Marshall Dimock has called directing is the heart of administration.
Directing is the process of instructing, guiding, counselling, motivating & leading the human resources to achieve organizational objectives.
It guides, motivate, inspire.
Features of directing-
1) Important managerial functions
2) Performed at every level of management 3) It is a continuous process
4) Top to down level in the organization 5) It has dual objectives-
1) It aims at getting things done by subordinates.
2) To provide superiors opportunities for some more important work which their subordinates cannot do.
Importance of Directing- 1) Initiation of actions
2) Integration of employee’s effort.
3) Getting maximum out of individuals.
4) Facilitating changes in the organization.
5) Providing stability & balance in the organization.
Principles of directing Relating to purpose of direction
1) Principle of maximum individual contribution.
2) Principle of harmony of objectives.
3) Principle of efficiency of direction.
Relating to direction process
Principle of unity of command
Principle of appropriateness of directional technique
Principle of managerial communication
Principle of comprehension(correct information)
Principle of use of informal organization
Principle of leadership
Principle of follow theory
Principle of appropriateness of direction technique- three direction techniques includes authoritarian, consultative & free rein it can be used in the most appropriate time.
Direction and supervision- supervision is used as an element of direction & therefore every manager in the organization performs the function of supervision irrespective of his level in managerial hierarchy.
The scope of supervision is much more limited as compared to that of direction which includes motivating and leading
employees & communicating with them besides guiding them. It is used to denote the functions performed by supervisor. It includes all supervisory functions planning, organizing, directing, staffing & controlling. Thus supervision become much wider than directing.
Elements of effective supervision- 1) Leadership (high morale, high productivity)
2) Closeness of supervision (successful supervisors follow the less close supervision) 3) Employee oriented or human relations (successful supervisor, employee oriented)
4) Group cohesiveness (it is a group situation in which all member’s works together for a common goal)
5) Delegation- appropriate delegation leads to high productivity in the organization. Effective supervision implies adequate delegation
Order giving- it is one of the most important elements of direction. Management gives orders & instructions to subordinates as to how the work should be accomplished.
Order is defined as a directive to subordinates as to what is to be done or not to be done in the execution of work for achieving organizational objective.
General/specific order, written/oral, formal/informal, timing, follow up of orders.
Techniques of direction 1) Orders & instructions 2) Follow up orders & instructions 3) Standard practices & procedures 4) Behavioral pattern
CONTROLLING
Controlling is the process of evaluating actual performance and if necessary taking corrective actions so that the performance is in accordance with planned performance.
Controlling is related to planning.
Features of controlling-
1) It is a forward looking after measuring the past performance.
2) It can take corrective actions.
3) Executive process (each manager has to perform controlling functions in an organization) 4) It is a continuous process.
5) It is a co-ordinated integrated system.
It is said that planning is the basis, action is the essence, delegation is the key & information is the guide control.
Importance of controlling- 1) Adjustment in operations 2) Policy verification 3) Managerial responsibility 4) Psychological pressure 5) Co-ordination in action
6) Organizational efficiency & effectiveness.
Steps in controlling- 1) Establishment of control standards 2) Measurement of performance 3) Comparing actual & standard performance 4) Corrective actions
Types of control- based on elements-
1) Strategic control 2) operational control, based on stages- 1) feedback control 2) feed forward control 3) concurrent control.
Strategic control- It is the process of taking into account the changing planning premises, both external & internal to the organization, on which the strategy is based, continuously evaluating the strategy as it being implemented and taking corrective actions to adjust the strategy to the new requirements.
Operational control- It is concerned with action or performance and is aimed at evaluating the performance of the organization as a whole or its different components, SBU (strategic business units), divisions and departments.
Strategic control 1) External environment 2) Long term 3) Exclusive by top management, may be through lower level support.
Operational control 1) Internal environment 2) Short term 3) Exclusive or middle management on the direction of top management.
Controlling and Management By Exception- This principle allow managers to detect those places where their attention is required and should be given. This implies the use of management by exception particularly in controlling.
Management by exception is a system of identification and communication that signals to the manager when his attention is needed.
Management by exception has six basic ingredients- 1) Measurement 2) Projection 3) Selection 4) Observation 5) Comparison 6) Decision making
Various areas where percepts of management by exception are used such as statistical control of product quality, economic order quantities& order points for control of inventories & suppliers, break even points for determining operating levels, trends in ratios of indirect to direct labor used in apportioning overhead, attitudes surveys for gauging employee morale.
Management by exception is useful because- 1) Saves time because it looks after only on fewer problems which are important.
2) Concentrate on major problems 3) It identifies crisis & critical problems 4) It alerts management to appraise opportunities as well as difficulties. 5) It provides qualitative & quantitative yardsticks for judging.
Operational control techniques- control techniques also known as control tools or control aids.
Operational control is exercised at the level of various operating units by the concerned operating managers while overall control is exercised by top management of the organization.
In an operating system there are two aspects where control is required- 1) Financial aspects known as financial control
2) Operating mechanism of the system known as operating control.
Financial control- In this outcomes are expressed in monetary terms. Budget is used to exercise control at operative level while
budget summary is used to exercise control at overall organization level.
The major financial control techniques are- 1) Budgetary control
2) Control through costing 3) Break even analysis 4) Responsibility accounting 5) Internal audit
1) Budgetary control- It is a system of controlling costs which includes the preparation of budgets ,co-ordinating the departments and establishing responsibility comparing actual performance with budgeted and acting upon results to achieve maximum profitability.
Budgetary control as a tool for planning, act as a tool for control, act as an aid to coordination.
2) Control through costing- It involves the control over costs in the light of certain predetermined costs usually known as standard costs. Standard costs are pre-determined operations costs computed to reflect quantities prices & level of operations.
3) Break even analysis- It is concerned with cost volume profit relationships. Set of relationships of fixed cost, variable cost, price, sales mix to the profitability of the organization.
BEP = FC/Contribution (fc/sp-vc) fc= fixed cost, vc= variable cost, sp= selling price, BEP= break-even point.
Margin of safety= total sales- BEP sales
Profit= sales- total cost/ total contribution-fc
BEP= neither profit nor loss
Learning curves implies that an organization is able to reduce its costs because of the improvement in production operations process.
4) Responsibility accounting- The use of responsibility accounting focuses attention on management by objectives (MBO) rather than management by domination. Each person is responsible for his effective control, he must know what his costs should be and what his costs were. Three types of responsibility centers are there- 1) cost centers 2) profit centers 3) investment centers
5) Internal audit- It is also known as operational audit. It is much more wider or broader in scope & encompasses the whole range of activities of the organization. Thus internal audit in addition to ensuring that accounts properly reflect the facts, als appraises policies, procedures, use of authority, quality of management, effectiveness of methods, special problems & other options of operations.
Operating Control- It is closely linked to concurrent control i.e exercise of control during the operating process itself. Three types of operational control are- 1) Quality control 2) Cost control & inventory control 3) Time event network analysis. 1) Quality Control- Quality is a sense of appreciation that something is better than something else. Quality means focusing on the production of increasingly better products & services at progressively more competitive prices.
Techniques of quality control-
1) SQC (Statistical quality control) – It is also known as statistical process control. It is a method of measuring & continuously improving work process before the final inspection of the product. It is a preventive & remedial method. It is based on the theory of sampling which implies that the analysis of few items out of the total production can be used to understand the features of the entire population. It measures the product quality by taking sample for inspection during the production process. It produce large volume of the product.
2) Inspection Control- It is applied at the stage of raw materials as well as at the stage of finished products or in between. It may be done either for the raw materials which are in the form of finished products resulting from the completion of production process.
Inspection is done by comparing the quality of the product to the standard, commonly known as specifications by means of visual or testing examination.
3) Quality control through quality circle- concept of quality circle emerged from quality control. Japanese system of management integrated quality control with manufacturing department which give rise to the idea of quality control circle or simple quality circle.
It is a group of employees that meets regularly to solve problems affecting its work area.
Six to twelve volunteers from same work area make up the circle.
It recommends solutions for quality & productivity problems which may be implemented by management.
It can be made a permanent feature of organization. (Voluntary)
Steering committee the highest level serves as advisory body of quality control.
Brainstorming methods are used for problem solving.
2) Inventory control- Inventory control tries to specify the optimum level of inventory that an organizations should keep with itself.
In 1970 a Japanese introduced the concept of just in time inventory system (JIT) known as kanban. The basic theme of this system is to have no inventory.
Generally there are two techniques of inventory control- 1) ABC Analysis
2) Economic order quantity
1) ABC Analysis- Synder has given this. It is widely used technique for classifying different items. This technique uses the values of different types of inventory for their classifications.
A = High value, low number (more attention)
B= Average value, average number ( average attention)
C= low value, high number ( low attention)
So ABC Analysis provides clue where attention should be focused in inventory control.
2) Economic order quantity- It includes ordering cost, carrying cost.
EOQ= √2so/Đ ; s= total quantity, o= ordering cost, c= carrying cost)
Safety stock- The estimation of safety stock that an organization should keep regularly to continue its operation uninterruptedly.
3) Time event network analysis- Programme or project completed within the stipulated time. Time element is one of the most significant consideration because if the project is not completed within the specified time the organization has to pay heavy penalty.
There are three techniques of time event network analysis- 1) Gantt chart
2) PERT/CPM
3) Milestone budgeting
1) Gantt chart – It is developed by Hennery Gantt. He recognized that total Programme goals should be regarded as a series of interrelated derivative plans that people could comprehend & follow. He said some of the activities were independent of others while some of the activities were dependent on others. It is indicated that two or more activities which have sequential relationship must be completed in that order. It shows relationships among two activities.
2) Milestone budgeting – It is also known as milepost budgeting. A project that can be completed individually in a time sequence, to be ready when needed. It establishes relationships between two or more segments of a project.
3) PERT/CPM – PERT (Programme evaluation and review technique) CPM (critical path method) .There is a difference between PERT and CPM in accordance of duration of activity. CPM assumes duration of every activity to be constant. PERT assumes uncertainty in the duration of activities by three parameters- 1) Most optimistic – activities in which least time taken 2) Most likely – most probable time 3) Most pessimistic – maximum time.
PERT/ CPM is used either to minimize total time, total cost, cost for a given total time, time for a given cost or minimize idle resources.
Process of PERT/CPM – Identification of activities> sequential arrangement> time estimates of activity> network construction>
critical path.
Advantages of PERT/CPM- For top level manager, solving problems of scheduling the activities, it presses for right action at right point & at right time in the organization.
Disadvantages of PERT/CPM- Activities are of non -repetitive type, not useful for routine planning of recurring events.