Functions of Management

Submitted to- MR. SUMIT KUMAR

Submitted by-

MISHU JAIN (19213221)

RINSHA NARAYANAN (19213224)
RIYA KUMAR (19213225)
SIMRAN GUPTA (19213232)

ARPIT PANDEY (19213243)

PLANNING

Planning Process:

1. Setting objective- In planning function manager begin with setting up of objectives because all
the policies procedures and methods are framed for achieving objectives only.
2. Developing premises-Premises refer to making assumptions regarding future. The assumptions
are made on the basis of forecasting. Forecast is the technique of gathering information.

3. Identifying alternative courses of action-After setting up of objectives the managers make a list
of alternatives through which the organization can achieve its objectives.

4. Evaluating alternative course of action- After making the list of various alternatives along
with the assumptions supporting them the manager starts evaluating each and every
alternative.

5. Selecting an alternative- The best alternative is selected but as such there is no

mathematical formula to select the best alternative. Sometimes instead of selecting one
alternative a combination of different alternatives can also be selected.

6. Implementing the plan- This is the step where other managerial functions also come in to the
picture. The step is concerned with putting the plan into action i.e., doing what is required.
7. Follow-up action- Planning is a continuous process so the manager’s job does not get over
simply by putting the plan into action. The manager monitors the plan carefully while it is
implemented.

Types of plans :

 Single use plans

 Standing plans
Standing Plans Includes :

1. Objectives- Objectives are the ends towards which the activities are directed. They axe the end result
of every activity.

2.  Strategy- A strategy is a comprehensive plan to achieve the organizational objectives.

3.  Policies- Policies are general statements that guide thinking or channelize energies towards a
particular direction.

4. Procedures- Procedures are required steps established in advance to handle future conditions. The
procedure can be defined as the exact manner in which an activity has to be accomplished.

5.  Method- Methods provide the prescribed ways or manner in which a task has to be performed
considering the objective.

6.  Rule- Rules are specific statements that inform what is to be done. They do not allow for any
flexibility or discretion.

Single use plans includes :

1.  Programme-A program is a single use plan containing detailed statements about project
outlining the objectives, policies, procedures, rules, tasks, physical and human resources required
to implement any course of action.

2. Budget-A budget is a statement of expected results expressed in numerical terms.

Advantages of Planning:-

1. Attention on Objectives-Planning helps in clearly laying down objectives of the

organization. The whole attention of management is given towards the achievement of
those objectives. There can be priorities in objectives, important objectives to be taken up
first and others to be followed after them.

2. Minimizing Uncertainties-Planning is always done for the future. Nobody can predict
accurately what is going to happen. Business environments are always changing. Planning is an
effort to foresee the future and plan the things in a best possible way.

3.  Better Utilization of Resources- Another advantage of planning is the better

utilization of resources of the business. All the resources are first identified and then
operations are planned. All resources are put to best possible uses.

4. Economy in Operations-The objectives are determined first and then best possible course of
action is selected for achieving these objectives. The operations selected being better among
possible alternatives, there is an economy in operations

5. Better Co-ordination-The objectives of the organization being common, all efforts are made to
achieve these objectives by a concerted effort of all. The duplication in efforts is avoided.
Planning will lead to better co-ordination in the organization which will ultimately lead to better
results.
Limitations of planning:
1. Lack of Reliable Data-Planning is based on various facts and figures supplied to the planners. If
the data on which decisions are based are not reliable then decisions based on such information
will also be unreliable. Planning will lose its value if reliable facts and figures are not supplied.
2.  External Factors may Reduce Utility-Besides internal factors there are external factors too which
adversely affect planning. These factors may be economic, social, political, technological or legal.
The general national and international climate also acts as limitation on the planning process.
3. Time Consuming Process-Practical utility of planning is sometimes reduced by the time factor.
Planning is a time- consuming process and actions on various operations may be delayed because
proper planning has not yet been done.
4. Expensive-The planning process is very expensive. The gathering of information and testing of
various courses of action involve greater amounts of money.

ORGANIZING

Organizing is the function of management which follows planning. It is a function in which the
synchronization and combination of human, physical and financial resources takes place. Organizing is a
function by which the concern is able to define the role positions, the jobs related and the co-ordination
between authority and responsibility. Hence, a manager always has to organize in order to get results.

Organizing process:

1. Identification of activities - All the activities which have to be performed in a concern have to be
identified first. For example, preparation of accounts, making sales, record keeping, quality
control, inventory control, etc. All these activities have to be grouped and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to combine and group
similar and related activities into units or departments. This organization of dividing the whole
concern into independent units and departments is called depart mentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify the
powers and its extent to the managers. This activity of giving a rank in order to the managerial
positions is called hierarchy. The top management is into formulation of policies, the middle
level management into departmental supervision and lower level management into supervision of
foremen. The clarification of authority helps in bringing efficiency in the running of a concern.
This helps in achieving efficiency in the running of a concern. This helps in avoiding wastage of
time, money, effort, in avoidance of duplication or overlapping of efforts and this helps in
bringing smoothness in a concern’s working.
4. Co-ordination between authority and responsibility - Relationships are established among
various groups to enable smooth interaction toward the achievement of the organizational goal.
Each individual is made aware of his authority and he/she knows whom they have to take orders
from and to whom they are accountable and to whom they have to report. A clear organizational
structure is drawn and all the employees are made aware of it.

Importance of organization:

1. Specialization - Organizational structure is a network of relationships in which the work is

divided into units and departments. This division of work is helping in bringing specialization in
various activities of concern.
2. Well defined jobs - Organizational structure helps in putting right men on right job which can be
done by selecting people for various departments according to their qualifications, skill and
experience. This is helping in defining the jobs properly which clarifies the role of every person.
3. Clarifies authority - Organizational structure helps in clarifying the role positions to every
manager (status quo). This can be done by clarifying the powers to every manager and the way he
has to exercise those powers should be clarified so that misuse of powers does not take place.
Well defined jobs and responsibilities attached helps in bringing efficiency into managers
working. This helps in increasing productivity.
4. Coordination - Organization is a means of creating co-ordination among different departments of
the enterprise. It creates clear cut relationships among positions and ensure mutual co-operation
 among individuals. Harmony of work is brought by higher level managers exercising their
authority over interconnected activities of lower level manager.
Authority responsibility relationships can be fruitful only when there is a formal relationship
between the two. For smooth running of an organization, the co-ordination between authority-
responsibilities is very important. There should be co-ordination between different relationships.
Clarity should be made for having an ultimate responsibility attached to every authority. There is
a saying, “Authority without responsibility leads to ineffective behavior and responsibility
without authority makes person ineffective.” Therefore, co-ordination of authority- responsibility
is very important.
5. Effective administration - The organization structure is helpful in defining the jobs positions. The
roles to be performed by different managers are clarified. Specialization is achieved through
division of work. This all leads to efficient and effective administration.
6. Growth and diversification - A company’s growth is totally dependent on how efficiently and
smoothly a concern works. Efficiency can be brought about by clarifying the role positions to the
managers, co-ordination between authority and responsibility and concentrating on specialization.
In addition to this, a company can diversify if its potential grow. This is possible only when the
organization structure is well- defined. This is possible through a set of formal structure.
7. Sense of security - Organizational structure clarifies the job positions. The roles assigned to every
manager are clear. Co-ordination is possible. Therefore, clarity of powers helps automatically in
increasing mental satisfaction and thereby a sense of security in a concern. This is very important
for job- satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are clear and every
person gets independence in his working, this provides enough space to a manager to develop his
talents and flourish his knowledge. A manager gets ready for taking independent decisions which
can be a road or path to adoption of new techniques of production. This scope for bringing new
changes into the running of an enterprise is possible only through a set of organizational structure.

Features of organizing function

 Job Distinction

A functional organization analyzes the strengths and weaknesses of each member, groups them into
categories and assigns them to tasks that best utilize their skills. Jobs that perform a similar function
are grouped in functional areas, sometimes referred to as functional silos because they are kept
separate from other areas. Specialized jobs within each basic functional silo are centralized and
clustered to form departments. Each functional area contains employees with varied skills that are
further grouped based on specialization and put in separate units or departments.

Functional Departments

Since functional structures allocate employees based on their roles within the company, they
naturally form functional departments. Each department has a leader, usually referred to as
department manager. Common functional departments include purchasing, human resources,
accounting, manufacturing, sales and marketing. As individuals improve or change their skills, they
may move between departments to perform different functions.

Project Management

When a project requires management, it is completed within a single department or functional

unit. If a single department cannot handle a project on its own, it must request assistance from
another department. The head of each department handles interdepartmental requests. If a single
department has all the required information and skills, it often restricts communication to within
the department.

Positive Characteristics

Functional organizations work best when a single product or service is involved. The chain of
command is linear, so everyone knows his position in the organization. By clustering specialists with
similar skills, leadership, tutoring and guidance concentrate on one area. Employees have an obvious
path for growth and promotion, either up or lateral.

Negative Characteristics

As a company gets larger, some of the positives of functional organizations become negatives.
Since decisions travel through the chain of command, the process becomes bureaucratic, and
information and decisions move slowly. Functional grouping can result in a narrowed overall
perspective. Because of communication and decision-making issues, the functional organization
is slow to adapt to environmental changes.

Motivation

The structured system provides obvious motivation for the employees. Functional supervisors
have a higher level of skill in their areas than their employees, making it easier to see and reward
high performance while discouraging inefficiencies. Group members with similar skills can
monitor each other’s behavior and performance, Lamar University’s Under down says. Similar
skills create teamwork and group cohesiveness that can promote higher job performance.

Delegation and decentralization of the organizing functions

Delegation- No matter how much manager is capable to do work if he finds can’t able to do work
he can appoint his subordinate to do his work on his behalf.

Decentralization- Decentralization is the extension of delegation. it is a redistribution of power

from higher level to lower level.

Importance of delegation

1. Through delegation, a manager is able to divide the work and allocate it to the subordinates. This
helps in reducing his work load so that he can work on important areas such as - planning,
business analysis etc.
 2. With the reduction of load on superior, he can concentrate his energy on important and critical
issues of concern. This way he is able to bring effectiveness in his work as well in the work unit.
This effectivity helps a manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate relationship stands. An
organization functions as the authority flows from top level to bottom. This in fact shows that
through delegation, the superior-subordinate relationship become meaningful. The flow of
authority is from top to bottom which is a way of achieving results.
4. Delegation of authority in a way gives enough room and space to the subordinates to flourish
their abilities and skill. Through delegating powers, the subordinates get a feeling of importance.
They get motivated to work and this motivation provides appropriate results to a concern. Job
satisfaction is an important criterion to bring stability and soundness in the relationship between
superior and subordinates. Delegation also helps in breaking the monotony of the subordinates so
that they can be more creative and efficient.

Importance of decentralization

1.  Develop initiative among subordinates:

Passing of authority at middle and lower level shows the trust and faith of top level in their subordinates
and this trust and faith motivate the employees working at different levels as they are allowed to take
decisions without seeking the approval of superiors.

2. Develop managerial talent for future

Passing of authority at middle and lower level shows the trust and faith of top level in their subordinates
and this trust and faith motivate the employees working at different levels as they are allowed to take
decisions without seeking the approval of superior

In the decentralization managers working at lower and middle level also learn the art of making
decisions. They get the experience of performing activities of top executives and learn to manage the
authority given to them. So decentralization process prepares the managers working at lower and middle
level to perform the task of top level. So, whenever there is vacant job position at top level management,
the managers working at lower or middle level can be promoted. This is how it levels talent for future.
3. Quick decision-making:

In the decentralization process decision-making is not restricted in few hands only but decision-making
power is entrusted to all the managers who are taking actions or performing the activities. This leads to
faster decision because employees who have to perform the activities are allowed to take decision also.

4. Relief to top level management:

In the process of decentralization top level managers are not overburdened with the responsibilities and
authority as they systematically pass the authority and responsibilities at different levels and they
become free to concentrate on core and important issues.

5. Facilitates growth

Decentralization grants more autonomy or freedom to lower level. This helps the subordinates to do the
work in the manner best suited for their department. When each department is doing to their best then
productivity increases and it will generate more revenue which can be used for expansion.

STAFFING

Staffing simply means ‘putting people to job’ or ‘finding the right people for the right job’. It is the
managerial function of filling and keeping filled positions in the organization. It is concerned with
obtaining, utilizing and maintain a satisfactory and satisfied workforce.

Importance of staffing :

1. Obtaining competent personnel- Proper staffing helps in discovering and obtaining competent
personnel for various jobs.
2. Higher performance- Proper staffing ensures higher performance by putting right person on the
right job.
3. Continuous survival and growth- Proper staffing ensures continuous survival and growth of the
enterprise through succession planning for managers.
 4. Optimum utilization of human resources- By avoiding overstaffing, it prevents underutilization
of personnel and high labour costs. At the same time, it avoids disruption of work by indicating
in advance the shortages of personnel.
5. Improves job satisfaction and morale of employees- Proper staffing improves job satisfaction and
morale of employees through objective assessment and fair reward of their contribution.

Staffing process :

1. Estimating manpower requirements- This the first step of the staffing process it means to
estimate the no. of people required and of what type in the organization to fill the various job
positions created while designing the organizational structure.
(a) Workload analysis: It would enable how much work each one of them will perform.
(b) Workforce analysis: It would reveal the number and type of human resources available.
2. Recruitment- The process of researching for prospective employees and stimulating them to
apply for the job in the organization.
3. Selection- It is the process of identifying and choosing the best person out of a number of
prospective candidates for the job.
4. Placement and Orientation- Placement refers to the employees occupying the position or post for
which he/she has been selected. Orientation refers to introduce to his job, colleagues, superior
and subordinates and with the rules and policies of the organization.
5. Training and Development- Training refers to the process by which the attitude, skills and
abilities of employees to him/her. Development refers to the learning opportunities designed to
help employees grow.
6. Performance appraisal- It means evaluating an employee’s current and past performance as
against some predetermined standards. Sometimes reward system can also be implemented.
7. Career planning and promotion- Managers must encourage employees to realize their potential
and to grow.Promotion involves shifting an employee to a higher position carrying higher
responsibilities, facilities, status and pay. Promotion is an integral part of one’s life.
8. Compensation- It refers to all forms of pay or reward given to the employees. There are two
types:
(a) Direct financial payments- Wages, salaries paid annually, monthly or weekly or are paid
according to their performance.
 (b) Indirect payments- Insurance, vacations, schemes like provident fund etc.

Recruitment :

It is the process of researching for prospective employees and stimulating them to apply for the vacant
jobs in the organization. It said to be a positive process as it allows everybody to apply for the job. There
are two sources of recruitment:

(a) Internal recruitment- When people are recruited from within the organization.
For example: Promotion, Transfer
(b) External recruitment- When people are recruited from outside the organization.

 Direct recruitment: A notice with ‘vacancy’ is placed on the factory gate or notice board
in firm. The interested worker can directly approach for working.
 Casual callers: Sometimes many applications may be received for the vacancies. The
unsolicited applications may be considered for future.
 Advertisement: When wider choice is required advertisement in newspaper, television or
trade journal is used.
 Employment exchange: It is the government operated offices where the job seekers and
the job providers can be registered for finding the jobs.
 Placement agencies and consultants: These agencies are operated privately and thus
charges high fees for screening the data to find the perfect match.
 Campus recruitment: Sometimes the firms approach schools and colleges to find fresh
talent as the students may have better ideas for working.
 Web publishing: Now-a-days internet has become a useful way to publish and to recruit
people from various sources.
 Recommendation of employees: Sometimes existing employees recommend for filling
the vacancies. This may help the firm to find the right candidate without wasting time in
checking the reference and background.
 Labour contractors: They are the employees of the firm to bring the workers and get the
work done in their name.
Selection:

After recruitment the next step is selection where we select the most suitable person out of the
candidates who have applied for the job. It is said to be a negative process as it rejects the applicants.

Selection process:

(1) Preliminary screening- It helps the manager to eliminate unqualified or unfit job seekers based
on the information supplied in the application forms. Preliminary interview, it is a small
discussion about the personal details of the candidate to find the misfit candidates and reject
them.
(2) Selection test- Selection test measures aptitude, intelligence, personality etc. of the candidates
who have applied for the job.
(3) Employment interview- This is a formal interview, in-depth conversation conducted to evaluate
the suitability of candidate for the job
(4) Reference and background- This step includes checking of the testimonials provided by the
previous employers, teachers etc for the purpose of verifying information and gaining additional
information about the candidate.
(5) Selection decision- The final selection decision has to be made among the candidates who pass
the above steps.
(6) Medical examination- After selection and before job offer candidate undergo a medical fitness
test.
(7) Job offer- Job offer is through a letter of appointment, which contains the date by which
candidate report on duty.
(8) Contract of employment- After the job offer has been made and candidate accepts the offer,
certain documents need to be executed by the employer and the candidate. One such document is
attestation form; this includes all the vital detail of the candidate.

Training and Development:

Training is the process of increasing knowledge and skills while development is a process of learning
and growth.

Types of training :

(1) On the job method-It refers to the methods that are applied to the workplace, while the employee
is actually working.
(a) Apprenticeship training: It is a method of training in which trainee is kept under the guidance
of master worker for prescribed time period.
(b) Internship: It is the joint program of training in which educational institutions and business
firms cooperate. Even the candidates get payment in the form of stipend.
(2) Off the job method- They are used away from the work place.
(a) Vestibule training- Employees learn their jobs on the equipment they will be using, but the
training is conducted away from the actual work place. Actual work environment are created
in a classroom and employees use the same materials, files and equipment.

DIRECTING

Directing is the managerial function that consists of those activities which are concerned directly with
influencing, guiding or supervising the subordinates in their jobs. Thus directing is performance oriented
and the initiating function of management that actuates plans and the organization.

Features of directing

(1) Directing Initiates Action- Other functions prepare a base or setting of action, i. e., how action
has to be carried on the directing initiate or start action. By giving directions or instructions the
managers get the work started in the organization.

(2) Continuing Function- Directing is a continuous process. A manager cannot just rest after issuing
orders and instructions. He has to continuously guide, supervise and motivate his subordinates.
He must continuously take steps to make sure that orders and instructions are carried out
properly.
 (3) Directing takes place at every level- Directing is a pervasive function as it is performed by
managers at all levels and in all locations. Every manager has to supervise, guide, motivate and
communicate with his subordinate to get things done.

(4) Directing flows from top to bottom- Directions are given by managers to their subordinates.
Every manager can direct his immediate subordinate and take directions from immediate boss.
Directing starts from top level and flows to lower level.

(5) Performance oriented- Directing is a performance oriented function. The main motive of
directing is bringing efficiency in performance. Directing converts plans into performance.
Performance is the essence of directing. Directing functions direct the performance of
individuals towards achievement of organizational goal.

(6) Human Element- Directing function involves study and molding of human behavior. It improves
interpersonal and intergroup relationship. It motivates employees to work with their best ability.

Importance of directing

(1) Initiates actions- It helps in initiating actions of people towards achieving organizational
goals.Actual actions are initiated only when managers direct their subordinates. Thus, directing
function guides and motivates selected employees to commence their work by following the
instructions.

(2) Integrates employees efforts- Directing ensures integration of employees efforts towards
attainment of organizational goals. Directing coordinates and integrates the efforts of employees
working at different levels and in different job positions through supervision. Resultantly,
effectiveness and efficiency follow and the planned results are easily achieved.

(3) Means of motivation- Through motivation and effective leadership, directing helps the
employees to realize their full potential.

(4) Balance in the organization -Directing helps in establishing cooperation and commitment among
the people. Thus it helps to bring stability and balance in the organization. Individual objectives
of employees should not clash with the organizational objectives. Directing function instructs
 guides, supervises and inspires the employees in such a manner that enables them to maintain
balance between individual goals and organizational goals.

(5) Facilitates Changes- To cope up with the changes in the business environment, directing function
guides, initiates and motivates employees in such a manner that helps them to accept the changes
willingly. Thus, changes can be incorporated and implemented through directing.

Elements of directing

(1) Motivation

In simple words, it is “the drive to achieve a goal”. It primarily a mental process, a mental
attitude that incites or produces, a mental attitude that incites or produces physical action leading
to the accomplishment of some practical result. It is indeed the action part of a need-satisfaction
cycle.

The sequence goes something like this:

Needs lead to → Motivation leads to → Action.

These needs are:

1. Basic physiological needs

2. Safety needs

3. Social needs

4. Esteem and self-respect needs

5. Self-Actualization needs

(2) Communication

In simple terms communication means the process of passing information and understanding from
one person to another. Two significant points by this definition are worth noting. First,
 communication always involves two people, a sender and a receiver. The second point is that
effective communication involves both information and understanding.

Flow of Communication:

1. Formal communication

The communication in which the flow of information is already defined is termed as Formal
Communication. The communication follows a hierarchical chain of command which is
established by the organization itself. In general, this type of communication is used exclusively
in the workplace, and the employees are bound to follow it while performing their duties.

2. Informal communication

The communication which does not follow any pre-defined channel for the transmission of
information is known as informal communication. This type of communication moves freely in
all directions, and thus, it is very quick and rapid. In any organization, this type
of communication is very natural as people interact with each other about their professional life,
personal life, and other matter.

(3) Leadership

Leadership has been defined as the process by which an executive or manager directs, guides and
influences the work of others in choosing and attaining specified goals by mediating between the
individual and the organization in such a manner that both will obtain maximum satisfaction.
Leadership involves the way a manager behaves in his man-to-man relationship with his
subordinates.

Types of leadership:

1. Autocratic leadership
 Under the autocratic leadership styles, all decision-making powers are centralized in the leader as
shown such leaders are dictators. Autocratic leadership is an extreme form of transactional
leadership, where a leader exerts high levels of power over his or her employees or team
members. People within the team are given few opportunities for making suggestions, even if
these would be in the team’s or organization’s interest.

2. Democratic leadership

Although a democratic leader will make the final decision, he or she invites other members of
the team to contribute to the decision-making process. This not only increases job satisfaction by
involving employees or team members in what’s going on, but it also helps to develop people’s
skills. Employees and team members feel in control of their own destiny, and so are motivated to
work hard by more than just a financial reward.

3. Laissez Faire

The laissez-faire leadership style is also known as the “hands-off¨ style. It is one in which the
manager provides little or no direction and gives employees as much freedom as possible. All
authority or power is given to the employees and they must determine goals, make decisions, and
resolve problems on their own.

(4) Supervision

Supervision as an element of directing is the process of guiding the efforts of employees and
other resources to accomplish desired objectives. Supervision means a manager overseeing ‘what
is being done’ by his/her subordinates.

CONTROLLING

Controlling can be defined as a managerial function to ensure that activities in an organization

are performed according to the plans. Controlling also ensures efficient and effective use of
organizational resources for achieving the goals. The controlling function compares the actual
 performance with predetermined standards, finds out deviation and attempts to take corrective
measures.

Controlling is one of the important functions of a manager. In order to seek planned results from
the subordinates, a manager needs to exercise effective control over the activities of the
subordinates. In other words, the meaning of controlling function can be defined as ensuring that
activities in an organization are performed as per the plans. Controlling also ensures that an
organization’s resources are being used effectively & efficiently for the achievement of
predetermined goals.

 Controlling is a goal-oriented function.

 It is a primary function of every manager
 Controlling the function of a manager is a pervasive function

Features of Controlling Function

Following are the characteristics of controlling function of management

Controlling is an end function- A function which comes once the performances are made in
conformities with plans.

Controlling is a pervasive function- which means it is performed by managers at all levels and in

all type of concerns.

Controlling is forward looking- because effective control is not possible without past being
controlled. Controlling always look to future so that follow-up can be made whenever required.

Controlling is a dynamic process- since controlling requires taking reviewable methods, changes

have to be made wherever possible.
Controlling is related with planning- Planning and Controlling are two inseparable functions of
management. Without planning, controlling is a meaningless exercise and without controlling,
planning is useless. Planning presupposes controlling and controlling succeeds planning.

Importance of controlling

1. Accomplishing organizational goals-Controlling helps in comparing the actual performances

with the predetermined standards, finding out deviation and taking corrective measures to
ensure that the activities are performed according to plans. Thus, it helps in achieving
organizational goals.

2. Judging accuracy of standards- An efficient control system helps in judging the accuracy of
standards. It further helps in reviewing & revising the standards according to the changes in
the organization and the environment.

3. Making Efficient Use of Resources-Controlling checks the working of employees at each

and every stage of operations. Hence, it ensures effective and efficient use of all resources in
an organization with minimum wastage or spoilage.

4. Improving employee motivation- Employees know the standards against which their
performance will be judged. Systematic evaluation of performance and consequent rewards
in the form of increment, bonus, promotion etc. motivate the employees to put in their best
efforts.

5. Ensuring Order and Discipline- Controlling ensures a close check on the activities of the
employees. Hence, it helps in reducing the dishonest behavior of the employees and in
creating order and discipline in an organization.

6. Facilitating Coordination in Action- Controlling helps in providing a common direction to

the all the activities of different departments and efforts of individuals for attaining the
organizational objectives.
Limitations of controlling

1. No Control on External Factors - An organization fails to have control on external factors like
technological changes, competition, government policies, and changes in taste of consumers etc.

2. Resistance from Employees- Often employees resist the control systems since they consider
them as curbs on their freedom. For example, surveillance through closed circuit television
(CCTV).

3. Costly Affair- Controlling involves a lot of expenditure, time and effort, thus it is a costly affair.
Managers are required to ensure that the cost involved in installing and operating a control
system should not be more than the benefits expected from it.

4. Difficulty in setting quantitative standards- It becomes very difficult to compare the actual
performance with the predetermined standards, if these standards are not expressed in
quantitative terms. This is especially so in areas of job satisfaction, human behavior and
employee morale.

Controlling Process

1. Establishment of standards- Standards are the plans or the targets which have to be achieved in
the course of business function. They can also be called as the criterions for judging the
performance. Standards generally are classified into two-

(a) Measurable or tangible - Those standards which can be measured and expressed are called as
measurable standards. They can be in form of cost, output, expenditure, time, profit, etc.
(b) Non-measurable or intangible- There are standards which cannot be measured monetarily. For
example- performance of a manager, deviation of workers, their attitudes towards a concern.
These are called as intangible standards.
Controlling becomes easy through establishment of these standards because controlling is
exercised on the basis of these standards.
 2. Measurement of performance- The second major step in controlling is to measure the
performance. Finding out deviations becomes easy through measuring the actual performance.
Performance levels are sometimes easy to measure and sometimes difficult. Measurement of
tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative
measurement becomes difficult when performance of manager has to be measured. Performance
of a manager cannot be measured in quantities. It can be measured only by-

a. Attitude of the workers,

b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.

3. Comparison of actual and standard performance- Comparison of actual performance with the
planned targets is very important. Deviation can be defined as the gap between actual
performance and the planned targets. The manager has to find out two things here- extent of
deviation and cause of deviation. Extent of deviation means that the manager has to find out
whether the deviation is positive or negative or whether the actual performance is in conformity
with the planned performance. The managers have to exercise control by exception. He has to
find out those deviations which are critical and important for business. Minor deviations have to
be ignored. Major deviations like replacement of machinery, appointment of workers, quality of
raw material, rate of profits, etc. should be looked upon consciously. Therefore it is said, “ If a
manager controls everything, he ends up controlling nothing.” For example, if stationery
charges increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand,
if monthly production decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led to deviation.
The causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the manager has
to detect those errors and take remedial measures for it. There are two alternatives here-

(a) Taking corrective measures for deviations which have occurred; and
(b) After taking the corrective measures, if the actual performance is not in conformity with plans,
the manager can revise the targets. It is here the controlling process comes to an end. Follow up
is an important step because it is only through taking corrective measures, a manager can
exercise controlling.