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ELEMENTS OF DIRECTING

Following are the elements of Directing


 Supervision
 Communication
 Leadership
 Motivation
PRINCIPLES OF DIRECTING
Following are the principles that could prove to be useful for the manager
while directing:
 Principles Relating to the Purpose of Directing
- Principle of Maximum Individual Contribution
- Principle of Harmony of Objectives
- Principle of Efficiency of Direction
 Principles Relating to the Process of Directing
- Principle of Comprehension
- Principle of Unity of Command
- Principle of Communication
- Principle of Appropriateness of Direction Technique
- Principle of Follow-through
- Principle of Effective Leadership
TECHNIQUES OF DIRECTING
 Autocratic Technique:
− In this technique the superior issues orders to his subordinates without prior
discussion with his subordinates. Here, the subordinates have no scope to take
any initiative or put in their creativity. In simple words, it can be referred as ‘do
what I say’ style.
 Consultative Technique:
− This technique implies that the instructions are issued after consulting the
subordinates. It does not conclude that the superior is inefficient or incapable.
The success of this technique lies in the co-operation of the subordinates.
Increased employee morale is the outcome of this technique.
 Free-rein Technique:
− This technique can be used when the subordinates are well qualified and
efficient. It emphasizes on encouraging the employees to work independently
once the task is assigned.
CHARACTERISTICS OF DIRECTING
 Directing is required at all levels of management. Every superior
provides guidance to his subordinate.
 It commands, motivates, communicates, and supervises the
employees and controls the organization.
 Directing is not a one-time activity but a continuous process.
 Directing function unearths the complexity in human behaviour
mainly the unpredictability, thus increasing its level of significance.
 It facilitates in securing co-operation of the subordinates for achieving
goals of the organization.
 Direction function initiates action leading to converting of plans into
performance.
 It also provides the necessary leadership in the business.
Are we not giving positions according to skill and attitude
…..why controlling?
Which control type should be used in specific time/task
/organisation.
CONTROLLING DEFINITIONS
 Controlling is the measurement and correction of performance in
order to make sure that enterprise objectives and the plans
devised to attain them are accomplished.—Koontz and O’Donnell

 Control means to guide something in the direction it is intended to


go.—Louis Allen

 Controlling is the process of ensuring that actual activities conform


to the planned activities.—James Stoner
NEED OF CONTROLLING
 Optimum Utilization of Resources
 Minimizes Deviation
 Increased Efficiency
 Coping with the changes
 Value Addition
 Facilitates Delegation and Teamwork
CONTROL PROCESS STEPS
 Establish Standards and Performance Measures
 Measure Performance
 Compare the Actual Versus the Planned Measure
 Take the Corrective Action
TYPES OF CONTROL
 Controls can be classified on the basis of (a) timing, (b) designing
systems, (c) management levels, and (d) responsibility
BUDGET
 Budget is a financial plan that is used to estimate the revenue
and expenses over a specified future period of time.

 A budget can be made for a person, family, a group of


people, business, government, country, multinational
organization, or just about anything else that makes and spends
money.

 The budgeting process is carried out to identify whether the


person/organization can continue to operate with its projected
income and expenses.
BUDGET PROCESS
 Define the Objectives of Organization
 Set Production, Marketing, and Financial Budget
• Production Budget
• Marketing Budget
• Financial Budget
 Fragmentation of Budget
 Budget Monitoring Procedures Must Be Established
 Identify Variances
 Feedback
VARIANCE ANALYSIS
 Variance analysis is the investigation of the difference between actual
and planned behaviour.
 For example, if the budgeted sales is worth `10 million and actual
sales are worth 80 million, then variance analysis yields a difference
of `20,000.
 Variance analysis helps to identify the difference between planned
and actual results and its effect on the performance of the
organization.
 Example:

Variance(in `) Actual (in `) Budgeted (in `)


Cost of Raw
1,50,000 (F) 8,50,000 10,00,000
Materials
5,000 (A) 5,50,000 5,00,000 Labour Cost
8,00,000 (A) 42,00,000 50,00,000 Sales Revenue
6,55,000 (A) Total Variance
CONTROL TECHNIQUES
 Control techniques are broadly divided into following two categories:
− Non-financial Control Techniques: There is no requirement of
financial data and it includes rewards or punishments, stringent
recruitment and retirement norms, trainings, management by
exception, project progress control, production, and inventory and
quality control.
− Financial Control Techniques: Availability of data in terms of profits,
costs, turnovers, or revenues is shared so that managers can control
costs, sustain liquidity, and maintain a balance between assets and
liabilities.
NON FINANCIAL CONTROL
 Market Research
 Test Marketing
 HR control
 Production Control
 Direct supervision
 MBO
 Self Control
 MIS
 PERT and CPM
Financial Control
 Financial Audit
 Financial Statements
 Ratio analysis
 Budgetary control
 Break even analysis
 Accounting
 Return On Investment
TWO TECHNIQUES

 Traditional techniques
 Modern techniques
TRADITIONAL TECHNIQUES
1. Personal observation
2. Budgeting
3. Break-even analysis
4. Financial statement
5. Statistical data & report
6. Setting examples
7. Standard costing
8. Written instructions
PERSONAL OBSERVATION
 This is the most traditional method of control.
 It helps managers to collect first hand information.
 It also creates a psychological pressure on the
employees to perform well as they are aware that they
are being observed personally on their job.
 How ever it is very time consuming , & not suitable for
all kinds of jobs.
BUDGETING Meaning-
 A budget is a statement
which reflects future
incomes ,expenditures &
profits of the firm.
 Benefit of budgeting-
1. Standards of
performance
2. Planning
3. Predicting the future
4. Financial planning
BREAK EVEN ANALYSIS
 It deals with the study of the relationship between
costs, volume, & profit.
 It determines the probable profit and losses at
different levels of activity.
 The sales volume at which there is no profit, no loss is
known as breakeven point.
 It can be calculated as ,
 Breakeven point=fixed cost/selling price per unit –
variable cost per unit.
FINANCIAL STATEMENT
 Financial statements shows financial position of
a firm over a period of time, generally one year.
 These are prepared along with last year
statements, so that firm can compare its present
performance with last year’s performance &
improve its future performance.
 It offers information on ,
1. Liquidity
2. Financial strength
3. profitability
STATISTICAL DATA & REPORT
 Statistical analysis in the form of
averages,percentages,ratios,..etc.
 Data can be used for diagramatic representations like
histograms, pie chart, bar graphs..etc.
 A Report is a statement that represents data in the
form of information for carrying out the controlling
function.
SETTING EXAMPLES
 It is old saying that “example is better than precepts”
 Some managers follow this and put good examples of
performance before subordinates and expect the same
from them.
 Behaviour and actions of subordinates can be
controlled through exemplary behaviour of the
manager.
STANDARD COSTING
 It is a technique of cost control.
 Under this technique ,standard costs of
materail,labour,overheads etc. are determined.
 Actual cost are recorded and compared with the
standard costs and variances are found out.
 Then measures are taken to prevent variances in
future.
WRITTEN INSTRUCTIONS

 These instructions are issued time to time to the


organization members.
 These provide latest information and instructions in
the light of changing rules and conditions.
 These are supplementary control technique.
MODERN TECHNIQUES

1. Return on investment.
2. Management audit.
3. Management information system (MIS).
4. PERT/CPM.
RETURN ON INVESTMENT
 Investment consists of fixed asset
and working capital used in business.
 Profit on the investment is a reward for risk taking.
 If the ROI is high then the financial performance of a
business is good and vice-versa.
 It also shows the areas where corrective actions are
needed.
MANAGEMENT AUDIT
 Management Audit is an evaluation of the
management as a whole. It critically examines the
full management process.
 It finds out the efficiency of the management.
 Management auditing is conducted by a team of
experts.
 The data is analyzed and conclusions are drawn about
managerial performance and efficiency.
MANAGEMENT INFORMATION
SYSTEM
 In order to control the organisation properly the
management needs accurate information.
 Information is collected continuously to identify
problems and find out solutions.
 They need information about the internal working of
the organisation and also about the external
environment.
 MIS collects data, processes it and provides it to the
managers.
PERT/CPM
 Programme Evaluation and Review Technique (PERT)
and Critical Path Method (CPM) techniques were
developed in USA in the late 50's.
 Any programme consists of various activities and sub-
activities.
 Importance is given to identifying the critical activities.
 by controlling the time of the critical activities, the total
time and cost of the job are minimized.
MCQ
 Which among these are the techniques of directing?

 Free-rein technique
 Delegatory technique
 Bureaucratic technique
 Feedback technique
 ________ is the process which deals with the setting up
of standards and taking corrective measures.
 Directing
 Controlling
 Staffing
 Organising
 Choose the financial control technique from the
following
 Management audit
 MIS
 Financial audit
 Critical path analysis
 Which among the following are used as a control
techniquei n projects

 Management technique
 Direct supervision
 MBO
 Critical path analysis
THANKS