UNIT 3

Traditional And Modern Techniques of Controlling

After the management has completed the task of recruiting the right candidates for
the right job, training and development start according to the requirement. The
employees are on their job given. The next step is controlling. Controlling is a
process of controlling the difference between planned output and actual output.
The right performance of the process of control is very critical to the success of any
organization. Controlling is most important as it ensures the effective and efficient
utilization of a company's resources so that it achieves the planned or desired goals.
According to Brech, “Controlling is the systematic approach which is called as a
process of checking actual performance against the standards or plans with a view
to ensure adequate progress and also recording such experience as is gained as a
contribution to future needs.”

Methods and Techniques of Controlling

There are many controlling techniques that are commonly referred to as controlling
aids.
These controlling types are categorized into two -
1. A Traditional type of control
2. A Modern type of control
Traditional Types of Controlling Techniques
Under this, we have about a few types of traditional techniques of control as
mentioned below:
1. Direct Supervision and Observation
This is one of the oldest techniques of controlling. As the name suggests, the
supervisor directly observes the worker at his workplace during the working hours.
This technique is very useful in small scale business or industries. A lot of issues
can be sorted as the supervisor gets first-hand information about what's happening
and what needs to be done. The worker is also aware that he or she is being
watched, hence works with diligence and alertness.
2. Financial Statements
Maintaining a profit and loss account along with the balance sheet makes it possible
to control the issues that can be the reason for the decline in losses. The
management can compare the profits and losses with the previous year’s accounts
or with a similar organization, and take necessary steps to increase the profits of the
organization.
3. Budgetary Control
A budget is a planning and controlling strategy. Budgetary control is a process of
planning and preparing estimated figures for the organization for future needs and
then comparing it with actual performance. This comparison will draw variances
between the two and help the organization to take corrective actions at the proper
time. Hence, the budget is a means and budgetary control is the result.
4. Break-Even Analysis
This process is a simple control tool where the management analyzes their break-
even point to take corrective measures to improve their future performances. Break-
even point is a point where there is no loss, no profit. For instance, if the business
sells 5000 products, it will be at a break-even point. So anything below is loss and
anything above this is a profit.

Modern Techniques
1. Return on Investment
The reward of risk-taking is profit on investment. If the return on investment is
high, then the organization is doing well and vice-versa. This tool of controlling
helps the management to compare the ROI with the previous year’s profit and with
other similar organizations and help them to take corrective measures.
2. Management Audit
Evaluating management and its performance is a management audit. It meticulously
and critically examines and analyzes the complete management process starting
from planning, organization, directing, accounting, controlling, etc. Management
audit is conducted by a team of experts who collect data from different departments,
processes, and members of the organization. The data is thoroughly analyzed and
conclusions are drawn about the management’s performance and efficiency.
3. PERT and CPM Techniques
The USA in the late 50s developed two important methods that were Program
evaluation and review technique(PERT) and Critical path method(CPM). Under
these techniques, the tasks or jobs are divided into various parts. Then, critical tasks
are identified. Focus is given to the completion of these critical tasks. So,
controlling the time to complete these critical tasks will minimize the total cost and
total time taken to do the complete job.
4. Self Control
It is as simple as it sounds. Self-control is a tool best suited for entrepreneurs who
set their own targets, own deadlines, evaluate their performance and quality, and
then take correction steps to improve their performances. This tool is required and
exercised by the top-level managers too as they do not like external control. This
tool must be encouraged to be exercised by everyone in the company. This will help
the management to control each and everything in a better manner. The cost and
time taken to control through other ways can be minimized if self-control is
conducted effectively by each member of the organization.
5. Responsibility Accounting
Various departments of an organization are converted into responsibility centres.
The head of each centre is responsible for accomplishing the target of the centre.
Though modern techniques are used to improve the effectiveness of controlling
processes even today these traditional techniques are used extensively by the
organization.
Definition of Control Process
Controlling is the process of assessing and modifying performance to ensure that
the company's objectives and plans for achieving them are met.
Control is the final role of management. The controlling function will become
obsolete if other management functions are properly carried out. If there are any
problems in the planning or actual performance, control will be required.

Controlling ensures that the proper actions are taken at the appropriate times.
Control can be thought of as a process through which management ensures that the
actual operations follow the plans.

The company's managers check the progress and compare it to the intended system
through managing. If the planned and real processes do not follow the same path,
the necessary corrective action can be implemented.

The control process is the careful collection of information about a system, process,
person, or group of people which is required to make necessary decisions about
each of the departments in the process. Managers in the company set up the control
systems which consist of the four prior key steps which we will discuss in the later
section.

The performance of the management control function is important for the success of
an organization. Management is required to execute a series of steps to ensure that
the plans are carried out accordingly. The steps that are executed in the control
process can be followed for almost any application, also for improving the product
quality, reduction of wastage, and increasing sales.

What is Controlling?
The Controlling process assures the management that the performance rate does not
deviate from its standards.

The controlling Process consists of five steps:

1. Setting the standards.
 2. Measuring the performance.
3. Comparing the performance to the set standards
4. Determining the reasons for any such deviations which is required to be paid
heed to.
5. Take corrective action as required. Correction can be made in regards to
changing the standards by setting them higher or lower or identifying new or
additional standards in the department.

Elements and Steps of Control Process

1. Establishing Performance Measuring Standards and Methods
Standards are, by definition, nothing more than performance criteria. They are the
predetermined moments in a planning program where performance is measured so
that managers may receive indications about how things are doing and so avoid
having to monitor every stage of the plan's execution.

This simply means setting up the target which needs to be achieved to meet the
organizational goals. These standards set the criteria for checking performance. The
control standards are required in this case.

Standard elements are especially useful for control since they help develop properly
defined, measurable objectives.

2. Measuring the Performance

Performance against standards should be measured on a forward-looking basis so
that deviations can be discovered and avoided before they happen. Appraising
actual or predicted performance is relatively simple if criteria are properly drawn
and methods for determining exactly what subordinates are doing are available.
The actual performance of the employee is then measured against the set standards.
With the increase in levels of management, the measurement of performance
becomes quite difficult.

3. Determining if the Performance is up to par with the Standard

In the control process, determining if performance meets the standard is a simple
but crucial step. It entails comparing the measured results to previously established
norms. Managers may assume that "all is under control" if performance meets the
benchmark.

Comparing the degree of difference between the actual performance and the set
standard.

4. Developing and Implementing a Corrective Action Plan

This phase becomes essential if performance falls short of expectations and the
analysis reveals that corrective action is required. The remedial measure could
include a change in one or more of the organization's functions.

This is being initiated by the manager who corrects any sorts of defects in the actual
performance.

Types of Control
There are five different types of control:
1. Feedback Control: This process involves collecting the information on
which the task is being finished, then assessing that information and
improvising the same tasks in the future.
 2. Concurrent control (also known as real-time control): It investigates and
corrects any problems before any losses arising. An example is a control
chart.

This is the real-time control, which checks any problem and examines the same to
take action before any loss has been caused.

3. Predictive/ feedforward control: This type of control assists in the early

detection of problems. As a result, proactive efforts can be done to avoid a
situation like this in the future. Predictive control foresees the problem ahead
of its occurrence.

4. Behavioral control: This is a direct assessment of managerial and staff

decision-making rather than the consequences of those decisions. Behavioral
control, for example, sets incentives for a wide range of criteria in a balanced
scorecard.

5. Financial and non-financial controls: Financial controls refer to how a firm

manages its costs and spending to stay within budgetary limits. Non-financial
controls refer to how a company manages its costs and expenses to stay within
budgetary constraints.

Features of Controlling
The features of controlling are discussed point-wise to give a clear insight into the
concept. The features are as follows:
 Controlling helps in achieving organizational goals.
 The process facilitates optimum use of resources.
 Controlling judges, the accuracy of the standard.
 The process also sets discipline and order.
  The controlling process motivates the employees and boosts the employee
morale, eventually, they strive and work hard in the organization.
 Controlling ensures future planning by revising the set standards.
 This improves the overall performance of an organization.
 Controlling minimizes the commission of errors.
Advantages of Controlling
The organization inculcates the process of controlling due to its undying
advantages. The advantages of control are as follows:
 The Controlling Process saves time and energy.
 This allows the managers to concentrate on important tasks, and also allows
better utilization of the managerial resource.
 Assures timely and corrective action to be taken by the manager.
In contrast to this, controlling suffers from the disadvantage that the organization
has no control over the external factors that also affect the organization. The
controlling Process becomes a costly affair, especially for small companies.
CONCEPT OF COORDINATION
Coordination is the process of organizing the people or their groups in order of
harmony, which facilitates them to work together. They perform to function in their
respective parts in perfect synchronization which eventually fulfils the goals of the
company.

This harmonious function is to be termed as ‘Coordination’ which is utmost for a

company to work in. Coordination is that hidden term which interconnects all
important management functions such as planning, staffing, organizing, directions,
and, controlling.

Importance of Coordination in Management

Coordination is not a separate function of management, in fact it is known as the
“essence of management.” It is like the thread to synchronization of different
managerial functions. Coordination is to be performed right from the planning stage
till the controlling stage. Absence of this function will turn to be ineffective and will
weaken the effect of authority-responsibility hierarchy relationship in an
organisation.

Coordination initiates every function of management and makes them solid and
effective which serves a purpose for the organization. It creates harmony among the
individual efforts for achieving the organisational goals. This is present in all the
departments of an organisation such as the production, sales, finance etc.

Coordination minimizes the conflicts, rivalries are ended, wastages, delays,

indifferences and other organizational problems. It ensures smooth function of the
organization. Hence, with the help of coordination an organization can fulfil its
objectives promptly. Also, coordination functions help in improving the relationship
in an organization. Top Level Managers coordinate their activities with the middle
level managers and this helps in developing good relations among them. Likewise,
the middle level managers coordinate their activities with the lower level managers
and this too develops good relations with them. Again, the Lower Level Managers
coordinate with the workers and develop good relations with them. Thus,
coordination, overall, imposes a positive effect of relations in the organization.

Coordination is considered the essence of administrative work. The need for

collaboration stems from the fact that the various aspects and efforts of an
organization must be harmonized and integrated to achieve the same goals. Without
proper communication between all team members, managers are not able to
combine the various aspects into one coherent whole. First let us know about the
importance of Coordination point wise –

1. Unity of Action
Enterprise has diverse resources, technique, activities etc, and these all must be in
coordination so that there is unity in action.
 2. Increase in Efficiency and Economy
Coordination brings efficiency in the departments as it is an effort of all
organizational members to maintain good relations among all the levels of
organization.

3. Development of Personnel
Coordination helps in obtaining information about job qualities of a job holder
which helps to analyse about the capabilities of the job holder and this improves the
coordination system.

4. Differential Perception
People have different perceptions but when all people are coordinated effectively
their effort and power are concentrated in one direction to achieve the
organizational goals.

5. Survival of the Organization

Coordination helps to harmonize the work resources which helps in the survival of
the organization.

6. Accomplishment of Objectives
Their task and available resources are coordinated, which helps in their
coordination.

7. End of Conflicts
Many conflicts and rivalries between individuals, in between departments, and also
between a line and staff gets ended due to the coordination among the departments.

8. Coordination Paths Proper Direction

Coordination paves the path of correct direction in order of which every department
works.

9. Coordination Facilitates Motivation

Coordination gives total freedom to the employees. This encourages them to show
their talent and thus they coordinate well with the expectancy of the top level
managers.
1. Coordination utilizes resources optimally.
2. Coordination unifies the human and material resources of the organization.
This helps in making optimum utilization of the resources.

10. Unity in Diversity

Every large organization has a large number of employees, each with a different
vision or ideas, activities and background. Therefore, there are different functions in
an organization. However, all these activities would not be so effective without
communication. Therefore, cooperation is essential for unity in diversity.

11. Cohesive unity

An organization needs to combine the efforts and skills of different employees to
achieve the same goals. Coordination also eliminates duplication of work that leads
to more efficient operations.

12. Optimum Utilization of Resources

In particular, coordination ensures that employees do not participate in the work of
various purposes as it integrates human resources and organizational resources
together. Therefore, there is little waste of resources that help the organization to
use them effectively.

13. Promoting Team Spirit

In an organization, there are many conflicts between employees, departments, etc.
Integration encourages individuals and departments to work together as a team and
to achieve common organizational goals. Therefore, it promotes team spirit.

14. Coordination removes the conflict between the personal interests of

employees and the general interests of the organization:
Individuals join an organization to meet their needs. In many cases, these needs
may differ from the needs and goals of the group. In such cases, the goals of the
organization and of the individual are not fully realized. When the number of
individuals in an organization increases, the level of such inconsistencies increases.

15. Integration encompasses the impact of internal and external forces on

the organization and ensures that the affairs run smoothly:
Internally, it encompasses a wide range of business resources — money, building
materials, machinery and methods — to achieve common organizational goals.
Outside, the environment is improved for business with due consideration for
customers, employees, financiers and government. In this way, linking helps to
produce better results and becomes a central point of management.

Limitation of Coordination
Now that you understand the importance of cooperating in management, you should
also realize that in practice, coordination deals with specific problems. Here are the
limitations of communication in management. There are also factors which hinders
in the path of coordination, the limitation factors are as follows –

1. Difficulty in Setting of Standards

Control system minimizes its effective when standard of performance cannot be
defined in quantitative terms

2. External Factors Not in Control

External factors like government policies, technology changes, change in fashion
does not come under the ambit of an organisation, hence coordination being a part
of the organization cannot control it.

3. Less Willingness of the Employees

Employees often resist to coordinate and as a result effectiveness of coordination
reduces.

Benefits of coordinating a system apart from the limitation is quite beneficial for an
organization to function.

4. Lack of Management Talent

When hiring staff, it is possible to select some less efficient ones who do not
understand good management processes. This can lead to ineffective interactions.

5. Misunderstandings
In a large organization, hundreds of employees work together and participate every
day. Ideally, they should be cohesive and work as a team. In many cases, however,
misunderstandings arise between employees that create a problem in cooperation.
This was the complete discussion on the coordination, its importance and its
limitations.
Principle of coordination
Coordination is one of the prominent functions of management. It is an ongoing
process that helps to smooth ongoing activities and communication between the
employees, whether they are individuals or groups, or teams. It always aims to
minimize friction and maximize collaborative efficiency. Let us explore more about
the principles of coordination, techniques of coordination, etc.

Meaning of Coordination
Coordination is very important in management. The business has multiple
functions. These functions are performed by different people. In addition,
performing these functions requires division of labour and grouping activities and
decision-making at different levels. These need to be coordinated to achieve the
desired goals. Coordination involves synchronizing, integrating, or unifying the
actions of all groups in the enterprise to achieve its goals. It is a process in which
managers balance the activities of different individuals and individual groups,
reconcile their differences in interests or methods, to achieve a common goal,
achieving a harmonious group effort and unity of action.

Defined by Mcfarland, “Coordination is the process whereby an executive develops

an orderly pattern of group efforts among his subordinates and secures the unity of
actions in pursuing a common purpose.”

Principles of Effective Coordination

As coordination plays a vital role in the organization, every manager tries to
maintain good collaboration with other executives which helps in the growth of the
organization. That's the reason managers need to understand and implement some
principles to attain effective coordination. Mary Parker Follett has given a set of
principles of effective coordination.

(Image will be uploaded soon)

They are,
1. Early Stage:- This is the most important principle of coordination, which
specifies that the coordination should start at an early stage or initial stage of
the organization. If proper coordination has been done before the planning
system, we can provide effective plants that automatically develop the name
and fame of the organization.
2. Personnel Contract:- Coordination itself is a process involved with human
resources. If the direct contact of personnel is implemented, it eradicates
 Several conflicts and misunderstandings. Face-to-face communications, group
discussions, grievances, and settlement methods come under this principle.
3. Continuity:- It is the most important principle of coordination. Because it is a
continuous process and cannot be left or restricted to some activities. The
entire organization requires coordination around the clock.
4. Reciprocal Relationship:- It is the best principle of effective coordination.
Because the coordination will be in a two-way direction. If the purchasing
department works with the sales department, the sales department again needs
to work with the finance department. Similarly, the communication I'm the
influence but also done in the same way. Every person needs to communicate
with another person, and if one person influences the other, he might be
influenced by any third person. So the coordination should be reciprocally
also.
5. Dynamism:- The process, principles, and techniques of coordination should
not be static. Based on the requirements and the scenarios, it keeps on
changing according to the context spontaneously.
6. Simplified Organization:- This principle also achieves effective
coordination. It is merely like a divide and rule policy. If the size of the
organization is too large, it can be divided into several departments, and each
department should have a coordinator or coordination head. He will look after
all the collaborations, delegations, etc.
7. Self-Coordination:- This principle explains that expecting coordination from
other departments is as essential as maintaining the same thing in our
department. It is like giving respect and taking respect. Initially, if we are
perfect, then we can expect the same thing from others. So self-coordination is
the initial measure or principle of effective coordination.
8. Clear-Cut Objectives:- the objectives and standards were set by high-level
management. These objectives should be properly facilitated and create
awareness of all the departmental heads and other employees. All the
employees have a clear idea of what they need to achieve; then they can work
according to that.
9. Clear Definition of Authority and Responsibility:- The high cutter
employees should explain and define the authorities and responsibilities to the
 respected person, and it should be explained to all the lower-level employees.
Every employee needs to understand to whom he needs to report and what are
his responsibilities. This kind of coordination is significant for a healthy
organization.
10. Effective Communication:- Communication is the basic principle of
coordination. Clear and proper communication avoids several problems and
provides multiple solutions for a single problem. So proper communication
should be I'm graduating within the staff, which helps to exhibit their skills.
11. Effective Supervision:- the high-end executives should monitor and
supervise all subordinate's works regularly. They should not neglect their
responsibility and should not mislead their supervision. This helps to maintain
effective coordination as well as reduce the chances of making mistakes.
These are the various principles formulated by Mary Parker Follett for the growth
of the organization in terms of quality and quantity. As it is clear that Principles and
techniques of coordination are dynamic, the techniques of coordination had
formulated with different opinions. The generalized techniques of coordination are
categorized as:

Features of Coordination
The features of coordination are:
1. Coordination focuses on integrating collective efforts, not the integration
of individual efforts.
It involves arranging the activities of a group of people in an orderly manner.
However, individual performance is related to collective performance.
2. Coordination is a concerted effort to give the necessary quality and
quantity at the right time.
Coordination means cooperation, that is, collective effort, plus time and direction.
According to Haimann: “Coordination is the orderly synchronization of efforts of
the subordinates to provide the proper amount, timing and quality of execution so
that their unified efforts lead to the stated objective, namely the common purpose of
the enterprise.”
 3. Coordination is a continuous and dynamic process.
It is a continuous concept because it is realized through the execution of functions.
It is dynamic because the function itself is dynamic and may change over time.
4. Coordination has three important elements: balancing, timing and
integrating
Different activities can only be coordinated when different responsibilities are
performed at the right time and in the right amount.
5. Coordination and cooperation tasks do not mean the same thing.
Cooperation simply means that two or more people voluntarily participate in the
execution of certain tasks through collective efforts. But it has nothing to do with
the time, amount, and direction dimensions of the team's efforts. In contrast,
coordination means applying the necessary team effort in the right direction at the
right time by deliberately executing actions.
6. Every manager is responsible for coordination.
Every manager in the organization is responsible for coordination because he aims
to synchronize the efforts of his subordinates with others.
7. Coordination can be internal or external.
Coordination is to be used both inside and outside the company as a blending factor
for all activities and endeavors. In another way, coordination can take place both
internally and externally. Internal coordination refers to the coordination of actions
between employees, departments, and supervisors at different levels inside a
company.
Outside the enterprise, coordination work is extended to create a harmonious
relationship with the competitors, suppliers, and customers activities; technological
and technical advances of the time, government regulatory measures, national and
international interdependence, as well as the wishes and wants, likes and dislikes of
consumers, employees, and owners.
8. Coordination can be horizontal or vertical.
Coordination between horizontal departments at the same level in the managerial
hierarchy is known as horizontal coordination. For example, coordination between
the sales manager, the work manager, the finance manager, and the buyer is
necessary so that when the sales department is ready to sell the new product, the
production department will be able to fill the orders; and financial arrangements are
made so that the necessary funds are available to obtain the correct raw material and
other factors.
Vertical coordination occurs between the multiple links of the different levels of the
organization. Take the production department, for example, where the work
manager is followed by the superintendent, then the foreman, and lastly, the
workers.

Techniques of Coordination
1. Structural and Formal Techniques
 Departmentalization
 Centralization/Decentralization
 Formalization and Standardization Planning
 Output and Behavioural Control.

2. Informal and Subtle Techniques.

 Lateral or Cross-Departmental Relations Informal Communication
 Socialization
These are the various principles and techniques of coordination which each
principle and technique has its significance and strive for the growth of the
company.