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Chapter 4

Directing and controlling


Learning objectives
Define the term directing
Describe the nature of directing

Define the term leadership

Understand the importance of leadership

Describe different leadership styles

Define motivation
Learning objectives
Understand the importance of motivation
Describe Maslows theory of needs

Explain Herzbergs theory

Understand theory X and Y

Compare different theories of motivation

Define the term communication


Learning objectives
Describe the importance of communication in
organizations
Understand different types of communication
Understand the need of coordination
Describe the importance of coordination
Describe different techniques of coordination
Define controlling
Understand the importance of controlling
Understand controlling process
Describe the essentials of controlling
Describe the methods of controlling
Directing
Directing is defined as telling people what to do and
seeing that they do it to the best of their ability
Directing is that function which through which
managers gets the work done from others
Directing function consists of issuing orders and
instructions, guiding and helping subordinates to
perform tasks assigned to them, motivating them by
designing a good work environment and providing
rewards in line with their expectation and
performance.
Leadership
Leadership is defined as ability to influence
people towards accomplishment of goals
It is the ability to influence behavior of others
and direct them towards achievement of
group or organizational goals
Leaders energize the behavior of their
followers and motivate them to work towards
common group goals
Features of leadership
Leaders possess great influential power
Leaders have followers and they influence
the behavior of followers
There is a reciprocal relationship between
leaders and followers
Leaders have a great vision for future
Features of leadership
Leaders create a shared vision among
followers and direct them to work towards
achievement of common goals
Leaders are sensitive towards needs of

followers and they motivate followers


Leadership is situational and effectiveness of

leaders is influenced by situational variables


like environment, job content, group relations,
size of group, group norms etc.
Importance of leadership
Leaders guides and inspires subordinates
Leaders build good work environment

Leaders build confidence in followers

Leaders secure cooperation from the group

Leaders act as change agents

Leaders are representatives of the followers

Leaders develop great vision


Leaders and managers
Leadership styles
Leadership style refers to behaviors exhibited
by leaders in different situations
Leaders exhibit a behavioral pattern which is
influenced by their philosophy, personality,
value system etc
This determines their style of functioning
Autocratic or authorization
leadership
Autocratic leaders make all the decisions on their
own without consulting their followers
They simply order the followers and these orders
are to be obeyed by followers
Leaders make use of their authority to enforce
discipline and obedience among the followers
Discipline is enforced by using rewards and
punishment
Decision making is completely centralized and
followers cannot have any influence on decisions
Autocratic or authorization
leadership
Merits
Quick decisions are made
Leaders get the work done by making use of fear
of punishment and rewarding power
Leaders enforce strict discipline among the
followers
Consistent decisions are made
Suitable when subordinates are inexperienced
and need direction from leaders
Autocratic or authorization
leadership
Demerits
Low motivation among subordinates
No scope for development of subordinates as
they are merely allowed work as per the
instructions of leaders
One way communication may result in
misunderstanding
Too much dependence on leadership
Subordinates may develop rebellion against
leaders
Democratic leadership or
consultative leadership
Democratic or consultative leaders consult their
followers before they make any decisions
They try to take decisions according to the interests
of their followers
They take decisions according majority wishes of
their followers
Leaders do not completely dominate the group and
provides freedom to group members and thus it
results in two way communication
Democratic leadership or
consultative leadership
Merits
Motivates people as they are consulted before
decisions are made
Group members get an opportunity to express
their ways
Paves way for two way communication
Interests of followers are protected
Better productivity
Democratic leadership or
consultative leadership
Demerits
Decision making is slow
Maintaining absolute discipline is difficult
Suitable only when subordinates are more
matured
Decisions may get diluted
Participative style of
leadership
Participative leaders encourage group
decision making and all the decisions are
made jointly by followers and leader
Decisions are thus based on consensus and
for based on common interests of all the
parties involved
Subordinates get an opportunity in decision
making and use their expertise
Participative style of
leadership
Merits
Better decisions are made
Subordinates are highly motivated
Subordinates are more committed to
implementing decisions
Provides an opportunity for managerial
development
Participative style of
leadership
Demerits
Very slow decision making and timely decisions
are not made
Maintaining discipline is very difficult
Requires high maturity in followers
May not be suitable in situations which needs
quick decisions
Laissez Faire or free rein
leadership
Free rein leaders do not lead the group, but
leaves the followers with complete freedom
Subordinates can set their own plans and
develop plans
All the decisions are made by subordinates
and leaders do not involve in it and they are
only passive observers
The role of leader is only give advice when it
is sought
Laissez Faire or free rein
leadership
Merits
Can bring high motivation among subordinates
Brings in innovation and creativity
Highly flexible
Open and direct communication
Develops managerial skills among subordinates
Laissez Faire or free rein
leadership
Demerits
Lack of control
May result in confusion and chaos
Needs highly matured and knowledgeable
subordinates
Individual goals may get more importance than
the group goals
Lickerts system 4
management
System 1: Exploitative- Autocratic: In this style the leaders set
the goal by themselves and also decides the means of achieving
them
System 2: Benevolent Autocratic: This style also represents
autocratic leadership, but these leaders do not exploit the
subordinates and they are paternalistic in their approach and
they are more considerate towards needs of the subordinates
System 3: Consultative: In this style, managers consult the
followers and discuss with them before making any major
decisions
System 4: Democratic: These managers are very friendly can
cordial relations with their subordinates, and subordinates are
allowed to take part active role in goal setting and decision
making
Qualities of good leaders
Personality traits:
Intelligence
Character
Inner drive
Will power
Judgment
Sensitivity towards followers
Energy
Emotional stability
Qualities of good leaders
Knowledge and ability:
Education
Technical competence
Training ability
Qualities of good leaders
Skills
Decision making skills
Problem solving skills
Human relation skills
Conceptual skills
Administrative skills
Communication skills
Leadership theories
Trait
theory
Behavioral theories
Trait theory
Trait theory is based on personality traits of leaders
It assumes that leaders personality traits are key to
success of leaders
According to trait theory leaders possess some
special characteristic traits which cannot be found in
all the individuals
Since followers do not possesses these traits they
accept the person with these outstanding traits as
their leader
Trait theory
Intelligence
Vision
Initiative
Decisiveness
Integrity
Self-actualization
Maturity
Need for achievement
Risk taking ability
Human relation skills
Articulating skills
Broadmindedness
Environmental sensitivity
Courage and conviction
Behavioral theories
These theories are based on behaviors
exhibited by leaders, i.e., what they actually
do
These theories are based on the belief that
great leaders are made and not born
These theories advocate that it must be the
leaders behaviors that predict their success
The Michigan studies
Researchers in University of Michigan conducted extensive
survey American leaders to identify successful leader behaviors
Based on the research two leadership styles were identified
Production centered leader: These leaders believe that
employees are just tools of production process; they supervise
employees very closely, they use legitimate/position power for
influencing followers and also rewards and punishment are used
as tools for influence
Employee centered leader: This leaders believes that it is
necessary to create a supportive work environment in order for
workers to be successful in helping the company meet its goals.
The leader is concerned with giving employees an opportunity for
advancement and growth.
The Ohio state University
studies
Ohio state university studies identified two types of
leadership behaviors
Initiating structure: This component of leadership behavior
focuses on degree to which leader defines his own role and
the roles of subordinates, in terms of achieving goals, use
of job descriptions in telling employees what is expected out
of them, how they should do the jobs, etc. This leadership
behavior is similar to job centered leadership style
Consideration: This behavior focuses on interaction with
followers, the degree to which a leader builds mutual trust
with followers, respects their ideas, and shows concerns for
their feelings. This style encourages friendship, mutual
trust, warmth and rapport between leader and followers.
This is similar to employee centered leadership style
Managerial grid
(1,9) Management- Thoughtful attention to
needs of people for satisfying relationship
leads to a comfortable, friendly atmosphere
and work tempo. It is called country club style
(9,1) Management- Efficiency in operations
results from arranging conditions of work in
such a way that human elements interfere to
a minimum degree. It is called task or
production orientation
Managerial grid
(1,1) Management- Exertion of minimum effort to get
required work done is appropriate to sustain
organization membership. It is called impoverished
style
(5,5) Management- Adequate organization
performance is possible through balancing the
necessity to get out work with maintaining morale of
people at satisfactory level. It is called middle road
approach
(9,9) style is considered to be ideal leadership style
and this is called team leadership
Fiedlers contingency model
Charismatic leadership
Charisma is the ability of people to charm or
influence others
Charismatic leaders are often said to have magnetic
personalities that are larger than life and draw
others towards them. They have exceptionally high
self-confidence, strength of conviction,
assertiveness, social dominance, and their potential
personality and actions influence people to behave
in certain ways. They have a great vision for future
and they work towards realizing this vision
Charismatic leadership
They have great articulation ability and they are capable of
explaining this vision in such a way that their followers can
understand it and motivated to work towards it
They have great environmental sensitivity and understand
various factors influencing the environment. They are also highly
sensitive to the needs of the followers
They exhibit unconventional behavior which is considered to be
novel and this type of behavior is exceptionally difficult to exhibit
for ordinary individuals
They are capable of taking risk in their life. They are always
ready for self sacrifice and give highest interest for group goals.
Transactional leaders
Transactional leaders are leaders who primarily use
social transactions for getting the work done
It occurs when leaders clarify subordinates role and
task requirements, design the work structure, and
standardize the work procedures and use rewards
and punishments as a means of controlling
subordinates behavior
They may not attempt to change organizations
course of action
Transformational leaders
Transformational leaders on the other hand are
agents of strategic and organizational change and
they bring in organizational transformation
They are capable of broadening and elevating
subordinates interests, stimulating subordinates to
look beyond their own interests for the good of
others and organization
They can recognize problems of organizations
reenergize them and push them to new strategic
directions for bringing in organizational
transformations
Motivation
The word motivation is derived from motive which
means any idea or need or force which puts an
individual into a specific action
Motivation is the process of stimulating people to
action to accomplish desired goals. Motivation
represents inner drive within an individual which
directs him to behave in specific way
Motivation is also defined that one which accounts
for direction, intensity and persistence of efforts
towards achievement of goal
Maslows theory
Two factor motivation theory
Communication
Communication is the process of
transmission of information or message from
one person to another
It involves exchange of information, facts,
ideas, feelings etc. between two or more
individuals. Communication is the most
important component of directing function
The communication process
Formal and informal
communication
Formal communication is officially accepted
communication in the organization and it uses
official channel for transmitting messages. It follows
official route for flow of communication between
various people in the organization
Informal communication is that communication
which is not officially accepted part of the
communication in the organization. It do not adhere
the organizational hierarchy. Informal
communication is based on the informal relationship
among the organizational members.
Formal and informal
communication
Oral communication
It is face to face interpersonal communication
between individuals
Message is exchanged through word of

mouth i.e., it is exchanged through spoken


words
It is very simple and very effective as there is

a direct contact between sender and receiver


and provides as immediate chance for
feedback
Oral communication- Merits
Itis very quick and saves time
Direct contact establishes personal touch and
hence it is more effective
Message can be transmitted to large number
of people at the same time (through speech)
Easy to understand and scope for immediate
feedback
Chances of misinterpretation are minimum
Oral communication- Demerits
There is no recorded proof for message and
hence fixing responsibility for both sender
and receiver is difficult
Keeping attention of receiver is difficult when
messages are lengthy
Requires good oratory skills
Written communication
It is transmitted through written document in
the form of letters circulars, memos, reports,
manuals etc
It is the most popular mode of formal
communication and it is very widely used
It creates a permanent and verifiable
document can creates proof fro
communication process
Written communication- Merits
There is a recorded document which serves as
proof of communication and hence responsibility
can be easily fixed
Large amount of information can be transmitted
Messages can be read for any number of times and
kept for future references
More time is available for reading and interpreting
It can be used even when sender and receiver are
physically seperated
Written communication-
Demerits
More time is required for drafting messages
Good drafting skills are required for the
sender
There is no personal touch

Chances of misinterpretation may be more

No immediate feedback
Non verbal communication
Non verbal communication refers messages
sent through human actions and behaviors
rather than words
This is also very popular means of

interpersonal communication
We generally use body language in the form

of facial expressions, body positions,


gestures, eye contact, posture, silence etc. to
convey different messages
Vertical and horizontal
communication
Communication is said to be vertical when
messages from one hierarchy level to
another
Vertical communication can be downward or
upward communication
Horizontal communication refers to exchange
of information between two people at same
hierarchy level or peer level
Overcoming barriers
Clarity and purpose
Develop mutual trust
Use of appropriate language
Active listening
Encourage feedback
Empathize
Reduce perceptional errors
Credibility
Select appropriate channel
Coordination
Coordination is the process of integration or
synchronization of the interdepartmental
efforts of individuals in order to attain
common goals
Coordination helps in unifying efforts of all
these departments and achieving the
common organizational objectives
Need of coordination
Organizations are made up of various units and
departments which are interdependent
Coordination function ensures that this
interdependence needs are met by ensuring good
relations among all departments
The division of work into smaller and smaller units
through division of work creates the need for
coordination
Organizations are made up of people and people do
have their own individual interests
Requirements of good
coordination
Direct personal contact between individuals
Mutual consultation and joint planning

Defining clear objectives ensures clarity of


role and responsibility
Clear definition of authority and responsibility

Effective communication

Effective leadership
Techniques of coordination
Creating hierarchy levels
Defining policies, procedures and rules

Committees

Incentives

Liaison departments
Controlling
Controlling is that function of management
which ensures that plans are successfully
implemented and organizations achieves its
objectives
Controlling is defined as the process of
measuring the actual work and comparing it
with a predetermined standard in order to
determine any deviation so that timely
corrective actions are taken and tasks are
competed as per original plans
Relation between controlling
and planning
Controlling and planning are two closely related
functions of management
Controlling is directly related to planning
The controlling process ensures that plans are being
implemented properly
Control is the process through which standards for
performance of people and processes are set,
communicated, and applied
Planning and controlling are said to be two sides of
the same coin
It is also said that planning and controlling are
Siamese twins.
Objectives of controlling
To ensure effectiveness and efficiency in all management
functions
To determine what is happening in the organization and measure
actual progress from time to time
To ensure effective communication between various units of
organization
To keep a check on resource utilization
To reframe organizational plans in relation to changes in the
environment
To detect any deviation and take timely corrective actions
To ensure that all the activities are performed according to
predetermined plans
Control process
Types of control
Feed forward controls focus on operations
before they begin. Their goal is to prevent
anticipated problems
Concurrent controls apply to processes as
they are happening
Feedback controls focus on the results of
operations.
Essentials of good control
process
Controllingmust be tailored to specific plans
Control should be designed to individual
managers
Control should be objective

Control should be flexible

Control should be economical


Designing effective control
systems
Control at all levels in the business
Acceptability to those who will enforce decisions
Flexibility
Accuracy
Timeliness
Cost effectiveness
Understandability
Balance between objectivity and subjectivity
Coordinated with planning, organizing and leading
Budgetary controls
A budget is a statement of anticipated estimates of
requirements to cover the activities of an enterprise
spread over a time
Budget defines anticipated expenditures and results
expressed in financial and non-financial terms
Budgetary control is a device to find out how
activities are progressing, and it is concerned with
measuring and comparing actual performance with
corresponding predetermined performance
standards defined in the budgets, and taking
corrective actions for any deviations
Budgets
Sales budget
Production budget

Capital expenditure budget

Cash budget

Master budget
Break even analysis
Break even analysis is a control device which
is very widely used in organizations
It is a technique used to determine the
relationship between sales and cost involved
in product in such a way that as to show what
sales volume revenue can cover exactly all
the expenses
Responsibility accounting
It is a system of accounting in which each
departmental head is made responsible for the
performance of his department
Each department is treated as a responsibility
centre in the form of const centre or profit centre or
investment centre
In cost centre only cost is measured and no output
is accounted
In profit centre targets are fixed for revenues and it
is measured by input-output criteria
In investment centre responsibility is fixed for
optimum utilization of resources
Inventory control
Inventory control helps managers in
controlling stock of various items like raw
materials, semi finished items, spares and
finished goods so that investments on stock
is optimum and materials are better utilized
PERT and CPM
Programme Evaluation and Review Technique
(PERT) is a technique used in controlling complex
programmes or projects and it helps managers in
estimating time required for completion of project
Critical Path Method (CPM) shows the sequence of
events and activities within a programme evaluation
and review technique network that requires the
longest period of time to complete
CPM refers to those planning and controlling
techniques that are primarily concerned with the
time-cost trade offs in meeting scheduled
completion times
Linear programming
Linearprogramming is primarily used in
problems related resource allocation in
controlling process, and it helps in predicting
outcome of the results.