Notes by Drdini Menon

8/2/2019 Notes by Drdini Menon

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Notes by Dr. Dini Menon

Unit VII: Authority and Responsibility

Introduction

L. A. Allen defines an organisation as the process of identifying and grouping the work to

be performed defining and delegating responsibility and authority and establishing relationshipsfor the purpose of enabling the people to work most effectively together in accomplishing

objective. The relationships that exist in an organization may be formal and informal.

The manager describes organizational relationships in a written and graphic manner.

Manager tells the employees to do certain things in a specified manner, to obey orders fromdesignated individuals, and to work co-operatively with others. Formal organization is built on the

relationships of authority responsibility, accountability, span of management, delegation,

centralization and decentralization.

Authority

Authority is the right or power assigned to an executive or a manager in order to achieve certain

organizational objectives.

A manager will not be able to function efficiently without proper authority. Authority is the

genesis of organizational framework. It is an essential accompaniment of the job of management.Without authority, a manager ceases to be a manager, because he cannot get his policies carried out

through others. Authority is one of the founding stones of formal and informal organisations. An

Organisation cannot survive without authority. It indicates the right and power of makingdecisions, giving orders and instructions to subordinates. Authority is delegated from above but

must be accepted from below i.e. by the subordinates. In other words, authority flows downwards.

According to Henri Fayol, "Authority is the right to give orders and the power to exact

obedience."

According to Mooney and Reily, "Authority is the principle at the root of Organisation and soimportant, that it is impossible to conceive of an organisation at all unless some person or persons

are in a position to require action of others."

Responsibility

Responsibility indicates the duty assigned to a position. The person holding the position has toperform the duty assigned. It is his responsibility. The term responsibility is often referred to as an

obligation to perform a particular task assigned to a subordinate. In an organisation, responsibility

is the duty as per the guidelines issued.


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According to Davis, "Responsibility is an obligation of individual to perform assigned duties to the

best of his ability under the direction of his executive leader." In the words of Theo Haimann,

"Responsibility is the obligation of a subordinate to perform the duty as required by his superior".

McFarland defines responsibility as "the duties and activities assigned to a position or an

executive".

Accountability

Every employee/manager is accountable for the job assigned to him. He is supposed to complete

the job as per the expectations and inform his superior accordingly. Accountability is the liabilitycreated for the use of authority. It is the answerability for performance of the assigned duties.

According, to McFarland, "accountability is the obligation of an individual to report formally to

his superior about the work he has done to discharge the responsibility."

When authority is delegated to a subordinate, the person is accountable to the superior forperformance in relation to assigned duties. If the subordinate does a poor job, the superior cannot

evade the responsibility by stating that poor performance is the fault of the subordinate. A superior

is normally responsible for all actions of groups under his supervision even if there are severallayers down in the hierarchy. Simply stated, accountability means that the subordinate should

explain the factors responsible for non-performance or lack of performance.

They need proper consideration while introducing delegation of authority within an Organisation.

In the process of delegation, the superior transfers his duties/responsibilities to his subordinate andalso give necessary authority for performing the responsibilities assigned. At the same time, the

superior is accountable for the performance of his subordinate.

Delegation of Authority

A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, themanager should delegate authority. Delegation of Authority means division of authority and

powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of

your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the

subordinates in order to achieve effective results.

Meaning and DefinitionDelegation is a process of sharing work and authority between a manager and his subordinates. It

helps in completing the work in time, reduces the workload of managers, and motivates anddevelops subordinates.

According to Louis A Allen, Delegation is the dynamics of management. It is the process a

manager follows in dividing the work assigned to him so that he performs that part which only becan perform effectively, and so that he can get others to help him with what remains.


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According to Theo Haimann, Delegation means the granting of authority subordinates to

operate within the prescribed limits.

Features of Delegations of Authority1. Delegation is authorization to a manager to act in a certain manner. The degree of delegation

prescribes the limits within which a manager has to decide the things. Since formal authorityoriginates at the top level, it is distributed throughout the organization through delegation and

redelegation.

2. Delegation has dual characteristics. As a result of delegation, the subordinate receives authorityfrom his superior, but at the same time, his superior still retains all his original authority. Terry

comments on this phenomenon like this. It is something like imparing knowledge. You share with

others who then possess the knowledge, but you still retain the knowledge too.3. Authority once delegated can be enhanced, reduced, or withdrawn depending on the situation

and requirement. For example, change in organization structure, policy, procedure, methods, etc.

may require change in the degree of delegation of authority.4. A manager delegates authority out of the authority vesting in him. He cannot delegate which he

himself does not possess. Moreover, he does not delegate his full authority because if he delegatesall his authority, he cannot work.

5. Delegation of authority may be specific or general. Delegation of authority is specific whencourses of action for particular objectives are specified. It is general when these are not specified,

though objectives may be specified.

Process of Delegation of Authority

Delegation process involves four distinct stages. The process of delegation moves through thesestages. The following figure shows the stages in the process of delegation of authority.


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Principles of Effective Delegation of Authority

1. Knowledge of Objectives: Before delegating authority, the subordinates should be made

to understand their duties and responsibilities. In addition, knowledge of objectives and

policies of the enterprise should be provided to them. This will enable them to discharge

their roles purposefully in the process of delegation.

2. Parity of Authority and Responsibility: This principle of delegation suggests that when

authority is delegated, it should be commensurate with the responsibility of the

subordinate. In fact, the authority and responsibility should be made clear to the

subordinate so that he will know what he is expected to do within the powers assigned to

them. There should be proper balance/parity or co-existence between the authority and

responsibility. A subordinate will not function efficiently, if authority given to him is

inadequate. On the other hand, if the excess authority is given, he may misuse the same.

For avoiding this, the subordinates who are assigned duties should be given necessary/

adequate authority enables them to carry out their duties.

3. Unity of Command: This principle of delegation suggests that everyone should have only

one boss. A subordinate should get orders and instructions from one superior and should be

made accountable to one superior only. This means 'no subordinate should be held

accountable to more than one superior'. When a subordinate is asked to report to more than

one boss, it leads to confusion and conflict. Unity of command also removes overlapping

and duplication of work. In the absence of unity of command, there will be confusion and

difficulty in fixing accountability.

4. The Scalar Principle: The scalar principle of delegation maintains that there should be

clear and direct lines of authority in the Organisation, running from the top to the bottom.

The subordinate should know who delegates authority to him and to whom he should

contact for matters beyond his authority. They (subordinates) should also know what is

expected from them. This principle justifies establishment of the hierarchical structure

within the Organisation.

5. Clarity of Delegation: The principle of clarity of delegation suggests that while delegating

authority to subordinates, they should be made to understand the limits of authority so that

they know the area of their operation and the extent of freedom of action available to them.

Such clarity guides subordinates while performing their jobs.

6. Absoluteness of Responsibility: This principle of delegation suggests that it is only the

authority which is delegated and not the responsibility. The responsibility is absolute and

remains with the superior. He cannot run away from the same even after delegation. Even

when the manager delegates authority to his subordinate, he remains fully accountable to

his superiors because responsibility cannot be divided between a superior and his


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subordinate. No superior can delegate responsibilities for the acts of his subordinates. He is

responsible for the acts and omissions of his subordinates.

7. Use of Exception Principle: This principle of delegation indicates that when authority is

delegated, it is expected that the subordinate will exercise his own judgment and take

decisions within the purview of his authority. He is to be given adequate freedom tooperate within his authority even at the cost of mistakes. He should refer the problems to

the top level management only when he is unable to take decisions. Unnecessary

interference in the work of delegates should be avoided. This normal rule can be given up

under exceptional circumstances. Here, the superior can interfere in the work of his

subordinate and even withdraw the delegated duties and authority. The superior takes this

decision under exceptional circumstances.

8. Completeness of Delegation: This principle of delegation suggests that there should be

completeness in the process of delegation. The process of delegation should be taken to its

logical end. Otherwise, there will be confusion of authority and accountability.

9. Effective Communication Support System: This principle suggests that there should be

continuous flow of information between the superior and the subordinates with a view to

furnishing relevant information to subordinate fordecision-making. This helps him to take

proper decisions and also to interpret properly the authority delegated to him. Delegation

system may not work smoothly in the absence of effective communication between the

superior and subordinates.

10.Reward for Effective Delegation: This principle suggests that effective delegation and

successful assumption of authority should be rewarded. This will facilitate fuller delegationand effective assumption of authority within the Organisation. Reward for effective

delegation will provide favorable environmental climate for its fair introduction.

Importance of Delegation of Authority

1. Relieves manager for more challenging jobs: Delegation makes it possible for the

managers to distribute their workload to others. Thus, managers are relieved of routinework and they can concentrate on higher functions of management like planning,

organising, controlling, etc.

2. Leads to motivation of subordinates: Subordinates are encouraged to give their best at

work when they have authority with responsibility. They take more initiative and interest inthe work and are also careful and cautious in their work. Delegation leads to motivation of

employees and manpower development.

3. Facilitates efficiency and quick actions: Delegation saves time enabling subordinates todeal with the problems promptly. They can take the decisions quickly within their

authority. It is not necessary to go to the superiors for routine matters. This raises the

overall efficiency in an Organisation and offers better results in terms of production,turnover and profit.
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4. Improves employee morale: Delegation raises the morale of subordinates as they are

given duties and supporting authority. They feel that they are responsible employees. The

attitude and outlook of subordinates towards work assigned becomes more constructive.5. Develops team spirit: Due to delegation, effective communication develops between the

superiors and subordinates. The subordinates are answerable to superiors and the superiors

are responsible for the performance of subordinates. This brings better relations and teamspirit among the superiors and subordinates

6. Maintains cordial relationships: The superiors trust subordinates and give them

necessary authority. The subordinates accept their accountability and this develops cordialsuperior-subordinate relationships.

7. Facilitates management development: Delegation acts as a training ground for

management development. It gives opportunity to subordinates to learn, to grow and to

develop new qualities and skills. It builds up a reservoir of executives, which can be usedas and when required. Delegation creates managers and not mere messengers.

Barriers to Effective Delegation of Authority

1. Unwillingness of the manager to delegate authority: Some superiors/managers tend tothink that they can do the job better when they themselves handle the job. The attitude that

'I can do it better myself'on the part of superior acts as an obstacle to delegation. Some

managers (superiors) who are autocratic and power worshippers feel that delegation will

lead to reduction of their influence in the Organisation. A manager may feel that if he has acompetent subordinate and if he delegates authority to the subordinate, quite likely he will

outshine him (manager) and may be promoted.

2. Fear of competition: A manager may feel that if he has a competent subordinate and if hedelegates authority to the subordinate, quite likely he will outshine him. Fear of

subordinate's excellence may come in the way of delegation.

3. Lack of confidence in subordinates: A manager may hesitate to delegate authority, if he

feels that his subordinate is not competent to deal with the problem and take decisions.Even fear of losing control over the subordinates acts as an obstacle to delegation. In

addition, fear of being exposed due to personal shortcomings may act as an obstacle in the

process of delegation.4. Lack of ability to direct: Sometimes, a manager may experience difficulty in directing the

efforts of his subordinates because of his inability to identify and communicate the

essential features of his long-range plans and programmes.5. Too much dependence on the manager for decisions: Some subordinates avoid

responsibility even when the superior/manager is prepared to delegate authority. They want

the manager to tackle problems and take decisions. A subordinate who is not confidentabout his performance/ability will certainly try to shirk responsibility even though his

superior is prepared to delegate functions and authority.6. Fear of criticism: Subordinates express unwillingness to accept delegated authority

because of the fear of criticism in the case of mistakes. They fear that they may becriticized by others if they commit mistakes. Such subordinates have the following feeling

in their mind, "Why should I stick my neck out for my boss?"

7. Lack of information: A subordinate may hesitate to accept a new assignment, when heknows that necessary information to perform the job is not likely to be made available to


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him. He is reluctant to accept delegated functions and authority as he feels that he will not

be able to perform well due to inadequate information available.

8. Absence of positive incentives: Positive incentives like recognition of work and rewardsgo a long way in building up the morale of subordinates. In the absence of such incentives

in the form of recognition, appreciation or monetary benefit, a subordinate may not be

prepared to accept delegation of authority.9. Absence of self-confidence: A subordinate may lack self-confidence about his ability to

take quick and correct decisions. He may not like to accept new challenging functions as he

lacks self-confidence. Thus, lack of self-confidence on the part of subordinates is one

obstacle which comes in the way of delegation of authority.

Span of control

The span of management refers to the number of subordinates who report directly to the

superior. It is also known as the number of subordinates who are efficiently managed by a singlesuperior manager. If the subordinates who report to a superior are more in number, it is called the

wide span and the vice versa is called the narrow span.

A wide span means that there is direct communications and interactions between the

manager and their many reports (i.e. people who report to them.)

The benefits of this are that everyone deals with the same manager, and as a result

everyone is more likely to be aligned with the managers vision of what should be done.

The disadvantages are the cost to the manager in terms of time to deal with each staff

member.

A narrow span means that there are more layers of management between the frontline and

the top level management, and as a result there is the opportunity for the vision and

communications from the top to be muddied by misinterpretation. The benefits of this

model are that the managers all have more time to spend on each person and the work at

hand.
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Factors affecting Span of Control

1. Job complexity: Subordinate jobs that are complex, ambiguous, dynamic or otherwise

complicated will likely require more management involvement and a narrower span of

management.2. Similarity of subordinate jobs: The more similar and routine the tasks that subordinates

are performing, the easier it is for a manager to supervise employees and the wider the span

of management that will likely be effective.3. Physical proximity of subordinates: The more geographically dispersed a group of

subordinates the more difficult it is for a manager to be in regular contact with them and

the fewer employees a manager could reasonably oversee, resulting in a narrower span of

management.4. Abilities of employees: Managers who supervise employees that lack ability, motivation,

or confidence will have to spend more time with each employee. The result will be that the

manager cannot supervise as many employees and would be most effective with a narrowerspan of management.

5. Abilities of the manager: Some managers are better organized, better at explaining things

to subordinates, and more efficient in performing their jobs. Such managers can functioneffectively with a wider span of management than a less skilled manager.

6. Technology: Cell phones, email, and other forms of technology that facilitate

communication and the exchange of information make it possible for managers to increase

their spans of management over managers who do not have access to or who are unable touse the technology.


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Unit VIII: Coordination & Direction Concept

Introduction: CoordinationBusiness operations are performed by a number of departments and individual employees

based on plans, objectives and goals. The total business operations include procuring of raw

material, producing the products, mobilizing and managing financial resources, acquiring therequired human resources, providing them to various departments, marketing the product etc. each

department performs only one kind of operation based on its specialization. Similarly, eachemployee also performs one kind of operations based on his/ her specialization. These activities

need to be coordinated as each individual employee and department performs the business

activities from their own perspective rather than from the perspective of organizational objectives.

Meaning and Definition

Coordination as a function of management refers to the task of integrating the activities of

separate units of an organization to accomplish the goals efficiently. It permeates all levels and all

departments of management. Hence, it is regarded as the essence of management.

According to Henri Fayol, Coordination harmonizes, synchronizes and unifies individual efforts

for better action and for the achievement of the business objectives.According to Mooney and Railey, Coordination is the achievement of orderly group efforts andunity of action in the pursuit of a common purpose.

According to Mcfarland, Coordination is as the process whereby an executive develops an

orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit ofa common purpose.

According to George Terry, the orderly synchronization of efforts to provide the proper

amount, timing, and directing of execution resulting in harmonious and unified actions to statedobjective.

Co-ordination and co-operation the two should not be confused because the two terms

denote quite different meanings. Co-operation refers to the collective efforts of people whoassociate voluntarily to achieve specified objectives. It indicates merely the willingness ofindividuals to help each other. It is the result of a voluntary attitude of a group of people.

Co-ordination is much more inclusive, requiring more than the desire and willingness to

co-operate of the participants. It involves a deliberate and conscious effort to bring together the

activities of the various individuals in order to provide unity of action. It requires concurrence ofpurpose, harmony of effort and concerted action. It is much more than mere reconciliation of

differences or avoidance of friction.

Co-operation provides the foundation for co-ordination by enlisting voluntary efforts which

facilitate co-ordination, but by itself it cannot guarantee co-ordination. Co-ordination does notarise automatically from the voluntary efforts of the manager. For instance, a group of six persons

who attempt to move a heavy object are willing and eager to co-operate with one another. They

are fully aware of their common purpose and are trying their best to move the object, but theycannot be successful in their attempt unless one of them co-ordinates their efforts. He must give

proper directions to all members of the group to apply the right amount of effort, at the right place

and at the right time. Co-operation is a necessary, but not a sufficient condition of co-ordination.


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Difference between co-ordination and co-operation:

Difference between co-ordination and co-operation are given below.

Status co-ordination is the essence of management and it is vital for the success of all

managerial functions. Co-operation, on the other hand, does not enjoy the status of theessence of management. Co-operation is no doubt essential for successful co-ordination,

but it is more of a personal attitude rather than organisational.

Nature of work in the organisation, the nature of work is such that it needs to be dividedand then integrated. Co-ordination of all interdependent activities is utmost necessary, but

co-operation does not arise out of any limitations of organisation structure. The individuals

may learn to co-operate with each other even though their activities may not be related.

Deliberate co-ordination requires deliberate and intentional efforts of a manager. On the

other hand, co-operation is voluntary. In other words, co-ordination is a contrived process,

whereas co-operation is a natural process.

Scope co-ordination is broader in scope than co-operation. It includes both co-operation

and deliberate efforts to maintain unity of action and purpose.

According to McFarland, co-ordination is a far more inclusive term embracing the idea of

co-operation. Co-operation, that is mere willingness of individuals to help each other, cannot serveas a satisfactory substitute for co-ordination. Co-operation is for most part the result of voluntary

attitudes on the part of people in an organisation. Co-ordination, on the other hand, cannot be

voluntarily produced by a number of co-operating persons. Co-ordination is a state of affairs

which an executive brings about through deliberate action on his part. Thus, co-ordination ismuch more than co-operation. Co-ordination is the epitome of all managerial functions while co-

operation is an attitude of an individual or group. Need for co-ordination arises due to limitations

of formal organisation structure, but co-operation is necessary even in case of non-interdependent

activities. Thus, co-ordination is a broader concept than co-operation, but to be effective anorganisation requires both. Co-operation will be ineffective in the absence of co-ordination just as

co-ordination is not possible without co-operation.

Importance and need for coordination

The extent of coordination needed in an organization depends on the nature of tasks and

degree of interdependence of people in various units performing them. When these tasks require

high degree of communication between the units then high degree of coordination is required. The

need for coordination arises because of the following factors:

1. Encourages team spirit: There exist many conflicts and rivalries between individuals,

departments, between a line and staff, etc. Similarly, conflicts are also between individualobjectives and organisational objectives. Coordination arranges the work and the objectives in such

a way that there are minimum conflicts and rivalries. It encourages the employees to work as a

team and achieve the common objectives of the organisation. This increases the team spirit of theemployees.


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2. Gives proper direction: There are many departments in the organisation. Each department

performs different activities. Coordination integrates (bring together) these activities for achieving

the common goals or objectives of the organisation. Thus, coordination gives proper direction toall the departments of the organisation.

3. Facilitates motivation: Coordination gives complete freedom to the employees. It encouragesthe employees to show initiative. It also gives them many financial and non-financial incentives.

Therefore, the employees get job satisfaction, and they are motivated to perform better.

4. Makes optimum utilisation of resources: Coordination helps to bring together the human and

materials resources of the organisation. It helps to make optimum utilisation of resources. These

resources are used to achieve the objectives of the organisation. Coordination also minimise thewastage of resources in the organisation.

5. Helps to achieve objectives quickly: Coordination helps to minimise the conflicts, rivalries,

wastages, delays and other organisational problems. It ensures smooth working of the organisation.

Therefore, with the help of coordination an organisation can achieve its objectives easily andquickly.

6. Improves relations in the organization: The Top Level Managers co-ordinates the activities of

the Middle Level Managers and develops good relations with them. Similarly, the Middle Level

Managers co-ordinates the activities of the Lower Level Managers and develops good relationswith them. Also, the Lower Level Managers co-ordinates the activities of the workers and develops

good relations with them. Thus, coordination overall improves the relations in the organisation.

7. Leads to higher efficiency: Efficiency is the relationship between Returns and Cost. There will

be higher efficiency when the returns are more and the cost is less. Since coordination leads to

optimum utilisation of resources it results in more returns and low cost. Thus, coordination leads tohigher efficiency.

8. Improves goodwill of the organization: Coordination helps an organisation to sell high quality

goods and services at lower prices. This improves the goodwill of the organisation and helps itearn a good name and image in the market and corporate world.

Principles of coordination

1. Principle of early introduction: Coordination must be visualized right from the early

stages of planning and policymaking. At the time of preparation of the plan, mutual

cooperation, consultation, give and take become the necessity. In case the plan is preparedwithout coordination then it becomes difficult to supply the required materials or results in

the misallocation of the duties.

2. Principle of continuity: According to this principle, coordination should be followed in

the organization on continuous basis and it should be taken as a regular activity. Managers

should treat coordination as the never ending exercise.


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3. Principle of direct contact: According to the principle of direct contact, coordination can

only be established through the direct contact of the parties whose activities are to be

coordinated. As through direct contact the parties can discuss the methods, plans, actions,

activities and work for the achievement of overall organizational goals.

4. Principle of mutual relation: This principle states that every employee should understandthe problems faced by the other employees and try to solve them. For the purpose of

coordination, there should be perfect adjustment and sense of fellow feeling among the

employees.

Methods of achieving effective coordination

The main-techniques of effective coordination are as follows:

1. Sound planning: Unity of purpose is the first essential condition of coordination. Therefore, the

goals of the organization and goals of its units must be clearly defined. Every member of theorganization must understand fully how his job contributes to the overall objectives. Planning isthe ideal stage for coordination.

Clear-cut objectives, harmonized policies and integrated procedures ensure uniformity of action.

Various plans should be integrated properly. Precise policies and comprehensive programmers

facilitate coordination of activities and individuals. Standard procedures and rules createuniformity in repetitive operations.

2. Simplified organization: A simple and sound organization is an important means of

coordination. The line of authority and responsibility from top to the bottom of the organisation

structure should be clearly defined. Clear-cut definition of authority and responsibility of eachdepartment and individual helps to avoid conflicts.

Clear-cut authority relationships help to reduce conflicts and to hold people responsible. Related

activities should be grouped together and jobs should properly inter-relate. Well-drawn

organization charts, organizational manuals and proper allocation of work make for uniformaction.

In some cases, rearrangement of departments may be necessary to chief coordination of thought

and action.

3. Effective communication: Open and regular communication is the key to coordination.Effective inter-change of opinions and information helps in resolving differences and in creating

mutual understanding. Personal or face-to-face contacts are the most effective means of

communication and coordination.

Committees help to promote unity of purpose and uniformity of action. They provide anopportunity for free and frank exchange of views.


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Coordination becomes easier when different functional groups are represented in the decision-

making process. Committees are helpful in integrating the activities of different departments.

Committee decisions are collective decisions and such group decisions themselves providecoordination among different departments or functions in the enterprise. Personal or face-to-face

communication may be supplemented by written communication. Informal communication canalso be utilized for the purpose of coordination.

4. Effective leadership and supervision: Effective leadership ensures coordination of efforts bothat the planning and the execution stage. A good leader can continuously guide the activities of his

subordinates in the right direction and can inspire them to pull together for the accomplishment of

common objectives.

Sound leadership can persuade subordinates to have identity of interests arid to adopt a commonoutlook. Effective leadership reduces the dependence on such formal means of coordination as

authority, rules and procedures. In fact, no technique of coordination can replace effective

leadership.

Personal supervision is an important method of resolving differences of opinion. It helps to ensurethat work proceeds as planned.

Coordination is a human task and a manager can accomplish it through interpersonal relations.

Informal contacts with subordinates help to create climate of mutual trust and cooperation which is

the foundation of coordination, Luther Gallic has called coordinating by ideas to describe the useof leadership in coordination.

5. Chain of Command: Authority is the supreme coordinating power in an organization. Exercise

of authority through the chain of command or hierarchy is the traditional means of coordination.Chain of command brings together the different parts of an organization and relates them to acentral authority.

Coordination between interdependent units can be secured by putting them under one boss.

Because of his organizational position, a superior has the authority to issue orders and instructionsto subordinates. He can resolve inter-positional and intergroup conflicts.

However, behavioral scientists have warned against over-dependence on chain of command.

According to Chris Argyrols, the hierarchy technique of coordination makes individuals dependent

upon and passive towards the leader.

It is inconsistent with the needs of mature personality. The hierarchical structure may impaircommunication and decision-making.

6. Indoctrination and incentives: Indoctrinating organizational members with the goals and

mission of the organization can transform a neutral body into a committed body. Similarly,

incentives may be used to rebate mutuality of interest and to reduce conflicts.


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For instance, profit- sharing is helpful in promoting team-spirit and cooperation between

employers and workers. Such mutuality of interest reduces strife and insures better coordination.

7. Liaison departments: Where frequent contact between different organizational units isnecessary, liaison officers may be employed. For instance, a liaison department may ensure that the

production department is meeting the delivery dates and specifications promised by the salesdepartment.

Special coordinators may be appointed in certain areas. For instance, a project coordinator isappointed to coordinate the activities of various functionaries in a project which is to be completed

it in a specified period of time. Liaison officers act as 'linking pins' in organization and compensate

for lack of face-to-face contacts.'

8. General staff: In large organizations, a centralized pool of staff experts is used for coordination.A common staff group serves as the clearing house of information and specialized advice to all the

departments of the enterprise.

Such general staff is very helpful in achieving inter-departmental or horizontal coordination.

9. Voluntary coordination: When every organizational unit appreciates the working of relatedunits and modifies its own functioning to suit them, there is self-coordination. Self-coordination or

voluntary coordination is possible in a climate of dedication and mutual cooperation. It results

from mutual consultation and team-spirit among the members of the organization.

It arises when every member of the group takes cognizance of the effects of his actions onothers. Under self-coordination, members of an organization voluntarily adjust their behavior

according to the needs of the situation. Self-coordination is the voluntary efforts of independent

units or subunits of an organization to achieve the harmonious performance of their respectiveresponsibilities.

But self-coordination requires that individuals have sufficient knowledge of organizational goals,

adequate information concerning the specific problem of coordination, and the motivation to do

something on their own. Managers cannot rely on self-coordination as these conditions are notalways fulfilled. Self-coordination cannot be a substitute for coordination from above. Managers

have to make deliberate efforts to bring unity of purpose in the activities of subordinates.

In the words of Harman, "neither the principle of self-coordination nor the concept of self-

adjustment is a substitute for coordination.

It takes the efforts of the leader or the manager to bring about coordination, and the goal of theenterprise cannot be successfully obtained without it."

Introduction: Direction

Mr. N.R.Narayanamurthy, mentor of Infosys, makes his employees believe in themselves, the

organization, its value system and the philosophy including its targets. He tells the employees how


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to achieve the targets. He shares his ideas, opinions, attitudes etc. with all his subordinates.

Sometimes he orders them, sometimes he counsels them and sometimes he consults them. Thus,

he informs and instructs the employees how to do their job and achieve the targets. All these

efforts of Mr. Narayanamurthy are called direction.

This process requires directing the people, motivating them and leading them towards doing thework. The managers have to direct the people, tell them how to do the work and order them to

achieve the targets after they plan and organize various activities. All these activities constitute

direction

Meaning and DefinitionDirecting as a function of management is concerned with instructing, guiding and inspiring people

in the organization to achieve its objectives. It involves overseeing people at work, making

provision for the necessary facilities and creating a work environment, whereby employees mayperform to the best of their abilities.

It consists of issuing orders and instructions by a superior to his subordinates. It also includes the

process of motivation subordinates and providing leadership with an understanding of their hopes,beliefs and behavior pattern. Through the directing function managers bring about a balance

between individual interests of employees and the interests of the organization as a whole.

Directing is a function of all managers of the organization. It is an ongoing activity of managers.

According to William Newman and E. Kirby Warren, Directing deals with the steps a

manager takes to get subordinates and others to carry out plans.

According to Koontz and ODonnel, Direction is a complex function that includes all those

activities which are designed to encourage subordinates to work effectively and efficiently in boththe short and long run.

Importance of Direction

Directing or Direction function is said to be the heart of management of process and therefore, isthe central point around which accomplishment of goals take place. A few philosophers call

Direction as Life spark of an enterprise. It is also called as on actuating function of management

because it is through direction that the operation of an enterprise actually starts. Being the centralcharacter of enterprise, it provides many benefits to a concern which are as follows:-

1. It Initiates Actions - Directions is the function which is the starting point of the work

performance of subordinates. It is from this function the action takes place, subordinates

understand their jobs and do according to the instructions laid. Whatever are plans laid, canbe implemented only once the actual work starts. It is there that direction becomes

beneficial.


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2. It Ingrates Efforts - Through direction, the superiors are able to guide, inspire and instruct

the subordinates to work. For this, efforts of every individual towards accomplishment of

goals are required. It is through direction the efforts of every department can be related andintegrated with others. This can be done through persuasive leadership and effective

communication. Integration of efforts brings effectiveness and stability in a concern.

3. Means of Motivation - Direction function helps in achievement of goals. A managermakes use of the element of motivation here to improve the performances of subordinates.

This can be done by providing incentives or compensation, whether monetary or non -

monetary, which serves as a Morale booster to the subordinates Motivation is alsohelpful for the subordinates to give the best of their abilities which ultimately helps in

growth.

4. It Provides Stability - Stability and balance in concern becomes very important for long

term sun survival in the market. This can be brought upon by the managers with the help offour tools or elements of direction function - judicious blend of persuasive leadership,

effective communication, strict supervision and efficient motivation. Stability is very

important since that is an index of growth of an enterprise. Therefore a manager can use of

all the four traits in him so that performance standards can be maintained.5. Coping up with the changes - It is a human behaviour that human beings show resistance

to change. Adaptability with changing environment helps in sustaining planned growth andbecoming a market leader. It is directing function which is of use to meet with changes in

environment, both internal as external. Effective communication helps in coping up with

the changes. It is the role of manager here to communicate the nature and contents ofchanges very clearly to the subordinates. This helps in clarifications, easy adoptions and

smooth running of an enterprise. For example, if a concern shifts from handlooms to power

looms, an important change in technique of production takes place. The resulting factors

are less of manpower and more of machinery. This can be resisted by the subordinates. Themanager here can explain that the change was in the benefit of the subordinates. Through

more mechanization, production increases and thereby the profits. Indirectly, the

subordinates are benefited out of that in form of higher remuneration.6. Efficient Utilization of Resources - Direction finance helps in clarifying the role of every

subordinate towards his work. The resources can be utilized properly only when less of

wastages, duplication of efforts, overlapping of performances, etc. doesnt take place.Through direction, the role of subordinates become clear as manager makes use of his

supervisory, the guidance, the instructions and motivation skill to inspire the subordinates.

This helps in maximum possible utilization of resources of men, machine, materials and

money which helps in reducing costs and increasing profits.

From the above discussion, one can justify that direction, surely, is the heart of management

process. Heart plays an important role in a human body as it serves the function pumping blood to

all parts of body which makes the parts function. In the similar manner, direction helps thesubordinates to perform in best of their abilities and that too in a healthy environment.

Principles of Direction

Direction is a complex function as it deals with people whose behaviour is unpredictable.

Effective direction is an art which a manager can learn and perfect through practice. However,

managers can follow the following principles while directing their subordinates:


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1 Harmony o objectives: Individuals join the organisation to satisfy their physiological and

psychological needs. They are expected to work for the achievement of organisational objectives.

They will perform their tasks better if they feel that it will satisfy their personal goals. Therefore,

management should reconcile the personal goals of employees with the organisational goals.

2. Maximum individual contribution: Organisational objectives are achieved at the optimum

level when every individual in the organisation makes maximum contribution towards them.

Managers should, therefore, try to elicit maximum possible contribution from each subordinate.

3. Unity of command: A subordinate should get orders and instructions from one superior only. If

he is made accountable to two bosses simultaneously, there will be confusion, conflict, disorder

and indiscipline in the organisation. Therefore, every subordinate should be asked to report to only

one manager.

4. Appropriate techniques: The managers should use correct direction techniques to ensure

efficiency of direction. The techniques used should be suitable to the superior, the subordinates and

the situation.

5. Direct Supervision: Direction becomes more effective when there is a direct personal contactbetween a superior and his subordinates. Such direct contact improves the morale and commitment

of employees. Therefore, wherever possible direct supervision should be used.

6. Strategic use of informal organization: Management should try to understand and make use

of informal groups to strengthen formal or official relationships. This will improve the

effectiveness of direction.

7. Managerial communication: A good system of communication between the superior and his

subordinates helps to improve mutual understanding. Upward communication enables a manager

to understand the subordinates and gives an opportunity to the subordinates to express their

feelings.

8. Comprehension: Communication of orders and instructions is not sufficient. Managers shouldensure that subordinates correctly understand what they are to do and how and when they are to do.

This will avoid unnecessary queries and explanations.

9. Effective leadership: Managers should act as leaders so that they can influence the activities of

their subordinates without dissatisfying them. As leaders, they should guide and counsel

subordinates in their personal problems too. In this way, they can win the confidence and trust of

their subordinates.

10. Principle of follow through: Directing is a continuous process. Therefore, after issuing orders

and instructions, a manager should find out whether the subordinates are working properly and

what problems they are facing. He should modify, if necessary, his orders in the light of these

findings.

Characteristics of good direction

Direction is one of the most complex functions of management which can be learned andperfected only through long experience. However, some important principles or requirements of

effective direction may be as follows.


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1) Harmony of objectives: an organization functions best when the goals of its members are

in complete harmony with and complementary to the goals of the organization. Such an

ideal situation seldom exists in any organization. Nor should a manager ever expect thissituation to exist. But in directing subordinates he must take advantage of individual

motives to gain group goals. In other words, he must direct the subordinates in such a way

that they perceive their personal goals to be in harmony with enterprise objectives. Thus,for example, if employees are told to work hard so that the companys profits may increase,

they probably will not. But if they are told to do so in their own interest they are more

likely to work hard.2) Unity of command: this principle implies that the subordinates should receive orders and

instruction from one superior only. The violation of this principle may lead to conflicting

orders, divided loyalties and decreased personal responsibility for results. Another reason

why this principle should not be violated is that the immediate boss is the only person whoknows best about the nature of his subordinates and about their responses to different

motivation techniques.

3) Direction supervision: every superior must maintain face to face direct contact with his

subordinates. Direct supervision boosts the morale of employees, increases their loyaltyand provides them with immediate feedback on how well they are doing.

4) Efficient communication: communication is an instrument of direction. It is throughcommunication that the superior gives orders, allocates jobs, explains duties and ensures

performance. Efficient communication is a two way process. It not only enables the

superior to know how his subordinates feel but also helps the subordinates to know how thecompany feels on a number of issues concerning them. In communication, comprehension

is more important than the content. How much information is correctly understood by the

subordinates is more important than what is said and how it is said. This can be ensured

only if the manager makes provision for a proper feedback.5) Follow through: direction is not only telling subordinates what they should do but also

seeing that they do it in the desired way. The manager should, therefore, follow through the

whole performance of his subordinates not merely to keep a check on their activities but tohelp them in their act, to show them where their deficiency, if any, lies and to revise their

direction if it needs revision, and so on.

Unit IX: Control

Introduction:

The final phase of the management process is controlling. "Controlling means monitoringemployees' activities, determining whether the organization is on target toward its goals, and

making correction as necessary (Richard Daft ). Controlling ensures that, through effective

leading, what has been planned and organized to take place has in fact taken place. Three basiccomponents constitute the control function:


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Elements of a control system

Evaluating and rewarding employee performance

Controlling financial, informational, and physical resources.

Controlling is ongoing process. An effective control function determines whether the organization

is on target toward its goals and makes corrections as necessary.

Meaning and Definition

Controlling is the process through which managers assure that actual activities conform to

the planned activities. It is employed to make things happen in accordance with the plans and

programmes and rules and procedures lay down.

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

evaluating the performance and, if necessary, applying corrected measures so that the performance

takes place according to plans.

According to Robert N. Anthony, Management control is the process by which managers assure

that resources are obtained and used effectively and efficiently in the accomplishment of anorganizations objectives.

According to Koontz ODonnel, Managerial control implies measurement of accomplishmentagainst the standard and the correction of deviations to assure attainment of objectives according to

plans.

According to H. Koontz and ODonnell, Controlling is the measuring and correcting of

activities of subordinates to ensure that events conform to plans.

Planning-control relationship

Planning is required at the very outset of management whereas control is required at the

last stages. If planning is looking ahead, control is looking back.

Planning and controlling are two separate functions of management, yet they are closely

related. The scopes of activities if both are overlapping to each other. Without the basis of

planning, controlling activities becomes baseless and without controlling, planning becomes a

meaningless exercise. In absence of controlling, no purpose can be served by. Therefore, planning

and controlling reinforce each other. According to Billy Goetz, Relationship between the two can

be summarized in the following points

1. Planning proceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseparable functions of management.

3. Activities are put on rails by planning and they are kept at right place through controlling.


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4. The process of planning and controlling works on Systems Approach which is as follows:

Planning Results Corrective Action

Planning and controlling are integral parts of an organization as both are important for smooth

running of an enterprise.

5. Planning and controlling reinforce each other. Each drives the other function of

management.

In the present dynamic environment which affects the organization, the strong relationship between

the two is very critical and important. In the present day environment, it is quite likely that

planning fails due to some unforeseen events. There controlling comes to the rescue. Oncecontrolling is done effectively, it gives us stimulus to make better plans. Therefore, planning and

controlling are inseparable functions of a business enterprise.

Control Cycle

Process of control

The control process involves carefully collecting information about a system, process, person, orgroup of people in order to make necessary decisions about each. Managers set up control systems

that consist of four key steps:

Establish standardsTake corrective

actions

Compare

performance withthe standards

Measure actualperformance

Feed

BackGoals

Action

Plan

Resourc

e

Allocatio

n

Performa

nce

Evaluation

Performa

nce

Comparis

on

Authorit

y

Delegati

on


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1. Establish standards to measure performance. Within an organization's overall strategicplan, managers define goals for organizational departments in specific, operational terms

that include standards of performance to compare with organizational activities.

2. Measure actual performance. Most organizations prepare formal reports of performancemeasurements that managers review regularly. These measurements should be related to

the standards set in the first step of the control process. For example, if sales growth is a

target, the organization should have a means of gathering and reporting sales data.

3. Compare performance with the standards. This step compares actual activities to

performance standards. When managers read computer reports or walk through their plants,they identify whether actual performance meets, exceeds, or falls short of standards.

Typically, performance reports simplify such comparison by placing the performancestandards for the reporting period alongside the actual performance for the same period and

by computing the variancethat is, the difference between each actual amount and the

associated standard.4. Take corrective actions. When performance deviates from standards, managers must

determine what changes, if any, are necessary and how to apply them. In the productivity

and quality-centered environment, workers and managers are often empowered to evaluatetheir own work. After the evaluator determines the cause or causes of deviation, he or she

can take the fourth stepcorrective action. The most effective course may be prescribed by

policies or may be best left up to employees' judgment and initiative.

These steps must be repeated periodically until the organizational goal is achieved.

Types of Controls

Control can focus on events before, during, or after a process. For example, a local automobile

dealer can focus on activities before, during, or after sales of new cars. Careful inspection of newcars and cautious selection of sales employees are ways to ensure high quality or profitable sales

even before those sales take place. Monitoring how salespeople act with customers is a control

during the sales task. Counting the number of new cars sold during the month and telephoning

buyers about their satisfaction with sales transactions are controls after sales have occurred. Thesetypes of controls are formally called feed forward, concurrent, and feedback, respectively.

Feed forward controls: sometimes called preliminary or preventive controls, attempt to

identify and prevent deviations in the standards before they occur. Feed forward controls

focus on human, material, and financial resources within the organization. These controlsare evident in the selection and hiring of new employees. For example, organizations

attempt to improve the likelihood that employees will perform up to standards by


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identifying the necessary job skills and by using tests and other screening devices to hire

people with those skills.

Concurrent controls: monitor ongoing employee activity to ensure consistency withquality standards. These controls rely on performance standards, rules, and regulations for

guiding employee tasks and behaviors. Their purpose is to ensure that work activities

produce the desired results. As an example, many manufacturing operations includedevices that measure whether the items being produced meet quality standards. Employees

monitor the measurements; if they see that standards are not being met in some area, they

make a correction themselves or let a manager know that a problem is occurring.

Feedback controls: involve reviewing information to determine whether performance

meets established standards. For example, suppose that an organization establishes a goal

of increasing its profit by 12 percent next year. To ensure that this goal is reached, the

organization must monitor its profit on a monthly basis. After three months, if profit hasincreased by 3 percent, management might assume that plans are going according to

schedule.

Traditional Techniques & Modern Techniques of Control

Control techniques provide managers with the type and amount of information they need tomeasure and monitor performance. The information from various controls must be tailored to a

specific management level, department, unit, or operation.

To ensure complete and consistent information, organizations often use standardized documents

such as financial, status, and project reports. Each area within an organization, however, uses itsown specific control techniques, described in the following sections.

Traditional Techniques

1. Direct Supervision and Observation: 'Direct Supervision and Observation' is the oldest

technique of controlling. The supervisor himself observes the employees and their work.This brings him in direct contact with the workers. So, many problems are solved during

supervision. The supervisor gets first hand information, and he has better understanding with

the workers. This technique is most suitable for a small-sized business.

2. Financial Statements: All business organisations prepare Profit and Loss Account. It gives a

summary of the income and expenses for a specified period. They also prepare BalanceSheet, which shows the financial position of the organisation at the end of the specified

period. Financial statements are used to control the organisation. The figures of the current

year can be compared with the previous year's figures. They can also be compared with thefigures of other similar organisations.

Ratio analysis can be used to find out and analyse the financial statements. Ratio analysis helps to

understand the profitability, liquidity and solvency position of the business
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3. Budgetary Control: A budget is a planning and controlling device. Budgetary control is a

technique of managerial control through budgets. It is the essence of financial control.

Budgetary control is done for all aspects of a business such as income, expenditure,production, capital and revenue. Budgetary control is done by the budget committee.

4. Break Even Analysis: Break Even Analysis or Break Even Point is the point of no profit, noloss. For e.g. when an organisation sells 50K cars it will break even. It means that, any sale

below this point will cause losses and any sale above this point will earn profits. The Break-even analysis acts as a control device. It helps to find out the company's performance. So the

company can take collective action to improve its performance in the future. Break-even

analysis is a simple control tool.

Modern Techniques

1. Return on Investment (ROI): Investment consists of fixed assets and working capital used inbusiness. Profit on the investment is a reward for risk taking. If the ROI is high then the

financial performance of a business is good and vice-versa.

ROI is a tool to improve financial performance. It helps the business to compare its present

performance with that of previous years' performance. It helps to conduct inter-firm comparisons.It also shows the areas where corrective actions are needed.

2. Management Audit: ManagementAudit is an evaluation of the management as a whole. It

critically examines the full management process, i.e. planning, organising, directing, and

controlling. It finds out the efficiency of the management. To check the efficiency of themanagement, the company's plans, objectives, policies, procedures, personnel relations and

systems of control are examined very carefully. Management auditing is conducted by a

team of experts. They collect data from past records, members of management, clients andemployees. The data is analysed and conclusions are drawn about managerial performance

and efficiency.

3. Management Information System (MIS): In order to control the organisation properly the

management needs accurate information. They need information about the internal working of theorganisation and also about the external environment. Information is collected continuously to

identify problems and find out solutions. MIS collects data, processes it and provides it to the

managers. MIS may be manual or computerised. With MIS, managers can delegate authority tosubordinates without losing control.

4. PERT and CPM Techniques: Programme Evaluation and Review Technique (PERT) and

Critical Path Method (CPM) techniques were developed in USA in the late 50's. Any

programme consists of various activities and sub-activities. Successful completion of anyactivity depends upon doing the work in a given sequence and in a given time.

Importance is given to identifying the critical activities. Critical activities are those which have to

be completed on time otherwise the full project will be delayed.
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So, in these techniques, the job is divided into various activities / sub-activities. From these

activities, the critical activities are identified. More importance is given to completion of these

critical activities. So, by controlling the time of the critical activities, the total time and cost of thejob are minimised.

5. Self-Control: Self-Control means self-directed control. A person is given freedom to set hisown targets, evaluate his own performance and take corrective measures as and when

required. Self-control is especially required for top level managers because they do not likeexternal control.

The subordinates must be encouraged to use self-control because it is not good for the superior to

control each and everything. However, self-control does not mean any control by the superiors.The superiors must control the important activities of the subordinates.

Unit X: Comparative studyJapanese Management and Theory Z

The managerial practices followed in Japan are quite different from those followed in

economically advanced countries in the West. In recent years, more and more companies have

started using Japanese management practices to increase productivity.

Special features of Japanese Management

1. Scientific selection process: Few Japanese attend graduate school and graduate training in

business but percentage is rare because there are only 30 top business colleges who getadmission and study in that colleges only those students have the chance to work in large

company. Those large companies conduct competitive examination. Those students passed

the examination they can gain jobs but company provide their own training.

2. Lifetime employment: Lifetime employment refers to recruitment of employees

immediately upon graduation generation of employment until retirement, and mandatory

retirement. Though there is no formal contract, employers and employees have an

unwritten mutual understanding regarding their expectation about the job. Under lifetime

employment an employee spends his entire working life with a single enterprise. This helps

generate a feeling of job security in the employee and a feeling of belongingness towardsthe enterprise.

3. Seniority system: This concept is closely related to the concept of lifetime employment

companies following this concept; provide privileges to older employees who have been

with it for a long time. Promotion and wage increases are based on employees length of

service in the company, not job performance.


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4. Continuous training: The secret of the success of Japanese managers may lie in

continuous training" In western organizations, employees receive training only to acquire

a new skill or to move to a new position. In Japanese firms however, every young manager

has a godfather, who is never his boss or anyone in the direct line of authority. The

godfather is not part of the top management, but is highly respected by others.

5. Emphasis on group work: In most Japanese organizations, a task is not assigned to an

individual; instead several tasks are assigned to a group, which consists of a small number

of people are treated like family members. Kaisha means my or ones company the

community to which one belongs and which is an important part of ones life. Probably this

is the reason why employees take great pride in their company and its success.

6. Decision making: The practice of managerial decision-making in Japan is built on the

concept that change and new ideas should come primarily from personnel belonging to

lower levels in the hierarchy. Thus in Japan lower level employees prepare proposals for

higher-level personnel. The ringi system refers to decision-making by consensus. Theword ringi consists of two parts rin which means submitting a proposal to ones superior

and getting his approval, and gi meaning deliberations and decisions.

7. Complicated performance evaluation: When job descriptions are not well defined and

when tasks are performed by groups, it becomes difficult to evaluate individual job

performance objectively. The evaluation of workers and managers in Japanese corporations

takes a very long time up to ten years and requires the use of qualitative and quantitative

information about performance.

8.Father leadership:As a kacho, the task of a leader is not only to supervise his people atwork, but also to show fatherly concern for their subordinates private life. Since,

promotion is based on seniority; it is not easy to move on to a kacho position. Sufficient

training and experience are essential for an individual to be promoted to this position.

9. Good benefits for employees: Japanese companies provide substantial benefits to their

employees are provided benefits such as family housing and transportation allowances.

Some companies also provide bachelor accommodation, scholarships for employees

children, and low-interest housing loans. Salary enhancements become rapid after about

seven years of employment with the firm. Since the seniority-based wage system assumes

that the longer the experience, the more valuable the employee

10.Simple and flexible organisation: In Japanese firms, very often people are trained to be

generalists. For this reason, the organization structure in Japan is relatively simple flexible,

and it possible for people to take up a new challenge or a new task by forming a new

formal or informal group. Informal organization wield considerable power in formal

organization


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Differences between American and Japanese Management Practices

William Ouchi proposed the concept of theory Z organizations. The concept was developed in his

efforts to understand the best practices of Japanese management which can be used in companiesof USA. He identified the differences between American and Japanese organizations in some

aspects.American Organizations Japanese Organizations

Short-term employment Lifetime employment

Individual decision making Collective decision making

Individual responsibility Collective responsibility

Rapid evaluation & promotion Slow evaluation & promotion

Explicit control mechanisms Implicit control mechanisms

Specialized career paths Non-specialized career paths

Segmented concern for employee as an employee Holistic concern for employee as a person

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