5. directing and controlling

7/31/2019 5. Directing and Controlling

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Directing

Unit 5


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Definition

Direction is telling people what to do andseeing that they do it to the best of theirability. It consists of

Communication Leadership Motivation Supervision


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Features of direction

Deals with people Seeks performance

Provides a link Pervasive by all managers at all levels of an

organisation

Dynamic and continuous


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Importance of direction

Initiates action Achieves integration

Motivates people Facilitates change Attains balance and stability


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Principles of Direction Principle of unity of command Principle of harmony of objectives Principle of direct supervision

Appropriate techniques / style Two way communication Support of informal organisation Principle of maximum individual contribution Use of motivation techniques Principle of followup


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Elements of direction

Good instruction Follow up of instruction

Standard practice and indoctrination Explanations Consultative direction


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Controlling


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Importance of control

Achievement of goals Execution and revision of plans

Brings order and discipline Facilitates decentralisation of authority Promotes coordination Cope with uncertainty and change


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Limitations of control

Its difficult and challenging Resistance

Compounds problems


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Stages in controlling the controlprocess

1. Establishment of standards - Quantitative standards Time standards Cost standards Productivity standards Revenue standards Qualitative standards

How to set standards? Study the characteristics of work Consider acceptable levels of work


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Essentials of control Objective Suitable Simple Selective Sound and economical Flexible Forward looking Reasonable Responsibility of failure Acceptable


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Techniques of Controlling

Break even alanysis / CVP Analysis costvolume profit analysis

Advantages Determines all types of cost Helps understanding the relationship between costs

and profits Disadvantages

Difficult to segregate costs Difficult in a multi product firm Limited application in long range planning


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Budgetary control the establishment of budgets, relating to responsibilities of executive to the requirements of a policy

Provides detailed plan of action Comparing actuals with budgeted Involvement of all the concerned


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Techniques of Controlling Budgetary control

Advantages Planning

Thinking ahead Pooled judgement and experience Realistic goals and policies

Coordination Establishes coordination Relates business activity with general economic trends

Control Indicates weakness Prevents waste Facilitates standard costing

Disadvantages Accuracy is a doubt Constant review needed Costs may be prohibitive cost involved in maintenance


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Zero-Based Budgeting In zero-based budgeting, every line item of the

budget must be approved, rather than only

changes from the past budget Decision package all activities in a particular project Ranking each decision is ranked against other

packages Resource allocation preferential and objective

resource allocation


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Programme or Performance Budgeting Emphasis in on output or performance Time Extends over years overall performance Cost effectiveness costs versus benefits


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Techniques of Controlling Human Resource Accounting

Accounting for people as an organisational resource. It involvesmeasuring the costs incurred by organisations to recruit, select,hire, train and develop human assets and the measuring of economic value of people to the organisation.

Enables effective monitoring

Finds whether human resource appreciating or depreciating Assists in development of management practices Advantages

Throws light on strengths and weakness of workforce Feedback to managers Helps potential investors make decision

Disadvantages Not easy No agreement on measurement process No empirical evidence to support the idea of HRA


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Techniques of Controlling Standard costing

Standards are determined in advance and actual costsare compared with the standards

Advantages Easier and straight Forward looking Assists in formulating price

Disadvantages Unsuitable for small firms Difficult for non standardised products May create adverse effect, if standard is not real


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Management Audit Systematic appraisal of overall performance of

management by outside consultants

Advantages Identification of major areas of concern Check on new policies and practices Effectives of current managerial practices

Disadvantages Does not focus on individual performance Qualified auditors may not be available Subjective process


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Techniques of Controlling Social audit

Deals with social performance of the organisation,including total CSR expenditure, value of productivityof the organisations human resource

Advantages Develops goodwill of the organisation CSR

Disadvantages Not easy Scope is not clearly defined intangible social activities go

ignored


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PERT - Programme Evaluation and ReviewTechnique

Sophisticated mathematical and schematicnetwork technique

Used for problems that occurs once or few times,which has a definite starting and end point

Activity, event and path


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PERT Each activity must have a predecessor and successor, an

event may have more than one succeeding or precedingactivity

No activity can start until its predecessor even in completed No event is considered completed until all the activities

leading to it have been completed Time estimates to be associated with completion of every

activity Optimistic Most likely time pessimistic

Te = O + 4m + P6


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CPM - Critical Path Method Similar to PERT Critical path is the path with more number of

events and activities Has two time estimates

Normal time (N)

Expedited time (E) /crash time Crash time can be accomplished only through

crash expenditure


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Techniques of Controlling Kaizen

Japanese word meaning continuous and never endingimprovement involving everyone in the organisation

Not a single day shall pass without any improvement

Includes Improving labour management relationship Marketing practices Supplier relations In-house systems and procedures

Programme can be broadly divided into 3 parts Management oriented kaizen Group oriented kaizen Individual oriented kaizen

5. directing and controlling

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