Module 3 Management functions

Planning
- Defining the organisational goals
- Establishing overall strategy for achieving these goals
- Developing plans to integrate and coordinate work activities
- It is concerned with both the ends and the means
- It deals with what as well as the how
- It identifies the goals and lays down means to achieve them
Why do managers plan?
1. It provides directions to managers aswell as the other people part of the organisation
- when the employees know what the organisation is trying to achieve and what they are required to
contribute they can coordinate their activities, coordinate with others and do what it takes to achieve
these goals.
- without planning each department will work towards different goals which would decrease the
efficiency of the organisation

2. Reduces Uncertaininty
- it reduces uncertainity by forcing managers to look ahead as they have to plan for the future
- the managers need to anticipate change
- consider the impact of these changes and develop appropriate responses to these changes
- planning does not eliminate uncertainity but allows managers to deal with them effectively

3. Minimises Waste and redundancy

- when work is coordinated by planning there is less duplication of work, and the inefficiencies
become obvious and can be corrected and eliminated accordingly

4. Establishes goals and standards

- without planning there would be no goals or standards to check whether the plan has been
satisfactorily executed or not
- it provides the basis for controlling

 Strategic planning- Strategic planning is a process in which an organization's leaders

define their vision for the future and identify their organization's goals and objectives.
The process includes establishing the sequence in which those goals should be realized so
that the organization can reach its stated vision.

 Operational planning - Operational planning is the process of planning strategic goals and
objectives to technical goals and objectives. Operational planning is the process of turning
your strategic plan into a detailed map that outlines exactly what action your team will take
on. When a company wide strategy is studied and then adjusted as per the department
requirements.

 The top level managers are highly involved in strategic planning and least involved in
operational planning
 The middle level managers have to be equally involved in strategic aswell as organisational
planning
  The lower level manager are more involved in operational managing and least involved in
strategic planning

the operational plans are further divided into three categories

 Repetitive plans which are standing plans and include procedure methods and policies and rules
 The non repetitive plans which include single use plans like budgets and programmes
 The last is business plans which are to be showed to clients and investors
The contingency factor
- There are three contingency factors that influence planning
- 1. Orgnisational level 2. The external factors 3. Length of future commitments
- The first contingency is the relation of the manager with strategic and operational planning
- The second contingency is regarding the environmental uncertainity. When uncertainity is high the
plans should be flexible and not specific. The managers should be prepared to amend the plans as
required or even abandon the plan if needed. ( the continental airlines was facing a lot of delays so
in order to plan in the uncertain airline industry the management team identified not a flight plan
but a destination and changed plans to achieve the main aim of on time service.
- The last one is commitment, planning should not be too long or too short. When the plans are
implemented the organisation is committed to the future expenses and concequences related to the
plan.
PLANNING AND PERFORMANCE
Most studies have seen a positive relationship between planning and performance
Formal planning is associated with positive financial results and then ensuring that the formulated plans are
implemented and executed to ensure the high performance
When formal planning does not give the desired results it is generally due to external environments such as
government policies, politics, labour unions etc.
The planning performance relationships is also influenced by the time frame it has been found that atleast 4
years of formal planning is required before it affects performance.
Nirma was started in 1969 as a one man operation with detergents being made in the backyard of his home,
in a span of 11 years Nirma surpassed Surf a well established detergent brand and continued to grow today.
This was possible only with a well established vison, mission, planning and execution.

ESG planning
- Environmental, social and governance
 - ESG is not just about reporting but also being able to create plans that track, monitor, and can be
adjusted to reach your sustainability goals.
ESG Sustainable Investing: Environmental Factors
Environmental factors are about a company’s impact on the environment. They are based on the premise
that business activities have the potential to create environmental risks for ecosystems, water, air and human
health. Examples of companies’ ESG factors can be the following:

 Using energy efficiently;

 Using renewable energies that emit fewer GHG, are less polluting, and contribute less to climate
change;
 Managing waste responsibly (like adopting circular economy principles);
 Having responsible practices across the value chain such as no deforestation policies or even animal
welfare;
 Disclosing information on all environmental policies.

As a result, positive outcomes such as decreasing costs and improving profitability due to better energy
efficiency are expected. Reputational risks will also reduce.
ESG Sustainable Investing: Social Factor
Social factors have to do with the way businesses treat and value people. In other words, it is about the
impact that companies can have on their employees and on society. What do these companies do exactly?

 Diversity and inclusion policies to ensure no type of discrimination;

 Safe and healthy working conditions for employees;
 Labor standards across supply chains that guarantee fair wages and human rights protection;
 Good relations with local communities who give social license for companies to operate;
 Companies also need to report information on what they’re doing on this area.

As a consequence, business productivity and employees’ morale increases, turnover decreases, and
reputational risks are better managed. It also gets easier to work without social pressure from stakeholders,
as there’s social license to operate.
ESG Sustainable Investing: Governance Factor
Governance factors focus on corporate policies and how companies are governed. It is about making the
responsibilities, rights, and expectations of stakeholders clear so that interests are met and a consensus on a
company’s long-term strategy is achieved. Examples of specific factors under which governance is analyzed
can be:

 Tax strategy;
 Corporate risk management;
 Executive compensation;
 Donations and political lobbying;
 Corruption and bribery;
 Board structure and brand independence;
 Protecting shareholder interests;
 Disclosing information on these topics.

The effects of these policies can go from aligning shareholders’ interests with management to avoiding
unpleasant financial surprises and having a better social acceptance as a result of wealth being fairly
distributed.

ESG at Infosys
Examples of planning
1. The blue man group was a 3 man music band, who though they were ready to expand by hiring perfomers
to do the blue man show around the country, they were eager to keep the acts consistent with their original
vision and they thus realised they would need to plan. They locked themselves in a room and this lead to a
132 page operating manual which tells the story of Blue man and allows it to be produced by other. By this
plan they were able to express the understanding that they inherently shared but had never explicitly
mentioned.
2. Alibaba and the plans it used for global domination
3. Nirma Detergent

ORGANISING
Arranging and structuring work in order to achieve organisational goals
Managers design the organisation structure, this structure can be the organisational chart
Purpose of organising
 Dividing work
 Assigning tasks
 Coordinating tasks.
 Clustering jobs
 Establishing relationships
 Establishing lines of authority.
 Allocating resources.
This organisational design includes 6 parts
- Work specialisation
- Departmentalisation
- Chain of command
- Span of control
- Centralisation
- Decentralisation
- formalisation
1. Work specialisation
This is an example of work specialisation
Individual employees specialise in doing part of an activity rather than doing the whole work
Like the division of labour principls
Also use the pig iron examples her where output was increases with specialisation

-
When work specialisation is carried to extremes that may lead to boredom, fatigue and stress in employees
leading to poor quality and that is why companies like Tata Steel, hallmark and American express do not use
work specialisation and give their employees a broad set of tasks to do
2. Departmentalisation
- after deciding who will do what the similar tasks need to be grouped under a specific head so that work
gets done in a effective and systematic way
- eg : Japanese electronic company organises its functions on functional lines, manufacturing units, sales
units and on sale regions and geographic groupongs
- ITC sahrangpur plant is a 77 year old has cross functional meetings regularly, the cross functional meetings
are those meetings where people from different functional units come together and deliberate on issues, the
cross functional meetings at ITC met for devising plans to save energy this lead to several improvements.
3. Chain of Command
- line of authority extending from upper organisational levels to lower organisational level.
- it clarifies who reports to whom
- this is in sync with authority , responsibility and unity of command
- eg: Motorola employee smitashree menon had to report to two heads, one in banglore and the other in
Beijing. Then she tried to minimise conflict by making the communication clear.
4. Span of control
- how many employees a manager can effectively and efficiently manage
- the wider or larger the span the more efficient is the traditional view
- wider span is cost wise more effective but in terms of employees it might not be ideal since managers do
not have time to lead.
- as of late the span is widening as the managers are recognising that it is easier to do so when the employees
recognise their work and the organisational processes.
- eg: pepsi co Mexico, 56 employees report to a single manager but every employee is thoroughly briefed
about company goals and processes, pay systems, rewards, quality, procedures etc.
5. centralisation and decentralisation
- add the table from page 191 book
6. formalisation
- how standardised an organisation is
- extent to which employee behaviour is guided by rules and procedures
- employee has little discretion as to what has to be done

-
The employee did break some rules but by breaking the rule he got some revenue, considering there are
situations when the rules may become too restrictive the organisation gives some sufficient autonomy to
make decisions under the given circumstances.
There will still be rules which are important for the employees to adhere to and this will be explained to
them
LEADING
it refers to motivating the people of the organising and helping them achive the goals of the organisation as
well as personal goals
A major part of leading is organisational behaviour
The managers need to also study the elements that influence how the employees behave at work.
Leading also talks about involving the employees in the decision making process and considering their
inputs. Eg: the ministry of commerce and industry minister of West Bengal decided to move his office to a
posh area without considering the inputs of the employees. On the day of the opening very few people came
because the decision had increased and become tough for them to travel.
ORGANISATIONAL BEHAVIOURS

the actions of people at work.

Explain, predict and influence the employee behaviour
Explain why employees behave in such a manner, predict how employees will respond to certain situations
and influence how employees behave
6 IMPORTANT EMPLOYEE BEHAVIOURS TO CONSIDER
- EMPLOYEE PRODUCTIVITY- measure of both effectiveness and efficiency, what factors influence them
- ABSENTEEISM- failure to show up to work, municipality school teachers who don’t show up to teach
- TURNOVER- involuntary or voluntary resigning from organisation, necc. Because it leads to increases
recruiting, selection and training
- ORGANISATION CITIZENSHIP BEHAVIOUR- employee behaviour which is not part of formal job but
adds to the work done
- JOB SATISFACTION- general attitude of the employee regarding his job, satisfied employees perform
better
- WORKPLACE MISBEHAVIOUR- intentional employee behaviour that is harmful to the organisation

MOTIVATION
Process of stimulating people to act towards the desired goals and achievement of goals of the organisation
The Process by which a person’s efforts are Energized, Directed and Sustained towards attaining a goal.
MOTIVATION THEORIES
MASLOWS NEED THEORY
MCLELANDS THOERY OR THE THREE NEEDS THEORY

David McClelland built on this work in his 1961 book, "The Achieving Society." He identified three
motivators that he believed we all have: a need for achievement, a need for affiliation, and a need for power.
People will have different characteristics depending on their dominant motivator. [1]

According to McClelland, these motivators are learned (which is why this theory is sometimes called the
Learned Needs Theory).

McClelland says that, regardless of our gender, culture, or age, we all have three motivating drivers, and one
of these will be our dominant motivating driver. This dominant motivator is largely dependent on our culture
and life experiences.

These characteristics are as follows:

Dominant
Characteristics of This Person
Motivator

 Has a strong need to set and accomplish challenging goals.

 Takes calculated risks to accomplish their goals.

 Likes to receive regular feedback on their progress and

achievements.

Achievement  Often likes to work alone.

 Wants to belong to the group.

 Wants to be liked, and will often go along with whatever the rest of
the group wants to do.

 Favors collaboration over competition.

 Doesn't like high risk or uncertainty.

Affiliation

 Wants to control and influence others.

 Likes to win arguments.

 Enjoys competition and winning.

 Enjoys status and recognition.

Power
Note:
Those with a strong power motivator are often divided into two groups: personal and institutional. People
with a personal power drive want to control others, while people with an institutional power drive like to
organize the efforts of a team to further the company's goals. As you can probably imagine, those with an
institutional power need are usually more desirable as team members!
Using the Theory

McClelland's theory can help you to identify the dominant motivators of people on your team. You can then
use this information to influence how you set goals and provide feedback , and how you motivate
and reward team members.
You can also use these motivators to craft, or design, the job around your team members, ensuring a better
fit.
Let's look at the steps for using McClelland's theory:

Step 1: Identify Drivers

Examine your team to determine which of the three motivators is dominant for each person. You can
probably identify drivers based on personality and past actions.

For instance, perhaps one of your team members always takes charge of the group when you assign a
project. They speak up in meetings to persuade people, and delegate responsibilities to others to meet the
goals of the group. They like to be in control of the final deliverables. This team member is likely primarily
driven by power.

You might have another team member who never speaks during meetings. They always agree with the
group, work hard to manage conflict when it occurs, and visibly become uncomfortable when you talk about
doing high-risk, high-reward projects. This person is likely to have a strong need for affiliation.

Step 2: Structure Your Approach

Based on the driving motivators of your workers, structure your leadership style and project assignments
around each individual team member. This will help ensure that they all stay engaged , motivated, and
happy with the work they're doing.

Examples of Using the Theory

Let's take a closer look at how to manage team members who are driven by each of McClelland's three
motivators:

Achievement

People motivated by achievement need challenging, but not impossible, projects. They thrive on overcoming
difficult problems or situations, so make sure you keep them engaged this way. People motivated by
achievement work very effectively either alone or with other high achievers.

When providing feedback, give achievers a fair and balanced appraisal. They want to know what they're
doing right – and wrong – so that they can improve.
EXPECTANCY THEORY OF MANAGEMENT

he theory states that the intensity of a tendency to perform in a particular manner is dependent on
the intensity of an expectation that the performance will be followed by a definite outcome and on the appeal
of the outcome to the individual.

The Expectancy theory states that employee’s motivation is an outcome of:

1. how much an individual wants a reward (Valence),

2. the assessment that the likelihood that the effort will lead to expected performance (Expectancy)
and
3. the belief that the performance will lead to reward (Instrumentality).
1. In short, Valence is the significance associated by an individual about the expected outcome. It
is an expected and not the actual satisfaction that an employee expects to receive after achieving
the goals.
2. Expectancy is the faith that better efforts will result in better performance. Expectancy is
influenced by factors such as possession of appropriate skills for performing the job, availability
of right resources, availability of crucial information and getting the required support for
completing the job.
3. Instrumentality is the faith that if you perform well, then a valid outcome will be there.
Instrumentality is affected by factors such as believe in the people who decide who receives
what outcome, the simplicity of the process deciding who gets what outcome, and clarity of
relationship between performance and outcomes.
Thus, the expectancy theory concentrates on the following three relationships:
  Effort-performance relationship: What is the likelihood that the individual’s effort be
recognized in his performance appraisal?
 Performance-reward relationship: It talks about the extent to which the employee believes
that getting a good performance appraisal leads to organizational rewards.
 Rewards-personal goals relationship: It is all about the attractiveness or appeal of the
potential reward to the individual.
Advantages of the Expectancy Theory

 It is based on self-interest individual who want to achieve maximum satisfaction and who
wants to minimize dissatisfaction.
 This theory stresses upon the expectations and perception; what is real and actual is
immaterial.
 It emphasizes on rewards or pay-offs.
 It focuses on psychological extravagance where final objective of individual is to attain
maximum pleasure and least pain.
Limitations of the Expectancy Theory

 The expectancy theory seems to be idealistic because quite a few individuals perceive high
degree correlation between performance and rewards.
 The application of this theory is limited as reward is not directly correlated with performance
in many organizations. It is related to other parameters also such as position, effort,
responsibility, education, etc.
Implications of the Expectancy Theory

 The managers can correlate the preferred outcomes to the aimed performance levels.
 The managers must ensure that the employees can achieve the aimed performance levels.
 The deserving employees must be rewarded for their exceptional performance.
 The reward system must be fair and just in an organization.
 Organizations must design interesting, dynamic and challenging jobs.
 The employee’s motivation level should be continually assessed through various techniques
such as questionnaire, personal interviews, etc.
ERG THEORY OF MOTIVATION
He redefined maslow’s needs into three simple categories
o Existence needs- These include need for basic material necessities. In short, it includes an
individual’s physiological and physical safety needs.
o Relatedness needs- These include the aspiration individual’s have for maintaining significant
interpersonal relationships (be it with family, peers or superiors), getting public fame and
recognition. Maslow’s social needs and external component of esteem needs fall under this class
of need.
o Growth needs- These include need for self-development and personal growth and
advancement. Maslow’s self-actualization needs and intrinsic component of esteem needs fall
under this category of need.
The significance of the three classes of needs may vary for each individual.

Difference between Maslow Need Hierarchy Theory and Alderfer’s ERG Theory

 ERG Theory states that at a given point of time, more than one need may be operational.
 ERG Theory also shows that if the fulfillment of a higher-level need is subdued, there is an
increase in desire for satisfying a lower-level need.
 According to Maslow, an individual remains at a particular need level until that need is
satisfied. While according to ERG theory, if a higher- level need aggravates, an individual may
revert to increase the satisfaction of a lower- level need. This is called frustration- regression
aspect of ERG theory. For instance- when growth need aggravates, then an individual might be
motivated to accomplish the relatedness need and if there are issues in accomplishing
relatedness needs, then he might be motivated by the existence needs. Thus,
frustration/aggravation can result in regression to a lower-level need.
 While Maslow’s need hierarchy theory is rigid as it assumes that the needs follow a specific
and orderly hierarchy and unless a lower-level need is satisfied, an individual cannot proceed
to the higher-level need; ERG Theory of motivation is very flexible as he perceived the needs
as a range/variety rather than perceiving them as a hierarchy. According to Alderfer, an
individual can work on growth needs even if his existence or relatedness needs remain
unsatisfied. Thus, he gives explanation to the issue of “starving artist” who can struggle for
growth even if he is hungry.
Implications of the ERG Theory

Managers must understand that an employee has various needs that must be satisfied at the same time.
According to the ERG theory, if the manager concentrates solely on one need at a time, this will not
effectively motivate the employee. Also, the frustration-regression aspect of ERG Theory has an added
effect on workplace motivation.

For instance- if an employee is not provided with growth and advancement opportunities in an organization,
he might revert to the relatedness need such as socializing needs and to meet those socializing needs, if the
environment or circumstances do not permit, he might revert to the need for money to fulfill those
socializing needs. The sooner the manager realizes and discovers this, the more immediate steps they will
take to fulfill those needs which are frustrated until such time that the employee can again pursue growth.
EQUITY THEORY

What I give to the work v/s what I get in return

As per this motivation theory, an individual’s motivation level is correlated to his perception of equity,
fairness and justice practiced by the management. Higher is individual’s perception of fairness, greater is the
motivation level and vice versa. While evaluating fairness, employee compares the job input (in terms of
contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of
equal cadre/category. D/I ratio (output-input ratio) is used to make such a comparison.

TWO FACTOR MOTIVATION 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”.

a. 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:
 Pay - The pay or salary structure should be appropriate and reasonable. It must be
equal and competitive to those in the same industry in the same domain.
  Company Policies and administrative policies - The company policies should not be
too rigid. They should be fair and clear. It should include flexible working hours,
dress code, breaks, vacation, etc.
 Fringe benefits - The employees should be offered health care plans (mediclaim),
benefits for the family members, employee help programmes, etc.
 Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipments should be updated and well-maintained.
 Status - The employees’ status within the organization should be familiar and
retained.
 Interpersonal relations - The relationship of the employees with his peers, superiors
and subordinates should be appropriate and acceptable. There should be no conflict
or humiliation element present.
 Job Security - The organization must provide job security to the employees.
b. 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:
o Recognition - The employees should be praised and recognized for their
accomplishments by the managers.
o 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.
o Growth and promotional opportunities - There must be growth and advancement
opportunities in an organization to motivate the employees to perform well.
o 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.
o Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory

The two factor theory is not free from limitations:

1. The two-factor theory overlooks situational variables.

2. Herzberg assumed a correlation between satisfaction and productivity. But the research
conducted by Herzberg stressed upon satisfaction and ignored productivity.
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters may spoil
the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable
despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction of employees
when they are enquired the sources of satisfaction and dissatisfaction at work. They will blame
 dissatisfaction on the external factors such as salary structure, company policies and peer
relationship. Also, the employees will give credit to themselves for the satisfaction factor at
work.
6. The theory ignores blue-collar workers.
Despite these limitations, Herzberg’s Two-Factor theory is acceptable broadly.

Implications of Two-Factor Theory

The Two-Factor theory implies that the managers must stress upon guaranteeing the adequacy of the
hygiene factors to avoid employee dissatisfaction. Also, the managers must make sure that the work is
stimulating and rewarding so that the employees are motivated to work and perform harder and better. This
theory emphasize upon job-enrichment so as to motivate the employees. The job must utilize the employee’s
skills and competencies to the maximum. Focusing on the motivational factors can improve work-quality.

THEORY X AND THEORY Y (IMPORTANT DISCUSSED FREQUENTLY IN CLASS)

THEORY X
 EMPLOYEES DO NOT LIKE WORK, WILL ATTEMPT TO AVOID IT.
 EMPLOYEES TO BE FORCED, COERCED OR THREATENED WITH PUNISHMENT TO ACHIEVE GOALS.
 EMPLOYEES AVOID RESPONSIBILITIES
THEORY Y
 EMPLOYEES EFFORTS AT WORK ARE AS NATURAL AS PLAY.
 PEOPLE DO EXERCISE SELF-CONTROL AND SELF-DIRECTION
 EMPLOYEES ARE WILLING TO TAKE RESPONSIBILITY AND EXERCISE IMAGINATION AND
CREATIVITY IN SOLVING THE PROBLEMS

1. one of which is negative, called as Theory X and

2. 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.

Implications of Theory X and Theory Y

 Quite a few organizations use Theory X today. Theory X encourages use of tight control and
supervision. It implies that employees are reluctant to organizational changes. Thus, it does not
encourage innovation.
 Many organizations are using Theory Y techniques. Theory Y implies that the managers
should create and encourage a work environment which provides opportunities to employees
to take initiative and self-direction. Employees should be given opportunities to contribute to
organizational well-being.
 Theory Y encourages decentralization of authority, teamwork and participative decision
making in an organization. Theory Y searches and discovers the ways in which an employee
can make significant contributions in an organization. It harmonizes and matches employees’
needs and aspirations with organizational needs and aspirations.

CONTROLLING
The process of monitoring, comparing and correcting work performance.
- This is the process of evaluating the work done
- Effective control ensures that activities are completed in ways that lead to the attainment of goals
- Effective control helps employees and managers achieve their goals
IMPORTANCE

- Planning can be done, organisational structure can be established and employees can be motivated
but there is no assurance that the activities are going as planned
- Control helps managers know whether the goals are met and also the reasons why they are not met
- It helps in planning, empowering the employees and protecting the workplace
THE LINK BETWEEN PLANNING AND ORGANISING

- Follow up of plans
- Critical link back to the plans
- What needs to be added in the next plans
- If no control there is no way to know the correctness of the plans and the future actions that need to
be incorporated
EMPLOYEE EMPOWERMENT

- Effective control can provide information and feedback on employee performance

- Reduce potential problems
PROTECT THE ORGANISATION

- Many threats in today’s environment therefore managers must protect organisational assets against
them
- Comprehensive controls and backup plans lead to minimal disruptions
Controlling process
1. measuring the performance
2. comparing the performance
3. taking managerial actions

Summary of managerial decisions

the manager has set the objectives in the first stage and also set the standards of performance that are
expected. In the second stage he measures the actual performance with the set standards and then compares
them with the standards, this brings to light the deviation in the plans. These deviations are then analysed as
if the deviation is in permissible limits or not and if they can be within the expected standards. After the
analysis the standards are revised if the deviations are not permissible and the correct performance is done.
The cycle is restarted after the performance of the revised taks.
DESIGNING CONTROL SYSTEMS

Most of these problems can be avoided by an analysis that identifies key performance areas and strategic
control points.

Identifying key performance areas:

Key performance or key result areas (KRAs) are those aspects of the unit or organization that must function
effectively for the entire unit or organization to succeed. These areas usually involve major organizational
activities or groups of related activities that occur throughout the organization or unit. These key
performance areas, in turn help define the more detailed control systems and standards.

In today’s organizations, many KRAs are cross-functional. An organization might define KRAs for a team
focused on customer service in terms of the customers’ response to a satisfaction survey. At Deere,
managers might consider research and development KRAs.

One small business that uses satisfaction surveys with selected consumers is Schnaubelt Shorts, a
Coraopolis, Pennsylvania, company that designs cycling clothes for women. Schnaubelt seeks out active
cyclists to try but its products and complete satisfaction surveys. After pinpointing states with large numbers
of cyclists, it hand picked active cyclists to serve as “leaders” in each state. Each leader in turn selected 10
more women to evaluate Schnaubelt products. The women, ranging from dirt bikers to racers, serve as
product samplers and still out surveys on products.
Identifying strategic control points:

In addition to key performance areas, it is also important to determine the critical points in the system where
monitoring or information collecting should occur. Once such strategic control points can be located, the
amount of information that has to be gathered and evaluated can be reduced considerably.

The most important and useful method of selecting strategic control points is to focus in the most significant
elements in a given operation. Usually only a small percentage of the activities, events, individuals, or
objects in a given operation will account for a high proportion of the expense or problems that managers will
have to face. For example, 10 percent of a manufacturer’s products may well yield 60 percent of its sales; 2
percent of an organization’s employees may account for 80 percent of its employee grievances; and 20
percent of the police precincts in a city may account for 70 percent of the city’s violent crimes.

Another useful consideration is the identification of places where change occurs in a productive process. For
example, in an organization’s system for filling customer orders, a change occurs when the purchase order
becomes an invoice, when an inventory item becomes an item to the shipped, or when the item to be shipped
becomes part of a truckload. Since errors are more likely to be made when such changes occur, monitoring
change points is usually a highly effective way to control an operation.

Budgeting and auditing

- Ratio analysis and budget analysis

- Budgets are planning and controlling tools

- Budget provides quantitative standards against which the resource consumption and execution can be
measures

- This information serves as a guiding light for future course of action

- Managing of earnings is an important part of controlling too

- Auditing- Auditing is defined as the on-site verification activity, such as inspection or

examination, of a process or quality system, to ensure compliance to requirements.
An audit can apply to an entire organization or might be specific to a function, process, or
production step.

NEED FOR CONTROL

 TO CREATE BETTER QUALITY

 TO COPE WITH CHANGE

 TO CREATE FASTER CYCLE

 TO FACILITATE DELEGATION AND TEAMWORK