Module 7 To Module 10 Pom

Module VII
Directing
Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 1

• Direction is the process of instructing, guiding,
counseling, motivating, and leading the
human resources to achieve organizational
objectives.
• “Direction consists of the process and

techniques utilized in issuing instruction and
making certain that operations are carried out
as planned.” – Theo Haimann

Leadership – Meaning and
Characteristics
• Leadership is interpersonal influence, exercised in
a situation, and directed, through the
communication process, toward the attainment
of a specified goal or goals. (Tannenbaum,
Weschler & Massarik)
• Leadership is an influence process that enable

managers to get their people to do willingly what
must be done, do well what ought to be
done.(Cribbin, J.J.)
Characteristics of Successful and
Effective Leadership
• Early theorists - Among personality traits that
they found were determination, emotional
stability, diplomacy, self-confidence, personal
integrity, originality, and creativity.
• Intellectual abilities included judgmental ability,
knowledge, and verbal communication ability.
• In addition, physical traits cannot be ignored,
such as age, height, weight, and physical
attractiveness.
• Successful leaders mobilize all possible means
and human resources; they inspire all
members of the organization to support the
new mission and execute it with enthusiasm
• Situations make leaders!

Leadership Styles
• Authoritative
• Democratic
• Free-Rein
• Likert’s Leadership Style
• Narcissistic Leadership

Authoritative Leadership
• This style is used when leaders tell their
employees what they want done and how they
want it accomplished, without getting the advice
of their followers.
• Some of the appropriate conditions to use it are
When one has all the information to solve the
problem,
One is short on time, and
One’s employees are well motivated.

• Authoritative Leadership is also called
Autocratic Leadership.
• Should be rarely used

Democratic Leadership
• This style involves the leader including one or more
employees in the decision making process (determining
what to do and how to do it). However, the leader
maintains the final decision making authority.
• This is normally used when one has part of the information,
and ones employees have other parts. A leader is not
expected to know everything -- this is why one employs
knowledgeable and skillful employees.
• Using this style is of mutual benefit -- it allows them to
become part of the team and allows one to make better
decisions.

Free-rein/Delegative/Laissez Faire
• The leader allows the employees to make the
decisions. However, the leader is still responsible for
the decisions that are made. This is used when
employees are able to analyze the situation and
determine what needs to be done and how to do it.
• One cannot do everything! One must set priorities and
delegate certain tasks. This is not a style to use so that
one can blame others when things go wrong, rather
this is a style to be used when one fully trust and
confidence in the people below.
• This style is used wisely.

Even if leaders have their own chief styles of
leading, they must employ all three as per the
demand of the situation.

Likert’s Leadership Style

Exploitative Authoritative Leadership
• manager has no confidence or trust in subordinates. Subordinates feel no freedom to discuss
things about the job with their superior.
• In solving job problems, manager seldom gets ideas and opinions of subordinates.
Benevolent Authoritative Leadership
• manager has condescending confidence and trust in subordinates, motivates with rewards
and some punishments, permits some upward communication, solicits some ideas and
opinions from subordinates and allows some delegation of decision making but with close
policy control.
Consultative Leadership
• Manager has substantial but not complete confidence and trust in subordinates but still
wishes to keep control of decisions.
• Subordinates feel free to discuss things about the job with their superior. The manager gets
ideas and opinions and tries to make constructive use of them
Participative Leadership
• manager has complete confidence and trust in subordinates and allows them a direct equal
participation in decision making.
• Subordinates also feel completely free to discuss things about the job with their superior. The
manager always asks subordinates for their ideas and opinions and makes constructive use of
them.

Implications of the Four Leadership
Styles
• Likert found style 3 and 4 as high producing
while styling 1 and 2 as low producing.
• Likert also suggested extensive and intensive
leadership training at all levels of
management to move into style-4 as early as
possible.
• Classification can be used to identify
leadership style is suitable for which types of
organization in a scientific method.

Narcissistic Leadership
"Extreme selfishness,
with a grandiose view of
one's own talents and a
craving for admiration,
as characterizing a
personality type."
(Oxford English
Dictionary)

• Concerned only with their own self-actualization,
social standing and place in the world – they are
self-absorbed and take actions to improve these
factors, even if it’s at the expense of other
people.
• Narcissistic leaders will surround themselves with
co-dependents who are used to help the
narcissist achieve his or her agenda.
• Without these ‘cronies’ there may be too much
organisational oversight for narcissistic leaders to
be able to push forward with their own agenda.

Types of Narcissists
• healthy narcissists and destructive narcissists –
whether they merely enjoy power to a greater
extent than the average individual or whether
they crave power so badly that everything
they do is geared towards acquiring more of
it.

Characteristics of Narcissistic Leaders
• Prone to grandiose, unrealistic visions and over-estimating
their wisdom and judgement - so they may take foolish risks.
• Unusually sensitive to criticism and liable to fly into a rage -

which makes it hard and risky to disagree with them or tell
them bad news. It can also make them slow to learn.
• Lacking in empathy - and because narcissistic leaders are

often very 'street-wise', followers may be exploited with no
care for consequences.

Characteristics of Narcissistic Leaders
• Likely to gather a bunch of 'yes-men' around
them, which can lead to poor decisions.
• Distrustful and so keen to win that they can

create an atmosphere of infighting, suspicion
and intense internal competition, making
teamwork harder.

Additional Reading on Narcissistic
Leadership
• https://www.youtube.com/watch?v=arJLy3hX1E8
• Harvard Business Review Article (Michael Maccoby, Jan 2004)

- https://hbr.org/2004/01/narcissistic-leaders-
the-incredible-pros-the-inevitable-cons
• https://www.forbes.com/sites/ericjackson/20
13/09/16/the-top-25-most-narcissistic-ceos-
in-tech/#66e2a8a568a7 Forbes (Eric Jackson,
Sep 2013)
Mindful Leadership
• https://hbr.org/2012/10/mindfulness-helps-you-
become-a
• https://www.forbes.com/sites/hennainam/2019/
06/25/the-seven-practices-of-mindful-
leaders/?sh=45d03c42715a
• Mindfulness can be described as a ‘present-
focused consciousness’ (Hyland, Lee & Mills,
2015). In other words, a mindful individual is not
ruminating about the past or worrying about the
future; they are simply “being” in the here and
now.

Mindful Leadership
• A mindful leader embodies leadership
presence by cultivating focus, clarity,
creativity, and compassion in the services of
others.
• Leadership presence is a tangible quality. It
requires full and complete nonjudgmental
attention in the present moment. Those
around a mindful leader see and feel that
presence.

Mindful Leadership
• https://www.youtube.com/watch?v=lVQ2Mp4
iOGc

Servant Leadership
• Robert K. Greenleaf first coined the phrase "servant leadership" in
his 1970 essay, "The Servant as a Leader.“
• Characteristics of Servant Leaders
 Listening.
 Empathy.
 Healing.
 Awareness.
 Persuasion.
 Conceptualization.
 Foresight.
 Stewardship.
 Commitment to the growth of people.
 Building community.

Servant Leadership
• https://www.forbes.com/sites/forbescoachesc
ouncil/2020/03/11/traditional-leadership-vs-
servant-leadership/?sh=5289189e451e
• https://www.youtube.com/watch?v=ctZHSa4
Qhd4
• https://www.youtube.com/watch?v=RC9OwLL
W5HQ
Transactional and Transformational
Leaders
• A great leader is remembered for his or her charisma,
which means "divinely inspired gift" in Greek.
Charismatic leaders have profound effects on
followers.
• Through their exceptional inspirational and verbal

ability, they articulate ideological goals and missions,
communicate to followers with passion and inspiration,
set an example in their own behaviors, and demand
hard work and commitment from followers, above and
beyond normal expectation.

Transactional and Transformational
Leaders
• Building on charismatic leadership, Bernard Bass (1985) proposed a
theory of transformational leadership.
• Bass views leadership as a process of social exchange between a

leader and his or her followers. In exchange for desired behaviors
and task accomplishment, a leader provides rewards to followers.
• This nominal social exchange process is called transactional

leadership.
• In contrast, a transformational leader places a higher level of trust

in his or her followers and demands a much higher level of loyalty
and performance beyond normal expectations.

Constituents of Transformational
Leadership
• Individualized Consideration
• Intellectual Stimulation
• Inspirational Motivation
• Role and Identification Model

Implications
Yuki –
1. Develop a challenging and attractive vision

such that employees feel a sense of
ownership of the vision.
2. Develop an appropriate strategy for the
vision.
3. Realize the vision by implementing the
strategy through well planned steps.
Motivation – Meaning and Process
• The word motivation was derived from the Latin word
movere (meaning ‘to move’).
• "Motivation is a decision-making process, through which

the individual chooses the desired outcomes and sets in
motion the behaviour appropriate to them".
- Buchanan
• “Motivation is the complex of forces starting and keeping a

person at work in an organization. Motivation is something
that moves the person to action and continues him in the
course of action already initiated.”

Basic Motivational Process

Simpler Version of Motivational
Process

Needs: - The best one word definition of needs is ‘deficiency’. In the homeostatic
sense, needs are created whenever there is a physiological or psychological imbalance.
• For example a need exists when a cell in the body is deprived of food and water or
the human personality is deprived of other persons who serve as friends or
companions. (hunger, thirst and company)
Drives: - With a few exceptions, drives or motives (These two terms shall be used
interchangeably), are set-up to alleviate needs. A drive can be simply defined as a
deficiency with direction.
• Drives are action oriented and provide an energizing thrust toward goal
accomplishment. They are at the very heart of the motivational process. The
examples of the needs for food and water are translated into hunger and thirst
drives and the need for friends becomes a drive for affiliation.
Goals: - At the end of motivation cycle is the goal. A goal in the motivation cycle can
be defined as anything that will alleviate a need and reduce it to the drive.
• Thus attaining a goal tends to restore physiological and psychological balance and
will reduce or cut-off the drive.

Nature of Motivation
According to Arnold, there are 3 components of
motivation:
● direction – what a person is trying to do
● effort – how hard a person is trying
● persistence – how long a person keeps on

trying
Theories of Motivation
• Maslow’s Hierarchy of Needs
• McGregor’s Theory X and Theory Y
• McClelland’s Needs Theory of Motivation
• Herzberg’s Motivation Hygiene Theory

Maslow’s Hierarchy of Needs
Assumptions of Maslow’s Theory:
• Man is wanting being – he always wants. When one need is

satisfied, another arises. This process is unending; it continues from
birth to death.
• Man’s behaviour is motivated by unsatisfied needs. The need which

is satisfied no longer serves as a motivator of behaviour.
• Man's needs are arranged in a hierarchy of importance. As soon as

needs at the lower level of hierarchy are satisfied, those at the
higher level emerge and start demanding satisfaction

Advantages of this theory
1. Maslow’s work was originally published in

1943 and it is still regarded as one of the crucial
work in the area of motivation.
2. Several theories later have been based on

Maslow’s hierarchy of needs.
3. It clearly identified a way to classify basic

human needs.
Limitations/Criticism of the theory
1. People do not necessarily go step-by-step in perceiving needs.
2. There is no guarantee of how much time would elapse within and between need categories.
3. People may jump to higher order needs without fulfilling lower order needs.
4. People may never go beyond satisfying lower order needs.
5. Several needs may be felt at the same time by an individual.
6. Some needs may get ‘destroyed’. E.g. a physically/emotionally abusive childhood may totally kill the
need for love in a person forever.
7. Cause-effect relationship between need and behaviour cannot always be justified by this theory.
8. Maslow viewed satisfaction as the main motivational outcome of behaviour. But at workplaces,
satisfaction does not always lead to improved work performance.
Suresh an MBA from DAVV began his career with a bank at an
entry level position. Two years later, he joined HUL as a sales
manager. His new job gave him stability, and he soon
purchased a house on loan.
He got married and began a family. He switched from a two-
wheeler to a car when his son was born. He is very active
member of his community and attends laughter and health
camps every Friday evening in the local park. Now he has
started his own firm making and marketing herbal cosmetics,
believing that soil is best.
He is now testing soil based cleansers and shampoos, and
wants to continue in the business, thinking the potential is
tremendous, and he has found his calling. Identify the needs
he has experienced as per Maslow’s Hierarchy of Needs.

McGregor Theory X and Theory Y
• Douglas McGregor was a social psychologist
and he proposed the Theory X and Theory Y.
• This theory had a set of assumptions and

generalizations relating to human behaviour
and his nature.

Theory X
1. Management is responsible for organizing the elements of productive enterprises – money,
materials, equipment, people – in the interest of economic ends (e.g. profit).
2. With respect to people, this is a process of directing their efforts, motivating them, controlling
them, modifying their behaviour in interest of the organization.
3. People must be persuaded, rewarded, punished, controlled and directed.
4. By very nature, man is indolent (that is, works as little as possible).
5. Man lacks ambition, desire to work, dislikes responsibility and likes to be led.
6. Man is inherently self-centred (selfish).
7. Man is inherently resistant to change.
8. Man is gullible and not very bright.
These assumptions are very negativeDr.and the

Shilpa last five
Sankpal/ are
SVKM's directly
NMIMS, about the human nature.
Indore 44
Theory Y
The average human being does not dislike work.
2. Man will exercise self-direction and self-control in the service of objectives to which he is
committed.
3. Commitment to objectives is a function of the rewards that are associated with their
achievement.
4. Avoidance of responsibility, lack of ambition and emphasis on security are generally results
of experiences rather than inherent human nature.
5. Capacity to exercise imagination and ingenuity are widely spread in the organization.
6. Under the conditions of modern industrial life, capabilities and potential of people are only
partially utilized.
These assumptions are very positive and relate to a positive association between management
and employees.
Comparison of Theory X and Theory Y
1. Theory X assumes human beings dislike work but Theory Y assumes work as natural as play for
people.
2. Theory X believes people have no ambition but Theory Y rejects that assumption.
3. Theory X does not acknowledge creativity in people, but Theory Y does.
4. Theory X assumes people to have low self-motivation and are in utter need of external control but
Theory Y believes that people are self-guided.
5. In Theory X, lower order needs are given more importance but in Theory Y higher order needs are
given more importance.
6. Theory X promotes scalar chain and centralization while Theory Y assumes delegation and increased
participation.
7. Theory X emphasises autocratic leadership while Theory Y emphasises supportive/participative

leadership.
Implications and Applications of this
Theory
1. Initially when the concept of economic man was prevalent, Theory X was
used to justify it.
2. The evolution of management thought has brought about shift in

managerial practices as well as concept of people as employees.
3. If Theory Y holds true, an organization can apply these principles of

scientific management to improve employee motivation:
• Decentralization and Delegation - If firms decentralize control and reduce

the number of levels of management, managers will have more
subordinates and consequently will be forced to delegate some
responsibility and decision making to them.
• Job Enlargement - Broadening the scope of an employee's job adds variety

and opportunities to satisfy ego needs.

Implications and Applications of this
Theory
 Participative Management - Consulting employees in the
decision making process taps their creative capacity and
provides them with some control over their work
environment.
 Performance Appraisals - Having the employee set
objectives and participate in the process of evaluating
how well they were met.
• If properly implemented, such an environment would
result in a high level of workforce motivation as
employees work to satisfy their higher level personal
needs through their jobs.
• Leadership Style
McClelland Needs Theory of
Motivation
• Proposed by a psychologist David McClelland, who believed
that the specific needs of the individual are acquired over a
period of time and gets molded with one’s experience of
the life.
• Need for Power (n-pow): Power is the ability to induce or

influence the behavior of others. The people with high
power needs seek high-level positions in the organization,
so as to exercise influence and control over others.
• Generally, they are outspoken, forceful, demanding,

practical/realistic-not sentimental, and like to get involved
in the conversations.

• Need for Affiliation (n-aff): People with high need for affiliation derive pleasure from being
loved by all and tend to avoid the pain of being rejected. Since, the human beings are social
animals, they like to interact and be with others where they feel, people accept them. Thus,
people with these needs like to maintain the pleasant social relationships, enjoy the sense of
intimacy and like to help and console others at the time of trouble.
• Need for Achievement (n-ach): McClelland found that some people have an intense desire
to achieve. He has identified the following characteristics of high achievers:
 High achievers take the moderate risks, i.e. a calculated risk while performing the activities in
the management context. This is opposite to the belief that high achievers take high risk.
 High achievers seek to obtain the immediate feedback for the work done by them, so as to
know their progress towards the goal.
 Once the goal is set, the high achiever puts himself completely into the job, until it gets
completed successfully. He will not be satisfied until he has given his 100% in the task
assigned to him.
 A person with a high need for achievement accomplishes the task that is intrinsically
satisfying and is not necessarily accompanied by the material rewards. Though he wants to
earn money, but satisfaction in the accomplishment of work itself gives him more pleasure
than merely the cash reward.

Herzberg’s Motivation Hygiene Theory
“The opposite of dissatisfaction is not satisfaction
but, simply no dissatisfaction”.
• Frederick Herzberg (1923 - 2000) used the Critical

Incident Method to collect data through
interviews from 203 Engineers and Accountants
in Pittsburgh, USA. The findings indicated that
there were essentially two different sets of
factors responsible for affecting motivation and
work.
Herzberg’s Motivation Hygiene Theory
HERZBERG’S TWO FACTORS
HYGIENE / MOTIVATORS / GROWTH

MAINTENANCE FACTORS FACTORS

Hygiene/ Maintenance Factors 
• These factors serve to prevent dissatisfaction.
• They produce no growth in a worker’s output but only contribute towards preventing
losses in the worker’s performance.
• Ten elements: Company policy and administration, technical supervision,
interpersonal relationships with supervisors, interpersonal relationships with peers,
interpersonal relationships with subordinates, salary, working conditions etc.
Motivators/Growth Factors 
• These factors are those which, if present, serve to motivate the person to superior
performance and efforts.
• They are related to job content of the work itself.
• The strength of these factors will affect feelings of satisfaction or no satisfaction but
not dissatisfaction.
• Six elements: achievement, recognition, work itself, advancement, possibility of
growth and responsibility etc.
• Motivation is dependent upon the individual himself as well.

Implications of the Two-factor theory
• It extended Maslow’s hierarchy of needs and
is more directly applicable to work settings.
• It indicates that it is more likely that good
performance leads to job satisfaction and not
the opposite.
• The theory is hotly debated. Vroom said that
the two-factor theory was only one of many
conclusions that could have been drawn from
the research.

Criticism of the theory
1. It had limited applications, especially only on
‘manual’ workers.
2. It carried all the limitations that are

associated with the method of data collection
(that is critical incident method).

Motivational Tools and Techniques
• Money!
• Rewards (Intrinsic such as pride of
workmanship and Extrinsic such as praise,
promotion, certificates)
• Participation
• Character and Capacity
• Content of Communication
• Quality of Work Life
• Having Volunteers on the Project Team
• Shared Vision
• Shared Values
• Leading by Example
• Empowering team members to make full use
of their intelligence
• Encouraging the Heart

• Celebrating Accomplishments
• Increasing visibility of team efforts
• Developing Self-Directed Work Teams
• Showing Confidence
• Appropriate and Realistic Goals
• Speed
• Egalitarian Philosophy
• Holistic View

Module VIII
Coordination

Coordination – Meaning
• Mooney and Riley – Coordination is the orderly
arrangement of group efforts to provide unity of
action in the pursuit of common goals.
• Brech: It is the balancing and keeping together

the team by ensuring suitable allocation of tasks
to its various members and seeing that the tasks
are performed with the harmony amongst the
members themselves.
Need for Coordination
• The lifeline of management; needed everywhere
• No organizational task can be completed in isolation, hence
synchronization always needed
• People’s efforts don’t always blend together, unless
someone makes it so.
• Absence of coordination increases conflict.
• Organizations today are growing – multiple products,
multiples factories, increasing distribution, entering
different countries.
• People have different personalities, their own beliefs and
values may not always match the organization’s.
Coordination ensures smooth functioning of the
organization.

Need for Coordination
• Because units of the organization are
interdependent.
Pooled Interdependence Sequential Reciprocal
Interdependence Interdependence
Two or more independent One unit must act before Input of one unit becomes
units share from a the next can. output of others and vice
common pool of resources versa.
e.g. library in a college e.g. packing unit cannot e.g. production
work till product is finished department and
maintenance department;
one’s output is smooth
functioning for the other.

Types of Coordination

Other Types of Coordination
• Procedural Coordination – general description of
the behaviour and relationship of the members
of the organization. It establishes the line of
authority.
• Substantive Coordination – content of the

organization’s activities.
E.g. Organizational Chart is a kind of procedural
coordination, but how a product will be assembled
will be a case of substantive coordination.
Techniques of Coordination

Approaches/Techniques of
Coordination
Employing Basic Increasing Coordination Reducing Need for
Coordination Techniques Potential Coordination
Rules, Procedures and Direct Contact Autonomous Work Teams
Policies and Matrix Organizational
Structure.
Planning Task Force
Hierarchy Committees
Induction
Indoctrination
Incentives
Liaison Department
Workflow

Difficulty in Coordination
Lawrence and Lorsch –
• Differences in orientation towards particular
goals
• Differences in time orientation
• Differences in interpersonal orientation
• Differences in Formality of Structure

Video Resource on Coordination
• https://www.youtube.com/watch?v=5FH6Epn
fRag
• https://www.youtube.com/watch?v=6fbE52Y
DEjU (teamwork)

Module IX
Controlling

Controlling – Meaning
• Controlling is the measurement of and
correction of performance in order to make
sure that the enterprise objectives and the
plans devised to attain them are
accomplished.
• Controls are aimed at identifying and bridging

the gap between the actual and desired
results.

Feedback Loop of Management
Control

Relationship of Control with other
Functions

Characteristics of Effective Control
Systems
• Establishing Right Standards
• Guide for Measurement
• Realistic and Flexible
• Preventive
• Cost Effective
• Clarity of Responsibility for Delivery
• Reflecting Organizational Pattern
• Timeliness
• Ease of Understanding
• Forward Looking
• Based on Facts
• Emphasis on Exceptions
• Motivating

Importance of Controlling
• Bringing Focus
• Ensuring Consistency in Organizational Activities
• Enabling Organizational Effectiveness and
Efficiency
• Providing Feedback on the Project Status
• Aid in decision making
• Maintaining Discipline
• Input for Future Planning

Control Process

Another Representation of Control
Process

Step I – Establishment of Performance
Standards
• Standards are the criteria for performance
• Standards are the yardstick against which performance is checked
for any variance.
• They are pre-determined.
• Mainly provided by the objectives of the firm.
• Also provided by division, department, section and individuals plus
strategies, policies, rules, procedures, budgets etc.
Types of Standards
• Tangible Objectives are Objective and can include Cost Standards,
Revenue Standards, Capital Standards, Programme Standards etc.

• Intangible Objectives are Subjective and in certain departments it is
difficult to set standards in quantitative terms. E.g. PR department.
Here, the standards are set on the basis of perception of the
deciding executives. Proxy variables are commonly used for
measurement. E.g. Morale can be judged by Absenteeism,
Grievances etc.
• Principles of Establishing Standards:

• Standards should be set for all employees.
• Standards should be set for all strategic activities.
• Standards should be related to responsibility centres {Expense
(Research and Development, Personnel); Profit (Man-hour to
output); Investment (acquisition, use and disposal of fixed assets)}

Step II – Measurement of
Performance against Standards
• Performance should be measured against the criteria laid down in
the standards.
• There can be several sources of information for performance
measurement besides accounting data.
• Qualitative data must also be given importance.
Several methods can be used as supplements for collecting data on

performance -
• Sampling Technique
• Quality Control
• Personal Observation and Informal Discussion
• Qualitative Assessment
Provides Flexibility in observation

• Predictive Measure
Can assess likely measures of performance
• Cash flow statement, absenteeism, grievance rate
etc
• Reports and Summaries
Useful with personal observation
Serves the purpose of documentation
• System of Prior Approval
Step III – Identification of Deviations
and Analysis of Causes
• Comparison of Actual performance with the

standards leads to identification of deviations.
• All deviations may not warrant action.
• “Zone of Indifference” – When the deviation is
insignificant or can be ignored.

Step IV – Corrective Action
• Post-identification of causes, there may be changes made in several aspects.
• Corrective actions can include:

i. Training,
ii. Retrenchment,
iii. Transfers,
iv. Adjustments in authority-responsibility relationships and interaction pattern,
v. Equipment replacement,
vi. Changes in vendor – sources and/or specification, Improving machine maintenance
etc.
• Finally, it must be remembered that all steps of the Control process are
interdependent and changes in one aspect will lead to changes in other aspects as
well.

Techniques of Controlling
• Managers commonly use five major control
systems to ensure that the actual
performance meets organizational goals and
objectives.
Organizational Control Systems
Budgetary Financial Quality Inventory Operations

Control Control Control Control Control

Budgetary Control
• Numerical plan for any activity; states anticipated results
and likely investments, either in financial or non-financial
numerical terms for a specified future period.
Methods to Develop Budgets –

• Top-down Budgeting: set by superior, given to subordinates
• Bottom-up Budgeting: potential revenues and expenses
estimated by subordinates; adjusted by superiors.
• Zero-Base Budgeting: past data not taken; every budget is
fresh.
• Flexible Budgeting: volatile external environment; set for
optimistic, realistic and pessimistic scenario.

Budgetary Control
Types of Budgets –
• Revenue and Expense Budget: forecasting of sales
figures; cost estimates to produce that volume;
can be broken down to operating expenses.
• Time, Space, Material or Product Budget:
expressed in non-financial terms but can be
converted to financial terms.
• Capital Expenditure Budget: outlays of
investments on plant, machinery and equipment.
• Cash or Financial Budget: forecasted cash receipts
and disbursement.
Financial Control
• Crucial to survival and growth of a business organization.
Financial Statements:
Income Statement – outcome of organization’s operations
over a period of time such as revenues, expenses and profit or
loss.
Balance Sheet – what the organization is worth (assets),
extent to which they were financed through debt (liabilities)
and owner’s investment.
Cash Flow – Movement of Cash to and from the organization
as well as the availability of cash in the organization at
different times. It helps to manage the cash position of the
firm.

Financial Control
Ratio Analysis
Classification of Ratios
Profitability Ratios Debt Ratios Activity Ratios Liquidity Ratios
Organisation’s ability to generate Organization’s Organization’s efficiency in Organization’s ability to
profits over a period of time ability to repay its operations and use of generate cash in a short
debts assets span of time
Gross Profit Ratio Debt-Equity Ratio Inventory Turnover Current Ratio
Ratio
Net Profit Ratio Equity Ratio Debtors Turnover Ratio Quick Ratio
Operating Ratio Fixed Assets to Creditors Turnover
Net Worth Ratio Ratio
Operating Profit Ratio Interest Coverage
Ratio
Earnings Per Share
Returns on Shareholder’s
Investment

Inventory Control
• Attaining higher efficiency and operational
productivity in material management of an
organization.
• Applied to raw material, work in progress and
finished goods.
• Practices/Tools for Inventory Control –
A. Just in Time – maintain zero or minimum level of
inventory by synchronizing supply with suppliers to
cut down holding time. JIT uses multiple
techniques.
Inventory Control
These techniques in JIT include –
Standardization of Processes
Total Productive Maintenance
Kanban – A card signalling system that
regulates inventory between the process steps
by ensuring that workstations on production-
lines produce only to card-orders from the
internal consumers.

Inventory Control
B. Radio Frequency Identification and Detection –
Electronic chips pasted on every product in the supply
chain so that its movement is automatically monitored
from the moment it leaves the producer’s works till it
reaches the customer; allows assessment of stocking
pattern.
C. ABC Analysis – Classify overall inventory into categories

based on their values. A category is high value, low
quantity; C is high quantity, low value and B falls in
between. ABC Analysis wants that more attention be paid
to A category items over the other categories

Inventory Control
D. Economic Order Quantity -

Operational Control
• Evaluate the performance of the organization as a
whole and also of its different divisions and
departments.
• It is meant to ensure –
 Products and services are produced at the
required time.
 Cost incurred to produce a good or service is
optimum and as per budget.
 The desired level of quality is obtained.

Operational Control
Types of Operational Control –
• Productivity – ratio of output to input with due
consideration to quality. It can be increased by
1. Increasing output with the same input.
2. Decreasing the input but maintaining the
output.
3. Increasing output and decreasing input to
maintain a favourable ratio, and not letting the
quality suffer.

Operational Control
• Lean Manufacturing: philosophy to manufacture the goods or services
with lean organization structure, and using least amount of resources.
Essence of Lean Manufacturing –
 Producing with as few people as possible.

 Using as little inventory as possible.
 Producing as little wastage as possible.
 Ensuring that each production stage processes exactly as much as the
next stage wants and exactly when it wants that.
 Reducing order-to-shipment times.
 Reducing or eliminating non-value-adding activities.
 Flexibility to create variety in products without too much change-over
costs.

Operational Control
 Integrate in every facet of the organization – sourcing,
manufacturing, marketing, strategic planning etc
 Creating a people, process or technology environment in
which lean manufacturing philosophy can be implemented.
 Categorization of suppliers as self-certified and non-
certified suppliers.
 Providing continuous training to vendors and employees to
fit in with the lean manufacturing system.
 Self-inspection and doing away with quality supervisors and
making workers responsible for quality management.

Quality Control
• American Society for Quality Control defines quality as the totality of features
and characteristics of a product or service that bear on its ability to satisfy the
stated or implied needs.
• Dimensions of Quality
 Performance
 Features
 Reliability
 Conformance
 Durability
 Serviceability
 Aesthetics
 Perceived Quality
Quality Control
TQM Tools –
• Value Added Analysis

Value added analysis is the comprehensive evaluation of all work
activities, material flows and paperwork to determine the value that
they add for customers.
• Benchmarking
Benchmarking is the process of learning how other firms do things in
an exceptionally high quality manner.
• Outsourcing
Subcontracting services and operations to other firms that can
perform it in a cheaper and better manner is outsourcing.
Quality Control
• Reducing Cycle Times
Cycle time indicates the time needed by the organization to accomplish
activities such as developing, making and distributing products and
services.
• ISO 9000:2000 / ISO 14000
ISO 9000:2000 are a set of quality standards created by the International
Organization for Standardization and revised in 2000.
ISO 14000 is a set of standards for environmental performance.
• Six Sigma
Six Sigma is specifically applied to improve the processes of an
organization. To achieve Six Sigma, a process must not produce more
than 3.4 defects per million opportunities.

Other Special Measures of Control
• Special Studies and Analysis –focused projects
• Internal and External Audits – measure strengths and
weaknesses
• Marketing Control – converting divisions to profit,
centres; product reviews
• Human Resource Control
 Performance Appraisal – assess performance regularly
 Human Resource Ratio – absenteeism, turnover etc
• Management by Exception – serious deviations are
identified
• Critical Point Control – maintain those points where
success is critical

PRINCIPLES OF CONTROLLING
Controls should be:
1. Based on objectives and plans

2. Understandable
3. Flexible
4. Economical
5. Established at strategic points
6. Timely
7. Objective
8. Adjusted to individual differences
9. Linked to positions within the company
10. Related to organization design
11. Aimed at corrective action
12. Reviewed periodically

Case Study
Auditors submitted report for Maretryne Ltd to the MD. Maretryne was involved in
new construction work at Salem, and the audit showed that most electrical designs
for new construction were carried out at the headquarters of the company
(Mumbai) by a project manager.
In preparing the budget, for a new project, the manager checked expenses for
similar jobs finished in the past, and then simply multiplied and adjusted them
with current figures. It had been found that during the last three years, several
budgets were overestimated. The project manager submitted his budget to the
Expenditure Control Committee composed of high-level managers.
These managers mostly approved budgets as submitted. Also, the chief auditor felt
that project team tended to expand the time needed to complete the task
whenever the members thought the budget made it possible. In other words, they
adjusted their productivity to match the money allocated to the project. There
were certain parts in the project where a competing contractor could get a job
done for twenty percent less. The MD was reading the report to identify how the
controlling could improve.
Case Study
Questions –
1. What do you think of the budgeting process?
2. Do you think that budgeting needs to be re-
assessed?

Module X
Organizational Change

Need for Planned Change
• https://www.youtube.com/watch?v=T0Z73Zbtlyg
• Change is linked with changing customer needs,

designing new technologies for meeting customer
needs and evolving new managerial practices.
• Change Management refers to the process by
which an individual or and organization
implements change or responds to change in
their environment.
Types of Organizational Change
Strategic Change Structural Change People-centered Change
Affects the core of the Affects structural design of Affects skill sets and
business; changes in vision, the company, systems of performance; requires
mission, goals, objectives working, functional areas, manpower planning and
and strategies among technologies; introduction training
others of new policies and
procedures.
e.g. A company that has e.g. A company that has e.g. A company that was
been making soft drinks, been using departmental using manual help for
enters the packaged good line organization structure packaging for finished
category for the first time, adopts product based goods, is now using a
departmentation computerised system to
pack the finished goods.

Factors responsible for Change
Sr. No Factors Component Factors

1 External Factors Changes in Market Conditions
Technological Changes
Social Changes
Political and Legal Changes
Trans-National Corporations
2 Internal Factors Changes in Managerial Personnel

Weaknesses in the Organization

Factors affecting Successful
Management of Change
• Institutional Factors
Organizational Culture
Support for Change
Nature of Business
• Nature of Change
• People Involved
Extent of understanding of the short term and long term
impact of change
Degree of acceptance
Readiness of people
Personality and education level

Resistance to Change
• Inertia
• Cultural Lock-In
(https://www.youtube.com/watch?v=wHd43Exw
UQk)
• Fear of the Unknown
• Clash of Personal and Organizational Interests
• Human Relationships
• Perception
• Awareness
• Interdependence
Strategies to reduce Resistance to
Change
• Awareness and Communication
• Training and Development
• Participation
• Facilitation and Support
• Negotiation

Process of Change (Lewin’s Three Step
Process)

White-Water Rapids Metaphor
• “Calm waters” metaphor envisions the organization as
a large ship crossing a calm sea and experiencing an
occasional storm.
• This metaphor is best illustrated by Kurt Lewin’s three-
step description of the change process. According to
Lewin, successful change requires unfreezing the status
quo, changing to a new state, and then refreezing the
new change to make it permanent.
• This three-step process treats change as a break in the
organization’s equilibrium state. The status quo has
been disturbed, and change is necessary to establish a
new equilibrium state.

• The alternative metaphor is the “white-water rapids”
metaphor. In this metaphor the organization is seen as a
small raft navigating a raging river with uninterrupted white-
water rapids.
• Thus change is a natural state and managing change is a
continual process. It takes into consideration that
environments are both uncertain and dynamic.
• Since managers face constant change, bordering on chaos, the
stability and predictability of the calm waters does not exist,
disruptions in the status quo are usually continual and
permanent rather than occasional and temporary, and there is
not a return to calm waters.
• Most organizations can ill-afford to treat change as an
occasional disturbance in a peaceful business world.
• Managers have to be
change agents!

Video Resources on Change
Management
• https://www.youtube.com/watch?v=ZYagV9a
omiU (Resistance to Change)

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Module VII

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 1

• “Direction consists of the process and

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 2

• Leadership is an influence process that enable

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 5

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 6

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 7

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 8

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 9

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 10

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 11

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 12

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 13

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 14

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 15

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 16

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 17

• Unusually sensitive to criticism and liable to fly into a rage -

• Lacking in empathy - and because narcissistic leaders are

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 18

• Distrustful and so keen to win that they can

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 19

• Harvard Business Review Article (Michael Maccoby, Jan 2004)

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 22

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 23

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 24

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 25

• Through their exceptional inspirational and verbal

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 27

• Bass views leadership as a process of social exchange between a

• This nominal social exchange process is called transactional

• In contrast, a transformational leader places a higher level of trust

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 28

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 30

1. Develop a challenging and attractive vision

• "Motivation is a decision-making process, through which

• “Motivation is the complex of forces starting and keeping a

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 32

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 33

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 34

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 35

● effort – how hard a person is trying

● persistence – how long a person keeps on

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 37

• Man is wanting being – he always wants. When one need is

• Man’s behaviour is motivated by unsatisfied needs. The need which

• Man's needs are arranged in a hierarchy of importance. As soon as

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 38

1. Maslow’s work was originally published in

2. Several theories later have been based on

3. It clearly identified a way to classify basic

4. People may never go beyond satisfying lower order needs.

5. Several needs may be felt at the same time by an individual.

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 42

• This theory had a set of assumptions and

Dr. Shilpa Sankpal/ SVKM's NMIMS, Indore 43