment than meeting
an easy standard. However, if a target is so tough that it seems impossible to meet, it will be
more likely to discourage than to motivate effort.

8) Corrective Action: Merely pointing of deviations is not sufficient in a good control

system. It must lead to corrective action to be taken to check deviations from standard
through appropriate planning, organizing and directing. In the words of Koontz and
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O'Donnell, "An adequate control system should disclose where failure is occurring, who is
responsible for them and what should be done about them." A control system will be of little
use unless it can generate the solution to the problem responsible for deviation from
standards.

9) Reflection of Organisation Pattern: Organization is not merely a structure of duties and

function; it is also an important vehicle of control. In enforcing control the efficiency and the
effectiveness of the organisation must be clearly brought out.

10) Human Factor: A good system of control should find the persons accountable for
results, whenever large deviations take place. They must be guided and directed if necessary.

11) Direct Control: Any control system should be designed to maintain direct contact
between the controllers and controlled. Even when there are a number of control systems
provided by staff specialists, the foreman at the first level is still important because he has
direct knowledge of performance. Focus on Strategic Points: A good system of control not
only points out the deviations or exceptions but also pinpoints them where they are important
or strategic to his operations.

TECHNIQUES OF MANAGERIAL CONTROL

Techniques of managerial control may be classified into two broad categories:

I. Traditional Techniques

II. Modern Techniques.

I. TRADITIONAL TECHNIQUES:

1. Personal Observation: It enables the manager to collect first hand information but it is very

time consuming and cannot be used in all kinds of job.

2. Statistical Reports: Statistical analysis in the form of averages, percentages, ratios,

correlation, etc., present useful information to the managers regarding performance of the

organisation.

3. Breakeven analysis: is a technique to study the relationship between costs, volume and

profits.

4. Budgetary Control: is a technique of managerial control in which all activities are planned

in advance in the form of budgets and actual results are compared with budgetary standards.

Types of budget

1. Sales budget

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2. Production budget

3. Material budget

4. Cash budget

5. Capital budget

6. Research and development budget

Advantages of Budgeting

1. Helps in attainment of organisational objectives.

2. Is a source of motivation to the employees

3. Helps in optimum utilisation of resources

4. Is also used for achieving coordination among different departments

II. MODERN TECHNIQUES

1. Return on Investment:

Return on Investment (ROI) is a technique which provides the basic yardstick for measuring

whether or not invested capital has been used effectively for generating reasonable amount of

return.

Net income Sales ROI= ×

Sales Total Investments

2. Ratio Analysis:

Ratio Analysis refers to analysis of financial statements by computation of various ratios.

1. Liquidity Ratios

2. Solvency Ratios

3. Profitability Ratios

4. Turnover Ratios

III. RESPOSIBILITY ACCOUNTING

1. Cost centre: A cost or expense centre is a segment of an organisation for which a manager
is held responsible for its operations. For e.g. production department for manufacturing unit.

2. Revenue Centre: is a segment of an organisation which is primarily responsible for

generating revenue. For e.g. marketing department

3. Profit Centre: is a segment of an organisation whose manager is responsible for both

revenues and costs. For e.g. repair and maintenance department.
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4. Investment Centre: is responsible not only for profits but also for all investments made in
the centre. e.g. assets.

IV. MANAGEMENT AUDIT

Management audit refers to systematic performance appraisal of the management of an

organisation.

V. PERT and CPM

• PERT (Programme Evaluation and Review Technique) and CPM (Critical Path Method)

are important management techniques used to plan, schedule and control complex

project.

• These techniques are especially useful for planning, scheduling and implementing time

bound projects involving performance of a variety of complex, diverse and interrelated

activities.

VI. MANAGEMENT INFORMATION SYSTEM

Management Information System (MIS) is a computer-based information system that

provides

information and support for effective managerial decision-making. Its is an important control

technique.

MIS offers the following advantages to the managers:

1. It facilitates collection, management and dissemination of information

2. It supports planning and controlling at all levels

3. It improves the quality of information

4. It ensures cost effectiveness

5. It reduces information overload

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