MODULE- 4

LEADERSHIP MOTIVATION AND CONTROLLING

LEADERSHIP
Meaning
Leadership is the art of motivating a group of people to act toward achieving a common goal.
Ina business setting, this can mean directing workers and colleagues with a strategy to meet the
company's needs.

Definition
According to George R. R. Terry leadership is a relationship in which one Influences others to
work together willingly on related task to attain the which the leader desires.

Qualities of Good Leader

1. Patience and Tolerance : Patience is the capacity to face difficult situations, hardships or
inconvenience without making a single complaint. It is the ability to wait calmly for
something to happen without complaining or giving up or getting angry. Tolerance means
to have a fair, objective and permissive attitude towards those, whose thinking, opinions,
and practices differ from one’s own.
2. Good Personality: A good personality is a combination of physical, mental and social
quality Good personality helps a leader to influence his followers. Attractive physiq
manners add an advantage to the leader’s personality.
3. Coaching and Guidance: :A good leader must be a coach for his followers. As a coach,
he must teach his followers, what to do, how to do and when to do it. A good leader must
also give guidance to his followers. As a guide, he must first fix the objectives. Then he
must show his followers how to achieve the objectives.
4. Self-Confidence: Self-confidence is found abundantly amidst true leaders; hence they
know about their competencies and leadership qualities. They are sure about their
competencies and leadership skills. They have a sense of self-assurance and self-esteem
and, most importantly, believe that they can make a difference.
5. Human Skills: A good leader must have essential social and human skills. That is, he
must understand people. This quality is necessary for dealing with different types of
persons and social groups.
6. Initiative: A good leader must always take an initiative. This means he should do the right
thing at the right time without being told by others. He must be able to construct and
implement his own plan.
7.Communication skills: Excellent communication is the key to good leadership. An
effective leader knows how to put across his message. They are good orators and
communicate to get his/her work done. They are not harsh; they choose words and
expressions which suit the situation and allow others to express their thoughts and ideas.
8. Innovative: An innovative leader is not a creative genius with thought-provoking ideas but
gives others the freedom to develop their ideas. You would always find people with great
ideas who lack the will, determination, and fear of taking any actions. But innovative
leaders are not one of them.
9. Problem-Solving Skills/ proper judgement: Leadership roles are not only limited to
management or delegating. Today for any business leaders, the spectrum of leadership
responsibilities have evolved. For the proper functioning of an organization, leaders must
have problem-solving skills and an eye for analyzing the situation to make better
decisions. When it comes to effective leadership, problem-solving skills are crucial. Good
leaders have this innate ability to respond to problems. They are equipped with the ability
to identify and define problems. Make the analysis, use data, and communicate to solve
the issues. Cultivating strong problem-solving skills is vital for any leader to eliminate
barriers.
10. Administrative Skills: A good leader must have an administrative ability. This means, he
must be able to get the work done through his followers. He must know, how to plan,
organise and control the work of his followers
11. Self-Discipline: Good leadership is in developing discipline in others. Good leaders are
self- disciplined and have good time management skills. They encourage a culture where
people are disciplined. This is a quality in which people can adapt themselves with
persistence. When you are self-disciplined and set an example, you motivate others to
follow.
12. Integrity: Integrity is a core quality that every leader must possess. You cannot run any
business successfully if you lack integrity. Business leaders know- Integrity is the
foundation of good leadership, and one must stand for their beliefs. No matter how hard a
situation, a good leader inspires with his principles without compromising; they refrain
from making false promises or take shortcuts, choosing thoughts and action over personal
gain.
13. Honesty: One of the essential leadership qualities is the possession of honesty. Honesty is
expected from leaders to garner trust and respect from people for reliability. Moreover, we
look upto people who are loyal to their words and are accountable. Thus, honesty is the
most valued trait for any business leader or any leader in general.
14. Active Listening: Active listening is an excellent quality to have when it comes to
leadership. Good leaders listen to people with great attention and sincerity. It helps them
understand people and their perspectives. Active listening builds trust and relationships in
the long run.
15. Visionary; A visionary leader is far-sighted and driven and inspired by what a company
can become. Visionary leaders work hard for the greater good and keep
themselvesupdated with time and change. Ensuring a vision for the future with
perseverance and keeping everybody invested in the process is what a visionary leader
does.
16. Decision-making Skill: Good leaders are decisive and know how to help the organization,
employees, stakeholders, and customers. You would never envision a leader who is
unclear and uncertain. Good leaders are aware of the fact of how their decisions can make
or break businesses. They evaluate a given circumstance many a time before coming to
any conclusion. They collect the necessary information required before making any
 announcements. Also, they do not believe rumours but examine a situation or a problem
themselves before making a decision.

17. Fair Attitude: Good leaders are fair to the employees and the organization’s processes.
They acknowledge the good and always make room for everyone to thrive together. They
understand that nothing significant has ever been achieved with an attitude that is unfair
and biased. Even if it does, the sustainability of the outcome is always questionable.
18. Self-motivated: One of the essential leadership traits of good leaders is their ability to
motivate others. Good leaders always motivate their employees and boost their morale
when needed. They sail their boat smoothly, even in hazardous situations. They keep
themselves self-motivated and set an example to follow.
19. Humility/ humanity: Humble leaders make the best leaders. Humility is not the first trait
that comes to mind when we think about leadership. But it is one of the essential qualities
of a good leader.
20. Emotional Intelligence: Emotional Intelligence is the capability to identify, manage,
evaluate, and understand our own emotions and the people around us. Good leaders are
self- aware, act in control, take calculated decisions without getting carried away. They
understand other’s perspectives without being cynical. They are self-motivated and have
strong social skills, which help them build connections and healthy relationships.

Features of Leadership
1. Process of influence: Leadership is an ability of an individual to influence the
behaviour of other employees in the organization to achieve a common purpose or goal
so that they are willingly co-operating with each other for the fulfillment of the same.
2. Achieve organizational goals: The purpose of leadership is to guide the people in an
organization to work towards the attainment of common organizational goals. The
leader brings the people and their efforts together to achieve common goals.
3. Group phenomenon: It is a group process that involves two or more people together
interacting with each other. A leader cannot lead without the followers.
4. Exist only with followers: It is an interpersonal process between the leader and the
followers. The relationship between the leader and the followers decides how efficiently
and effectively the targets of the organization would be met.
5. Personal qualities: Leadership its depend on the personal qualities of leader that how
he behave with people, the way of communication, listening skills, patience, tolerance
and many more.
6. Neither bossism nor synonymous: It means a good leader will always strive to
influence the behavior attitude and beliefs of his subordinates. He is not a management
or not a employee. He perform as management and employee in organization

Importance Of Leadership
1. Influencing the behaviour of people: A leader impresses his subordinates with his
leadership ability. He brings them under his control in such a way that they put in their
best efforts to achieve the goals of the organization. Good leaders usually get good results
through their followers.
 2. Helps employees in fulfilling their needs: A leader establishes personal relationship with

his subordinates and tries to meet their requirements. People follow a leader because he
provides them security and the opportunities to earn wealth, gives them the right to work
and tries to understand their feelings. Employees willingly accept him because he takes
care of their needs. Consequently, they work with complete dedication and enthusiasm.
3. Introducing required changes: The business environment is changing at a quick pace, so
in order to face the changing environment, many alterations have to be introduced in the
organization. Since the people already happen to be under the influence of the leader, he
can easily makes them agree to implement these changes. In this way, the
possibleresistance to the change is eliminated with the strength of leadership ability.
4. Solving conflicts effectively: A leader can effectively solve every type of conflict be it
employee vs. employee or employees’ vs. employer, under the weight of his influence. A
leader allows his followers the liberty to express their views. That is the reason that he
easily understands the reality of the conflict, in this way, by understanding the nature of
the conflict he tries to provide timely solution and minimizes the possibility of adverse
results.
5. Training and Development of Subordinates: A leader helps in the training and
development of the employees. He makes them aware of the modern technique influence
his followers to perform their duties by explaining the vision and the importance of their
role in the outcome.
6. Motivating and employees: This involves finding out the needs of the employees and
fulfilling them. It is important to guiding define the employees’ role in the work process
and provide them with the tools needed. A good leader will explain the task and be
available to assist them if they run into a problem.
7. Building morale: This involves pulling everyone together towards a comment goal. A
good leader will let the employees’ know how much their work is appreciated. A simple
gesture like providing praise for a task well done, or throwing a party to recognize small
achievements, will regenerate their spirits.

Functions Of Leadership
1. Setting Goals: A leader is expected to perform creative function of laying out goals and
policies to persuade the subordinates to work with zeal and confidence.
2. Organizing: The second function of a leader is to create and shape the organization on
scientific lines by assigning roles appropriate to individual abilities with the view to make
its various components to operate sensitively towards the achievement of enterprise goals.
3. Initiating Action: The next function of a leader is to take the initiative in all matters of
interest to the group. He should not depend upon others for decision and judgment. He
should float new ideas and his decisions should reflect original thinking.
4. Co-Ordination: A leader has to reconcile the interests of the individual members of the
group with that of the organization. He has to ensure voluntary co-operation from the
group in realizing the common objectives.
5. Direction and Motivation: It is the primary function of a leader to guide and direct his
group and motivate people to do their best in the achievement of desired goals, he should
build up confidence and zeal in the work group.
6. Link between Management and Workers: A leader works as a necessary link between
 the management and the workers. He interprets the policies and programmes of the
management to his subordinates and represents the subordinates’ interests before the
management. He can prove effective only when he can act as the true guardian of the
interests of his subordinates.
7. Develop team work: A leader has to work with his followers, he give common direction
to all followers which helps to build good team work among the employees.
8. Work as appropriate counselor:
Leader not only lead the team and give the directions to team members he also help others to
solve the personnel problems too. He give the best ideas or alternative to employees to
work hard, if anyone facing any problem he will analysis that and try to solve that.

Leadership Styles

1. Autocratic or Authoritarian leadership style:

when the authority and decision making power are concentrated to the leader is known
as autocratic leadership style. There is no participation by subordinates. The leader takes
full authority and assumes full responsibility.

Features:-
(a) He/she makes his own decisions and he/she doesn’t not take any advice of
others because he/she thinks he/she is only superior.
(b) His/her position gives him/her personal authority and right to lead the
members in any way he/she desires.
(c) Reward and punishment is exercised by him/her very strictly. Autocratic
leadership style believes on negative motivational tools.
(d) An autocrat leader does not give full information to the members. There is
only one way communication in order to maintain the position.
(e) An autocratic leader describes each job in detail and imposes rigid work
standard on his employees. It means the subordinates are compelled to certain
work assigned for him.
Advantages:-
a) It is useful in emergency or in war,
b) When the workers are undisciplined and uneducated it gives the best results.
c) When the laborers are not organized, it is more effective.
d) There is no need of trained labor. It may be used for untrained workers.
e) It is a prompt process of decision making as the single person decides for thewhole
group.
Disadvantages:-
a) Subordinates are not involved in the process of decision making in
autocratic leadership style
b) It doesn’t emphasize on correct evaluation of employee’s performance
c) The moral of employees is so low.
d) There is no chance of management development.
e) There is no chance of two-way communication.
f) Creative ideas and thinking cannot be used in autocratic leadership style.
 g) The employees perform the work with negative motivation.
2. Democratic or Participative leadership style
When the authority and decision making power are decentralized to the subordinates is
known as democratic leadership style. There is participation by subordinates. The leader
delegates authority and provides responsibility even to the followers.

Features:-
 A democratic leader delegates the responsibility as per the capability of
the employee
 There is participation of all subordinates in decision making
 Human values are also given preference. The leader gives concerns for the followers

 Democratic leader imposes flexible work standard, designs goals with freedom
for the performance of work.
 A democratic leader emphasizes in results than on action

Advantages: –
 Good cooperation among employees is made in democratic leadership style.
 Employees are highly satisfied and their morale is increased
 Human efforts are highly recognized
 It helps in increasing in productivity.
 Policies, planning and other working procedures become better because
different kinds of logic ideas and creativity are mixed.
 Subordinates have grown considerable freedom of action that helps to increase the
personal growth and gets opportunity to utilize their capabilities
Disadvantages: –
 It takes long time in decision making.
 It is not suitable for untrained subordinates’
 A leader may to be responsible in his style
 It is not suitable when the followers are undisciplined and untrained

3. Laissez-fair or Free rein leadership style

When all the authority and responsibility are delegated to the subordinates is known as
Free rein leadership style. The leader who believes on this style is known as free rein
leader. The free rein leader doesn’t use the power and leaves the power to the subordinates.
He/she doesn’t provide any contribution to make planning and policies. This type of
leadership style is very useful when group members are intelligent and fully aware of their
roles and responsibilities.

Features
 Subordinates have complete freedom in decision making
 The subordinates are self-directed, self-motivated and self-controlled
 The role of free rein leader is to provide facilities, materials and information to
 The employees.
 The leader doesn’t interfere in making planning and policies
Advantages: –
 The employees are satisfied in their job because they are free in decision making
 The morale of employees is developed.
 The employees are highly developed because there is maximum possibility
for the development of workers.
 The creativity and potentiality of subordinate are fully utilized.
Disadvantages:-
 Leader contribution is ignored.
 Sometime the subordinates are not self-directed.
 Subordinates should not get the guidelines of the leader.

4. Transactional leadership style

“Transaction made between the leader and the follower” Transactional leadership involves
motivating and directing followers primarily through appealing to their own self-interest. The
power of transactional leaders comes from their formal authority and responsibility in the
organization. The main goal of the follower is to obey the instructions of the leader. The style
can also be mentioned as a ‘telling style’.
The leader believes in motivating through a system of rewards and punishment. If a subordinate
does what is desired, a reward will follow, and if he does not go as per the wishes of the leader, a
punishment will follow. Here, the exchange between leader and follower takes place to achieve
routine performance goals.
5. Transformational leadership style
“Process by which interact with others and able to create relationship that result high
percentage of trust later it increase motivation to followers” Creating high-performance
workforce has become increasingly important and to do so business leaders must be able to
inspire organizational members to go beyond their task requirements. As a result, new
concepts of leadership have emerged - transformational leadership being one of them.
6. New-age leadership style
the new-age leadership is also about carrying people together, creating cohesive teams
and proper communication. it is about helping with environmental protection,
collaboration, and co-creation for the future. The new-age leaders can come in any
gender,shape, age economic strata field.
7. Servant Leadership style
Servant leadership is a leadership style and philosophy whereby an individual interacts
with others either in a management or fellow employee capacity to achieve authority rather
than power. These employees have a close relationship with the consumer and can make
better decisions to retain those customers and acquire new ones.
8. Level-5 Leadership style
The concept of Level-5 leadership was created by jim Collins. The concept came about
during a study that began in 1996, he started by looking at 1435 companies, and ended up
choosing 11 truly great ones. He found that these leaders have humility, and they don’t
seek for their own glory, they share credit for success of company. Level -5 leaders also
possess qualities found in levels of leadership that Collins identified. The five levels are
Level-1 Highly capable individual
Level- 2 Contributing team
member Level-3 Competent
manager
Level-4 Effective leader
Level-5 Great leader
9. Negotiation leadership style
Negotiation is an art, a skill that needs time to develop. Without this skill business
people, mostly executives won’t be able to make sensible decisions. Leaders are
extremelyimportant for a company because their goal is to inspire, motivate and engage
employees, vendors and investors.
10. Moral leadership style
Moral leaders model personal integrity, and they teach and inspire others to develop
their own moral characters. Moral leaders are skilled at self-management and emotional
intelligence the ability to read and respond compassionately to the cues of others.
11. Women leadership style
Any institution, whether it is society or organization, in the present century cannot
function effectively without women’s equal participation in leadership activities. Women
create a perspective that brings to competition and collaboration to organizations and
teams.
12. Global business leadership style
Global leadership is defined as leading people who are in multiple regions of the world.
They need to engage very diverse and distributed groups of stakeholders and colleagues to
get things done. These essential functions allow us to receive, share, and process
information.
13. Charismatic leadership style
Charismatic leadership focuses on the leaders themselves. It’s the ability to
communicate, influence and be comfortable in their own skin. Charisma is a process, a
quality that requires transforming visions into a reality. Leaders who use their powerful
personality and excellent communication skills to persuade employees and keep them
engaged during crises.
MOTIVATION

Meaning
Motivation is an important factor which encourages Persons to give their best
performance and help in reaching enterprise goals.

Definition
Berelson and Steiner: “A motive is an inner state that energizes, activates, or moves and
directs or channels behaviour goals.’

Nature Of Motivation
Motivation is a psychological phenomenon which generates within an individual. A
person feels the lack of certain needs, to satisfy which he feels working more. The need
satisfying ego motivates a person to do better than he normally does.
From definitions given earlier the following inferences can be derived:
1. Motivation is an inner feeling which energizes a person to work more.
2. The emotions or desires of a person prompt him For doing a particular work.
3. There are unsatisfied needs of a person which disturb his equilibrium.
4. A person moves to fulfill his unsatisfied needs by conditioning his energies.
5. There are dormant energies in a person which are activated by channelizing them
into actions.
Types Of Motivation
When a manager wants to get more work from his subordinates then he will have to
motivate them for improving their performance. They will either be offered incentive for more
work, or may be in the space of rewards, better reports, recognition etc., or he may instil fear in
them or use force for getting desired work.

The following are the types of motivation:

1. Positive Motivation/extrinsic
Positive motivation or incentive motivation is based on reward. The workers are offered incentives for
achieving the desired goals. The incentives may be in the shape of more pay, promotion, recognition of
work, etc. The employees are offered the incentives and try to improve their performance willingly.
2. Negative Motivation/intrinsic
Negative or fear motivation is based on force or fear. Fear causes employees to act in a certain
way. In case, they do not act accordingly then they may be punished with demotions or lay-
offs. The fear acts as a push mechanism. The employees do not willingly co-operate, rather
they want to avoid the punishment. Though employees work up-to a level where punishment is
avoided but this type of motivation causes anger and frustration.
 Importance Of Motivation

1. High Performance: Motivated employees will put maximum efforts for achieving
organisational goals. The untapped reservoirs, physical and mental abilities are tapped to
the maximum. Better performance will also result in higher productivity. The cost of
production can also be brought down if productivity is raised. The employees should be
offered more incentives for increasing their performance.
2. Low Employee Turnover and Absenteeism: When the employees are not satisfied with
their job then they will leave it whenever they get an alternative offer. The dissatisfaction
among employees also increases absenteeism. The employment training of new employees
costs dearly to the organization. When the employees are satisfied with their jobs and they
are well motivated by offering them financial and non-financial incentives then they will
not leave the job. The rate of absenteeism will also be low because they will try to increase
their output.
3. Better Organizational Image: Those enterprises which offer better monetary and non-
monetary facilities to their employees have a better image among them. Such concerns are
successful in attracting better qualified and experienced persons. Since there is a better
man power to development programme, the employees will like to join such organizations.
Motivational efforts will simplify personnel function also.
4. Better Industrial Relations: A good motivational system will create job satisfaction
among employees. The employment will offer those better service conditions and various
other incentives. There will be an atmosphere of confidence among employers and
employees. There will be no reason for conflict and cordial relations among both sides
willcreate a health atmosphere. So motivation among employees will lead to better
industrial relations.
5. Acceptability to Change: The changing social and industrial situations will require
changes and improvements in the working of enterprises. There will be a need to introduce
new and better methods of work from time to time. Generally, employees resist changes
for fear of an adverse effect on their employment. When the employees are given various
opportunities of development then they can easily adapt to new situations.

Theories Of Motivation
Maslow’s Hierarchy of Needs Theory
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a
classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of
five needs within each individual. The urgency of these needs varies. These five needs are as follows
 1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In
other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- Job security, financial security, protection from animals, family
security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness, and
friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom) and external esteem needs
(recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of
becoming
/ what you have the potential to become. It includes the need for growth and self-
contentment. It also includes desire for gaining more knowledge, social- service, creativity
and being aesthetic. The self- actualization needs are never fully satiable. As an individual
grows psychologically, opportunities keep cropping up to continue growing.

Assumptions of Maslow’s Theory

Maslow proposed that motivation is the result of a person’s attempt at fulfilling five basic
needs: physiological, safety, social, esteem and self-actualization. Maslow’s theory is based on
the following assumptions:

1. People’s behavior is based on their needs. Satisfaction of such needs influences

their behavior. Maslow believed that human behavior is based on their needs. Manis
a wanting being, i.e. his wants are growing continuously even when some wants are
satisfied. Satisfaction of such needs influences their behavior. When one need is
satisfied, they will move to strive for other needs. Human needs are of a varied and
 diversified nature.
2. A satisfied need does not motivate. People’s needs are in hierarchical order, starting
from basic needs to other higher level needs. Needs have a definite hierarchy of
importance. A satisfied need can no longer motivate a person to work; only next-higher
level need can motivate him. As soon as needs on a lower level are fulfilled, those onthe
next level will emerge and demand satisfaction. This suggests that bread (food) is
essential and is a primary need of every individual. According to Maslow, “Man does
not live by bread alone”. This conclusion of Maslow is a practical reality and needs to
be given adequate attention while motivating employees.
3. A satisfied need can no longer motivate a person; only next higher level need can
motivate him. A satisfied need does not act as a motivator. A person moves to the next
higher level of the hierarchy only when the lower need is satisfied. The needs network
for most people is complex, with several affecting the behavior of each person at any
one time.
4. As one need is satisfied, another replaces it. A person moves to the next higher level
of the hierarchy only when the lower need is satisfied. When one need is satisfied
another need emerges to take its place, so people are always striving to satisfy some
need. In general, lower level needs must be satisfied before higher level needs are
activated sufficiently to drive behavior.

Limitation of Assumption
The hierarchy of basic needs is not constantly permanent. Dissimilar people might have
diverse orders. For example, in case of artistic people like singers, painters, etc. their
self- actualization needs may become the dominant motivation force even before their
lower order needs are satisfied.
The level of satisfaction for exacting need might differ from person to person. A person
tries for his higher level need when his lower order need is realistically satisfied.

Herzberg’s Two-Factor Theory of Motivation

In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the
motivator-hygiene theory. According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction.
According to Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of
“Dissatisfaction” is “No Dissatisfaction”.
Herzberg classified these job factors into two categories-

1. Hygiene factors- Hygiene factors are those job factors which are essential for existence
of motivation at workplace. These do not lead to positive satisfaction for long-term. But
if these factors are absent / if these factors are non-existant at workplace, then they lead
to dissatisfaction. In other words, hygiene factors are those factors which when
adequate/reasonable in a job, pacify the employees and do not make them dissatisfied.
These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or
maintenance factors as they are required to avoid dissatisfaction. These factors describe
the job environment/scenario. The hygiene factors symbolized the physiological needs
which the individuals wanted and expected to be fulfilled. Hygiene factors include:
Maintenance / hygiene factors: these are factors which do not motivate employees by their
presence but their absence demotivates them. The addition of more and more of these factors
willnot help in motivating once they are satisfactory.
 Example: - proper working conditions,
 salary,
 status,
 job security,
 company policy and administration, etc.
2. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as
motivators. The motivational factors yield positive satisfaction. These factors are inherent
to work. These factors motivate the employees for a superior performance. These factors
are called satisfiers. These are factors involved in performing the job. Employees find
these factors intrinsically rewarding. The motivators symbolized the psychological needs that
were perceived as an additional benefit. Motivational factors include:
 Recognition - The employees should be praised and recognized for their
accomplishments by the managers.
 Sense of achievement - The employees must have a sense of achievement. This
depends on the job. There must be a fruit of some sort in the job.
 Growth and promotional opportunities - There must be growth and
advancement opportunities in an organization to motivate the employees to
performwell.
 Responsibility - The employees must hold themselves responsible for the work.
The managers should give them ownership of the work. They should minimize
control but retain accountability.

Mc Gregors Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of
human behaviour at work, or in other words, two different views of individuals (employees):
one of which is negative, called as Theory X and the other is positive, so called as Theory Y.
According to McGregor, the perception of managers on the nature of individuals is based on
various assumptions.
Assumptions of Theory X
 An average employee intrinsically does not like work and tries to escape it
whenever possible.
  Since the employee does not want to work, he must be persuaded, compelled, or
warned with punishment so as to achieve organizational goals. A close supervision
is required on part of managers. The managers adopt a more dictatorial style.

 Many employees rank job security on top, and they have little or no
aspiration/ ambition.
 Employees generally dislike responsibilities.
 Employees resist change.
 An average employee needs formal direction.

Assumptions of Theory Y
 Employees can perceive their job as relaxing and normal. They exercise their
physical and mental efforts in an inherent manner in their jobs.
 Employees may not require only threat, external control and coercion to work, but they
can use self-direction and self-control if they are dedicated and sincere to achieve the
organizational objectives.
 If the job is rewarding and satisfying, then it will result in employees’ loyalty
and commitment to organization.
 An average employee can learn to admit and recognize the responsibility. In fact, he
can even learn to obtain responsibility.
 The employees have skills and capabilities. Their logical capabilities should be fully
utilized. In other words, the creativity, resourcefulness and innovative potentiality of the
employees can be utilized to solve organizational problems.
Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour
at work, while Theory Y presents an optimistic view of the employees’ nature and behaviour at
work. If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption
that the employees emphasize on the physiological needs and the safety needs; while Theory X
is based on the assumption that the social needs, esteem needs and the self- actualization needs
dominate the employees. McGregor views Theory Y to be more valid and reasonable than
Theory
X. Thus, he encouraged cordial team relations, responsible and stimulating jobs, and
participation of all in decision-making process.

CONTROLLING

Meaning

controlling is the process to find out whether actions are being taken as planned and taking
corrective actions to make them conform to plans and then to take the necessary steps to prevent
the occurrence of variations in future.

Definition

According to George R Terry “Controlling is determining what is being accomplished, that is

evaluating the performance and, if necessary applying corrective so that the performance takes
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place according to plans”

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Characteristics Of Controlling
1. Managerial Function: Control is one of the managerial functions. It is not only the
function of chief executive but is the duty of every manager. A manager is responsible for
whatever work is assigned to him. He will control the performance of his subordinates for
ensuring the accomplishment of goals. Control is mainly the function of line organization
but manager may ask for data from staff personnel.
2. Forward Looking: Control is forward looking. Past is already gone thus, cannot be
controlled. Measures can be devised to control future activities only. Past provides a base
for determining controls for future. The manager will study the past performance in order
to find out the reasons for low results.
3. Continuous Activity: Control is regularly exercised. It is not an activity in isolation. The
manager will have to see that his subordinates perform according to plans at all the time.
Once the control is withdrawn it will adversely affect the work. So control will have to be
exercised continuously.
4. Control is related to Planning: Planning is the first function of management while
control is the last. Control cannot be exercised without planning. First the objectives are
set and then efforts are made to see whether these are accomplished or not. Whenever
there is a laxity in performance or things are not happening as per the plans then
correctivemeasures are taken immediately. So planning provides a base for controlling.
5. Essence of Control is Action: Whenever performance is not as per the standards the
immediate action is needed to correct the things. The purpose of control will be defeated if
corrective action is not taken immediately. If the sales are less than the standard set for
marketing department then steps will be taken to ensure that performance is not low in
future. If no such steps are taken then there will be a lack of control. In practice,
immediate action is the essence of control.

Importance Of Controlling

1. Basis for Future Action: Control provides basis for future action. The continuous flow of
information about projects keeps the long range planning on the right track. It helps in taking
corrective action in future if the performance is not up to the mark. It also enables
management to avoid repetition of past mistakes.
2. Facilitates Decision-making: Whenever there is deviation between standard and actual
performance the controls will help in deciding the future course of action. A decision about
follow up action is also facilitated.
3. Facilitates Decentralization: Decentralization of authority is necessary in big enterprise.
The management cannot delegate authority without ensuring proper controls. The targets or
goals of various departments are used as a control technique. If the work is going on
satisfactorily then top management should not worry.
4. Facilitates Co-ordination: Control helps in co•ordination of activities through unity of
action. Every manager will try to co-ordinate the activities of his subordinates in order to
achieve departmental goals. Similarly, chief executive will co-ordinate the functioning of
various departments. The controls will act as checks on the performance and proper results
will be achieved only when activities are coordinated.
5. Helps in Improving Efficiency: The control system helps in improving organizational
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 efficiency. Various control devices act as motivators to managers. The performance of every
person is regularly monitored and any deficiency is corrected at the earliest.
6. Psychological Pressure: Controls put psychological pressure on persons in the organization.
Everybody knows that his performance is regularly evaluated and he will try to improve upon
his previous work. The rewards and punishments are also linked with performance. The
employees will always be under pressure to improve upon their work.

Limitations Of Controlling
1. Influence of External Factors: There may be an effective control system but external factors
which are not in the ambit of management may have adverse effect on the working. These
factors may be government policy, technological changes, change in fashion, etc. The
influenceof these factors cannot be checked by the control system in the organization.
2. Expensive: The control system involves huge expenditure on its exercise. The performance of
each and every person in the organization will have to be measured and reported to higher
authorities. This requires a number of persons to be employed for this purpose. If the
performance cannot be quantitatively measured then it will be observed by the superiors. The
exercise of control requires both time and effort.
3. Lack of Satisfactory Standards: The performance of certain activities involving human
behaviour cannot be fixed in terms of quantities. It is difficult to fix standards for activities like
public relations, management development, human relations, research, etc. The evaluation of
work of persons engaged in these activities will be difficult.
4. Opposition from Subordinates: The effectiveness of control process will depend upon its
acceptability by subordinates. Since control interferes with the individual actions and thinking
of subordinates they will oppose it. It may also increase the pressure of work on subordinates
because their performance is regularly monitored and evaluated. These factors are responsible
for the opposition of controls by subordinates.
Steps Involved In Control Process
There are five steps in control process:
1. Setting of Control Standards: Every enterprise plans its activities in advance. On the
basis of plans, the objectives and goals of every department, branch, etc. are fixed. These,
goals are converted into quantity, value, man hour etc. These are to be/achieved in future.
There may also be qualitative goals. The achievement of various targets is made the
responsibility of specific persons. The levels of achievement are also decided in advance.
Whether a particular result is to be taken as satisfactory, average or poor should be pre
determined so that the persons responsible for that work should be able to assess their
performance.
2. Measurement of Performance: The second step in controlling process is the
measurement of performance. The actual performance is measured against the standards
set. This will enable management to determine whether the work is being done according
to plans or not. Measurement of performance is an important part of control process. If

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 measurement is such that deviation is detected at the earliest then it will enableappropriate
action well in time. If that is not possible then deviations should be detected as early as
possible.

3. Comparing Actual and Standard Performance: The next step in control process is the
comparison of actual performance with the standards set.
4. To find out deviations : While comparing actual performance with the standard, some
permissible limits are also fixed. When the deviations are within the prescribed limits then
there is no cause for worry. But if the deviations are more than the allowable limits then it
calls for urgent action. When the actual performance is not up to the level then causes for
it should be pin-pointed. Necessary steps are taken so that performance is not adversely
affected once again. If no efforts are made to rectify the weak areas then the whole control
process will be futile. Whenever the performance is low than the standards, the reasons for
it should immediately be found.
5. Taking Corrective Action: The last but most important step in controlling process is of
taking corrective action. Whenever the performance is less than the standards, efforts
should be made to rectify it. The control action may involve review of plans and goals,
change in the methods of work, change in the assignment of task, change in existing
techniques of direction and change in organization structure.

Essentials Of Effective Control System

(1) Reflecting Organisational Needs: The control system adopted should suit the needs of a
concern. Control system used in the finance department will be different from that used in
the sales department or the production department. Similarly, the control system for a
capital-intensive or machine-based method of production is different from the control
system that is needed in the labour intensive methods of production. Hence the manager
should choose such control system which is appropriate to the nature and needs of a
concern.
(2) Promptness in Reporting Deviations: The control system should enable subordinates to
inform their superiors in time about their performance. This would help the managers in
detecting the deviations and also in taking prompt corrective actions
(3) Forward-looking Controls: A good control system is one that detects deviations early
enough so as to enable the manager to take quick corrective action For example, cash
control forecasts cash needs well in advance and the manager is enabled to take
correctiveaction immediately in case there is any deviations from the forecasts
(4) Objective Control: Controls should be objective. Objective controls clarify the expected
results in clear and definite term and they also provide the control standards by which
actual performance can be measured
(5) Flexible Control: Plans and other predetermined standards or criteria need o be altered
from time to time. Hence, the control system should be flexible so that it can be adjusted
to suit the needs of any modification or alteration in the plans or other predetermined
criteria.
(6) Economical Controls: The control system should be economical The benefit derived by
the business concern from a control system should be more than the cost involved in its
maintenance.
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 (7) Simple Controls: To be effective, controls must be simple and easily understandable to
the manager as well as to the subordinates. A control system which is complicated and not
intelligible cannot be practised by the manager.
(8) Corrective Action: The control system should not only detect deviations from the
predetermined standards but also should provide solution to the problems that are
responsible for deviations. In fact, this can be said to be an important factor on which the
effectiveness of control system depends. In the words of Koontz and O Donnell, "An
adequate system should disclose where failures are occurring, who is responsible for them
and what should be done about them."
(9) 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. They may then
refuse to meet them. Status differences between individuals also have to be recognised.
Individuals who have to report deviations to someone they perceive as a lower level staff
member may stop taking the control system seriously.
(10) Reveal Exceptions at Strategic Points: A control system should be such as reveal
exceptions at strategic points. Small exceptions in certain areas have greater significance
than larger deviations in other areas. Five per cent deviations from the standards in office
labour cost is more important than 20 per cent deviation from the standard in cost of
postage stamps.

(11) 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 a 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.
Standards that are too difficult to attain may, therefore, cause the performance of
organisation members to decline.

(12) Other Requirements: Controls should be such which should be positive, must be helpful
and also provide guidance to the employees. Further, constructive and the manager should
recognise the importance of human beings in the control system.

Methods or Techniques Of Controlling

1. Budgeting Or Budgetary Control

A budget is a financial or quantitative statement prepared for a definite period of time. It
states the policy to be pursued during that period for the purpose of attaining a given
objective. It provides standards for comparison with the results actually achieved.

According to George R. Terry, "Budget is an estimate of future needs, arranged to an

orderly basis, covering some or all of the activities of an enterprise for a definite period of
time".

Budgeting is the process of preparing budgets whereas budgetary control is a device or

technique of managerial control through budgets.
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 According to J.Batty, "Budgetary control is a system which uses budgets as a means of
planning and controlling all aspects of producing and/or selling commodities or services".

2. PERT and CPM

Both PERT (Programme Evaluation Review Techniques) and CPM(Critical Path
Method) used the same basic concept and are being used for a wide range of planning and
control problems. These two techniques are new management tools used in project
management. They are useful to the management for the purpose of planning, scheduling
and controlling the activities of various business projects. Business projects, particularly in
modern days, are large and take a number of years for their completion and PERT and
CPM techniques help the management in coordinating the activities of the different jobs
inthe project, in minimising the interruption in work and in completing the project as per
schedule.
3. Ratio analysis
Ratios by establishing relationships between two or more values attempt to derive relevant
meaning from financial statements.
Ratio analysis is used to evaluate relationships among financial statement items. the ratios
are used to identify trends over time for one company or to more companies at one point
of time.
4. Economic value added (EVA)
Economic value added is an internal management performance measure of a company’s
financial performance based on the residual wealth calculated by deducting its cost of
capital from its operating profit, adjusted for taxes on a cash basis. EVA can also be
reffered to as economic profit and it attempts to capture the true economic profit of a
company.
5. Return on investment
Return on investment estimates the loss and gain generated on the amount of money
invested. Return on investment is generally expressed in the percentage to analyse an
organization’s profit or the earnings of different investments. It provides the basics and
guides for measuring whether or not invested capital has been used effectively for
generating a reasonable amount of return.
ROI can be used to measure the overall performance of an organization or of its individual
departments

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