DIRECTING AND

CONTROLLING
Unit 2
Dr. Nivedita Singh
Department of Management Studies
 Directing is said to be a process in which the managers
instruct, guide and oversee the performance of the workers to
achieve predetermined goals.
 Directing initiates action and it is from here actual work
starts. Direction is said to be consisting of human factors. In
simple words, it can be described as providing guidance to
workers is doing work.
 In field of management, direction is said to be all those activities
which are designed to encourage the subordinates to work
effectively and efficiently.
 “Directing consists of process or technique by which
instruction can be issued and operations can be carried out
as originally planned”
 Directing means giving instructions, guiding,
counselling, motivating and leading the staff in an
organisation in doing work to achieve Organisational
goals.
 Directing is a continuous process initiated at top level
and flows to the bottom through organisational hierarchy.
 Characteristics of
Directing

• 1. Initiates Action- A directing function is performed by the managers along

with planning, staffing, organizing and controlling in order to discharge their
duties in the organization. While other functions prepare a platform for action,
directing initiates action.
• 2. Pervasive Function - Directing is required at all levels of organization. Every
manager provides guidance and inspiration to his subordinates.
3. Continuous Activity - Direction is a continuous activity as it continuous
throughout the life of organization.
4. Human Factor - Since all employees are different and behave differently in
different situations, it becomes important for the managers to tackle the
situations appropriately. Thus, directing is a significant function that gets the
work done by the employees and increases the growth of the organization
5. Creative Activity - Direction function helps in converting
plans into performance. Without this function, people become
inactive and physical resources are meaningless.

6. Executive Function - Direction function is carried out by all

managers and executives at all levels throughout the working of
an enterprise, a subordinate receives instructions from his
superior only.

7. Delicate Function - Direction is supposed to be a function

dealing with human beings. Human behaviour is unpredictable
by nature and conditioning the people’s behaviour towards the
goals of the enterprise is what the executive does in this
function. Therefore, it is termed as having delicacy in it to tackle
human behaviour.
 Principles of Directing

1. Harmony of objectives: Sometimes there is a conflict between the organizational

objectives and individual objectives. For example, the organization wants profits to
increase and to retain its major share, whereas, the employees may perceive that they
should get a major share as a bonus as they have worked really hard for it.
• Here, directing has an important role to play in establishing harmony and coordination
between the objectives of both the parties.

2. Maximum individual contribution: One of the main principles of directing is the

contribution of individuals. Management should adopt such directing policies that
motivate the employees to contribute their maximum potential for the attainment of
organizational goals.
3. Unity of command: This principle states that a subordinate
should receive instructions from only one superior at a time. If he
receives instructions from more than one superiors at the same time,
it will create confusion, conflict, and disorder in the organization
and also he will not be able to prioritize his work.
4. Appropriate techniques: Among the principles of directing, this
one states that appropriate direction techniques should be used to
supervise, lead, communicate and motivate the employees based on
their needs, capabilities, attitudes and other situational variables.
5. Managerial communication: Managerial Communication
According to this principle, it should be seen that the instructions
are clearly conveyed to the employees and it should be ensured that
they have understood the same meaning as was intended to be
communicated.
6. Use of Informal Organization
• Within every formal organization, there exists an informal
group or organization. The manager should identify those
groups and use them to communicate information. There
should be a free flow of information among the seniors and the
subordinates as an effective exchange of information are really
important for the growth of an organization.
7. Leadership
• Managers should possess a good leadership quality to influence
the subordinates and make them work according to their wish.
It is one of the important principles of directing.
8. Follow Through
• As per this principle, managers are required to monitor the
extent to which the policies, procedures, and instructions are
followed by the subordinates. If there is any problem in
implementation, then the suitable modifications can be made.
 Supervision Elements of Directing
• Motivation
• Leadership
• Communication
 (i) Supervision- implies overseeing the work of subordinates
by their superiors. It is the act of watching & directing work &
workers.
(ii) Motivation- means inspiring, stimulating or encouraging
the sub-ordinates with zeal to work. Positive, negative,
monetary, non-monetary incentives may be used for this
purpose.
• (iii) Leadership- may be defined as a process by
which manager guides and influences the work of
subordinates in desired direction.

(iv) Communications- is the process of passing

information, experience, opinion etc from one
person to another. It is a bridge of understanding.
 Coordination
 Coordination is the synchronization and integration
of activities, responsibilities and command and
control structures to ensure that the resources are
used most efficiently in pursuit of the specified
objectives.
 In simple words, Coordination is the way through
which people can be made to work together and to
cooperate with each other to attain the final aims of
the organization.
 IMPORTANCE OF COORDINATION

1. Better accomplishment: it avoids the duplication of

efforts.
2. Economy and efficiency: by avoiding wastage of
resources and duplication of efforts.
3. High morale: in organizing and staffing it leads to job
satisfaction of employees.
4. Better human relations: because the authority
responsibility relationships are clear
5. Integration of goals: it brings unity of action.
 COORDINATION -THE ESSENCE OF
MANAGING

1. Planning and coordination: various types of plans like objectives, policies,

strategies and programs serve as means of coordinating the activities of an enterprise.
2. Organizing and coordination: when authority is delegated coordination is the last
thing which a manager looks for from different managers.
3. Staffing and coordination: coordination between the job requirement and the
personnel appointed.
4. Directing and coordination: To ensure smooth directing of subordinates,
supervision, motivation, leadership and communication require proper coordination.
5. Controlling and coordination: a manager keeps on monitoring the performance is
it is as per the desired standards or not. If the performance does not match the required
standards, the manager will take remedial steps. By this way he will achieve
coordination.
 Difficulties In Coordination

 Uncertain features such as natural phenomena like rains, floods, droughts or

abnormal changes in the behaviour of subordinates poses a great challenge to
effective coordination.
 The confused and conflicting ideas of the managers act as a constraint.
 Lack of administrative skills and adequate knowledge of necessary techniques
by the managers.
 Lack of orderly method of developing and adopting new ideas and
programmes act as a constraint for effective coordination.
 A vast number of variables due to the incompleteness of human knowledge
limit the degree of coordination
 Effective coordination techniques
1. Well defined objectives: unity of purpose is must for achieving proper
coordination.
2. Effective chain of command: clear cut authority responsibility
relationships help in reducing the conflicts.
3. Precise programmes and policies: it brings uniformity in action.
4. Effective communication: quick communication helps in
synchronizing the other activities to be performed.
5. Effective leadership: it helps coordination both at the planning and
implementation stage.
6. Cooperation: the individuals in an organization must be willing to help
each other voluntarily.
7. Committees: it includes the advisors who try to integrate the views of
different groups in an organization.
 • Control refers to a systematic
process of regulating
CONTROLLING organizational activities to make
them consistent with the
expectations established in plans,
targets and standards of
performance.
• Effectively controlling an
organization requires the
information about performance
standards and actual
performance, as well as actions
taken to correct any deviations
from the standards
Aspects of Controlling
 FEATURES OF CONTROL
1. Managerial function: it’s a follow up action to other functions of management.
2. Forward looking: it’s a corrective function related to future events only as past
can’t be controlled. It aims at minimizing losses, wastages and deviations from
standards.
3. Review of past events: the deviations in the past are revealed by the control
process. Its called feedback information. Thus, it facilitates the reasons for poor
performance.
4. Action oriented: It is only action which adjusts performance to predetermined
standards whenever deviations occur.
5. Continuous process: it involves constant analysis of standards, policies,
procedures etc. a manager needs to perform this function with other functions.
6. Dynamic process: control results in corrective actions which may lead to a
change in the performance of other functions of management.
 Tools and techniques of
controlling
• Control is a fundamental managerial function. Managerial control
regulates the organizational activities. It compares the
actual performance and expected organizational standards and
goals. For deviation in performance between the actual and
expected performance, it ensures that necessary corrective action
is taken.
• There are various techniques of managerial control which can be
classified into two broad categories –

➢Traditional techniques
➢Modern techniques
 Traditional Techniques of Managerial Control

• Traditional techniques are those which have been

used by the companies for a long time now. These
include:
• Personal observation
• Statistical reports
• Break-even analysis
• Budgetary control
 Budget and budgetary control system: a budget is a plan
or programme of future action which is prepared on the
basis of estimates or forecasts made for coming operating
period. It anticipates income for a given period and the
costs to be incurred in order to get this income.
 A budget which is prepared for the organization as a
whole is known as master budget. Budget prepared for
certain functional areas such as sales, distribution,
production and finance is known as functional or
operating budget.
• 1. Personal Observation
• This is the most traditional method of control. Personal
observation is one of those techniques which enables
the manager to collect the information as first-hand
information.
• It also creates a phenomenon of psychological pressure
on the employees to perform in such a manner so as to
achieve well their objectives as they are aware that they
are being observed personally on their job. However, it
is a very time-consuming exercise & cannot effectively
be used for all kinds of jobs.
• Statistical Reports

• Statistical reports can be defined as an overall analysis of

reports and data which is used in the form of averages,
percentage, ratios, correlation, etc., present useful
information to the managers regarding the performance of
the organization in various areas.
• This type of useful information when presented in the
various forms like charts, graphs, tables, etc., enables the
managers to read them more easily & allow a comparison to
be made with performance in previous periods & also with
the benchmarks.
• 3. Break-even Analysis
• Breakeven analysis is a technique used by managers to study
the relationship between costs, volume & profits. It
determines the overall picture of probable profit & losses at
different levels of activity while analyzing the overall
position.
• The sales volume at which there is no profit, no loss is
known as the breakeven point. There is no profit or no loss.
Breakeven point can be calculated with the help of the
following formula:
• Breakeven point = Fixed Costs/Selling price per unit –
variable costs per unit
 Budgetary control

 It is a system of controlling costs which includes the preparation of

budgets, coordinating the departments and establishing the
responsibilities, comparing actual performance with the budgeted
and acting upon results to achieve maximum profitability. It is an
intelligent consideration of future events. It clarifies objectives,
helps in the best utilization of resources and is helpful in the
control of performance and costs.
 Zero base budgeting: it was introduced for the first time in
preparing the divisional budgets in 1971 in USA. Under this each
manager has to justify the entire budget in detail from zero base.
• Some of the types of budgets prepared by an organisation are as follows,

• Sales budget: A statement of what an organization expects to sell in terms of

quantity as well as value
• Production budget: A statement of what an organization plans to produce in
the budgeted period
• Material budget: A statement of estimated quantity & cost of materials
required for production
• Cash budget: Anticipated cash inflows & outflows for the budgeted period
• Capital budget: Estimated spending on major long-term assets like a new
factory or major equipment
• Research & development budget: Estimated spending for the development
or refinement of products & processes
 Zero base budgeting

 In this rapidly changing environment goals continuously keep on

changing. The goals need to be redefined in a logical manner. The past
year financial allocations may not serve any purpose. It calls for a new
allocation of resources. All the proposals are drawn from the scratch.
 Basic steps in ZBB:
1. Identification of decision units
2. Analysis of decision units
3. Evaluation and ranking of all decision units
4. Allocation of resources to each unit
 Modern Techniques of Managerial Control

• Modern techniques of controlling are those which are of recent origin

& are comparatively new in management literature. These techniques
provide a refreshingly new thinking on the ways in which various
aspects of an organization can be controlled. These include:
• Return on investment
• Ratio analysis
• Responsibility accounting
• Management audit
• PERT & CPM
• Total Quality management (TQM)
• Six Sigma
• 1. Return on Investment
• Return on investment (ROI) can be defined as one of the
important and useful techniques. 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 or divisions. It can be calculated as
under-

• Net income before or after tax may be used for making

comparisons. Total investment includes both working as well as
fixed capital invested in the business.
• Ratio Analysis

• The most commonly used ratios used by organizations can be

classified into the following categories:
• Liquidity ratios
• Solvency ratios
• Profitability ratios
• Turnover ratios
• 3. Responsibility Accounting
• Responsibility accounting can be defined as a system of
accounting in which overall involvement of different
sections, divisions & departments of an organization are set
up as ‘Responsibility centers’. The head of the center is
responsible for achieving the target set for his center.
Responsibility centers may be of the following types:
• Cost center
• Revenue center
• Profit center
• Investment center
• 4. Management Audit
• Management audit refers to a systematic appraisal of
the overall performance of the management of an
organization. The purpose is to review the efficiency
& effectiveness of management & to improve its
performance in future periods.
• PERT & CPM
• PERT (programmed evaluation & review technique) & CPM
(critical path method) are important network techniques useful
in planning & controlling. These techniques, therefore, help in
performing various functions of management like planning;
scheduling & implementing time-bound projects involving the
performance of a variety of complex, diverse & interrelated
activities.
• Therefore, these techniques are so interrelated and deal with
such factors as time scheduling & resources allocation for these
activities.
 Differences between the PERT and CPM

• (i) In the CPM it is considered that the duration of each activity is constant,
and so, only one time estimate is made for each activity. But in the PERT,
uncertainty in the duration of the activities are taken into account and
estimates are made thrice for every activity— (a) optimistic time showing the
shortest time required for an activity, (b) Pessimistic time showing the
maximum time required for an activity, and (c) most probable time which lies
in between the two.
• (ii) In the CPM, main focus is on cost; whereas in the PERT the focus is on
time.
• (iii) The CPM is more appropriate for the projects with well-known times,
while the PERT is more suitable where activity timings are relatively
unknown.
Some of the common uses of these techniques are as follows:
(i) Launching new products;
(ii) Construction of a new plant;
(iii) Installation of a computer system;
(iv) Planning and launching of a new project;
(v) Ship-building;
(vi) Building of Airport facilities;
(vii) Setting up of industry.
 Total Quality Management (TQM)

• A core definition of total quality

management (TQM) describes a management
approach to long-term success through customer
satisfaction. In a TQM effort, all members of an
organization participate in improving processes,
products, services, and the culture in which they
work.
• The total quality management became attractive to
the US managers as it had been successfully
implemented by the Japanese companies such as
Toyota, Canon and Honda. The TQM philosophy
Quality circles

 A quality circle or quality control circle is a group

of workers who do the same or similar work, who
meet regularly to identify, analyze and solve work-
related problems. It consists of minimum three and
maximum twelve members in number. Circle
members are free to collect data and take surveys.
The reason for promoting quality circles is that
these people know the day to day tasks and
problems and can easily recommendations.
Benchmarking

• Benchmarking is defined as the process of measuring

products, services, and processes against toughest
competitors or recognizing the industry leaders in one
or more aspects of their operations, to identify the areas
of improvement.
• It is the continuous process of measuring products,
services and practices against the Of course, only those
companies be selected whose methods are compatible.
• There are four main types of benchmarking: internal,
external, performance, and practice.
 Six sigma
It was first introduced by Motorola in 1980s. It is based on Greek
letter ‘sigma’ which means how far something deviates from
perfection. It is a highly ambitious quality standard that
specifies not more than 3.4 defects per million parts i.e. 99.9997
percent accuracy. Now it has become a generic term which
indicates higher quality and lower costs.
Hundreds of companies like General Electric, Honda, American
Express, Ford, TCS, tata Steel, Sony, Hitachi, Motorola have
been using six sigma programs.
 Management
• It is a system of identification by
and exception
communication that signals
the manager as to when and where his attention is needed.
• The main object of this system is to enable the manager to
identify and isolate the problems that call for decision and action,
and avoid or ignore or pay less attention to less critical problems
which better be handled by his subordinates.
• Under this system the manager should receive only condensed,
summarized and invariable comparative reports covering all the
elements, and he should have all the exceptions to the past
averages or standards pointed out, both the specially good and the
specially bad exceptions.
Management by Exception
 System
• I Phase: of Management
Measurement Phase: by Exception:
• In this phase, facts of operational situation are collected and assessed, i.e., use
of performance of its whole range inputs such as efforts contributing to the
goals of the organisation; its productivity, money flow, effectiveness of
financial resources being used to produce goods, services and profits;
availability and wastage of material and its economy from its purchase through
processing and storing to delivery for finished products utilization, capability
and productivity of the machines.

• The information about all these factors are utilized by way of quantitative
measurements like using time standards, balance sheet data, inventory data,
inspection results of finished products, inventory accumulation for sales,
current assets, equipment utilization data.
II Phase: Projection Phase

• In this phase, analysis of those measurements which are meaningful to the

objectives of the organisation for future outlook or expectations is carried out.
Past and present data are projected by using the statistical concept like
probability, standard deviation, confidence, correlation, sample size, significance
etc.

• Examine the potential effect of changes expected as per forecast. Then the
projections are modified by the forecasts to decide the ‘goals’. At this stage
complete planning is thoroughly looked at from the angle of existing policies and
procedures, organisation structure, adequacy and capability of the existing staff
and equipment. If need arises necessary changes are made.
• III Phase: Selection Phase:
• In this phase, those vital and economical available measures are
selected, which will best indicate the progress towards its
objectives. Thus the criteria are selected, which the management
would like to use to follow the progress or performance towards
predicted objectives.
• IV Phase: Observation Phase:
• In this phase, current status of performance is periodically
observed and measured. The system should be reliable, automatic
and adequate. Adequate means that observations should neither
be too less nor too more, and only necessary information at
desired frequency is obtained.
• V Phase: Comparison Phase:
• In this phase, comparison is made between the actual and
expected performance and progress in order to identify the
exception, analyze causes and report the need for action to the
appropriate authority about the exceptions that required priority
of attention.

• VI Phase: Action Phase:

• This is the phase, where decisions are taken and implemented
with a view to bring the performance to the desired level or adjust
in anticipations to reflect changing conditions or take full
advantage of better performance or opportunity.
• Thus the Management by Exception compromise as
systematic approach of handling the management
problems and free the manager from the demands of
routine work, which enables him to devote more
time for creative efforts directed towards “improving
the overall efficiency of the organisation”. This also
provides necessary information readily available, for
taking timely and qualitative decisions, which would
require lot of time.
• 1. It savesAdvantages of attends
time. Manager Management by Exception:
to real problems at a particular point
of time.
• 2. Concentrated efforts are possible, as this system enables the manager
to decide when and where he should pay his attention. It identifies
crisis and critical problems.
• 3. Lesser number of decisions is required to be taken, which enables
the manager to go into detail.
• 4. This enables to increase span of control and increase the activities
for a manager.
• 5. Use of past trends, history and available data can be made fully.
• 6. It alarms the management about the good opportunities as well as
difficulties.
• 7. Qualitative and quantitative yardsticks are provided for judging the
current position.
 Limitations of Management by Exception:

• 1. It requires a comprehensive observing

and reporting system.
• 2. It increases paper work.
• 3. The system is silent till the problem
becomes critical.
• 4. Some important factors, like human
behaviour, are difficult to measure.