UNIT-II - FUNCTIONS OF MANAGEMENT & LEADERSHIP

Planning, Organizing, Staffing, Directing, Controlling, Leadership - Concept, Nature,

Importance, Attributes of a leader, developing leaders across the organization, Leadership
Grid

With the rapidly changing technology as well as changing structure of organizations, the
functions of management have become dynamic. Broadly the functions are categorized into
four broad functions as shown in Table

Planning
Planning involves defining the organization’s goals, setting the strategies to achieve the
goals, listing out the chart on how to organize and coordinate various activities. Planning can
be of two types – formal and informal. It involves the creation and maintenance of a plan,
such as psychological aspects that require conceptual skills.

According to Koontz and O’ Donnell, “Planning is an intellectual process, conscious

determination of course of action, the basing of decision on purpose, facts and considered
estimates.”

According to Allen, “A plan is a trap laid to capture the future.”

Characteristics (Nature) of Planning:

1. Managerial function: Planning is a first and foremost managerial function provides

the base for other functions of the management, i.e. organising, staffing, directing and
controlling, as they are performed within the periphery of the plans made.

2. Goal oriented: It focuses on defining the goals of the organisation, identifying

alternative courses of action and deciding the appropriate action plan, which is to be
undertaken for reaching the goals.

3. Pervasive: It is pervasive in the sense that it is present in all the segments and is
required at all the levels of the organisation. Although the scope of planning varies at
different levels and departments.
4. Continuous Process: Plans are made for a specific term, say for a month, quarter,
year and so on. Once that period is over, new plans are drawn, considering the
 organisation’s present and future requirements and conditions. Therefore, it is an
ongoing process, as the plans are framed, executed and followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the application of mind, to
think, forecast, imagine intelligently and innovate etc.
6. Futuristic: In the process of planning we take a sneak peek of the future. It
encompasses looking into the future, to analyse and predict it so that the organisation
can face future challenges effectively.
7. Decision making: Decisions are made regarding the choice of alternative courses of
action that can be undertaken to reach the goal. The alternative chosen should be best
among all, with the least number of the negative and highest number of positive
outcomes.

Importance / Advantages of Planning:

 It helps managers to improve future performance, by establishing objectives and
selecting a course of action, for the benefit of the organisation.

 It minimises risk and uncertainty, by looking ahead into the future.

 It facilitates the coordination of activities. Thus, reduces overlapping among

activities and eliminates unproductive work.

 It states in advance, what should be done in future, so it provides direction for

action.
 It uncovers and identifies future opportunities and threats.

 It sets out standards for controlling. It compares actual performance with the
standard performance and efforts are made to correct the same.

Disadvantages of Planning:
• Environmental factors are uncontrollable and unpredictable to a large extent.
Therefore planning cannot give perfect insurance against uncertainty.
• Planning is many times very costly.
• Tendency towards inflexibility to change is another limitation of planning.
• Planning delays action.
• Planning encourages a false sense of security against risk or uncertainty.
PLANNING PROCESS
Step # 1. Perception of Opportunities:
Perception of opportunities is not strictly a part of the planning process. But this awareness of
opportunities in the external environment as well as within the organisation is the real starting
point for planning. It is important to take a preliminary look at possible future opportunities
and see them clearly and completely.

All managers should know where they stand in the light of their strengths and weaknesses,
understand the problems they wish to solve and know what they gain. Setting objectives
depends on the awareness. Planning requires realistic diagnosis of the opportunity situation.

Step # 2. Establishing Objectives:

This is the second step in the planning process. The major organisational and unit objectives
are set in this stage. This is to be done for the long term as well as for the short range.
Objective specify the expected results and indicate the end points of what is to be done,
where the primary emphasis is to be placed and what is to be accomplished by the various
types of plans.

Organisational objectives give direction to the major plans, which by reflecting these
objectives define the objective of every major department. Major objectives, in turn, control
the objectives of subordinate departments and so on down the line. In other words, objectives
from a hierarchy.

The objectives of lesser departments will be more accurate if subdivision managers

understand the overall enterprise objectives and the derivative goals. Managers should also
have the opportunity to contribute their ideal to setting their own goals and those of the
organisation.
Step # 3. Planning Premises:
After determination of organisational objectives, the next step is establishing planning
premises that is the conditions under which planning activities will be undertaken. Planning
premises are planning assumptions the expected environmental and internal conditions.

Thus planning premises are external and internal. External premises include total factors in
task environment like political, social, technological, competitors, plans and actions,
government policies. Internal factors include organisation’s policies, resources of various
types, and the ability of the organisation to withstand the environmental pressure. The plans
are formulated in the light of both external and internal factors.

The nature of planning premises differs at different levels of planning. At the top level, it is
mostly externally focused. As one moves down the organisational hierarchy the composition
of planning premises changes from external to internal. The major plans both old and new
will materially affect the future against which the managers at lower units must plan.

Step # 4. Identification of Alternatives:

The fourth step in planning is to identify the alternatives. Various alternatives can be
identified based on the organisational objectives and planning premises. The concept of
various alternatives suggests that a particular objective can be achieved through various
actions.

Step # 5. Evaluation of Alternatives:

The various alternative course of action should be analysed in the light of premises and goals.
There are various techniques available to evaluate alternatives. The evaluation is to be done
in the light of various factors. Example, cash inflow and outflow, risks, limited resources,
expected pay back etc., the alternatives should give us the best chance of meeting our goals at
the lowest cost and highest profit.

Step # 6. Choice of Alternative Plans:

This is the real point of decision-making. An analysis and evaluation of alternative courses
will disclose that two or more .ire advisable and beneficial. The fit one is selected.
Step # 7. Formulation of Supporting Plan:
After formulating the basic plan, various plan are derived so as to support the main plan. In
an organisation there can be various derivative plans like planning for buying equipment,
buying raw materials, recruiting and training personal, developing new product etc. These
derivative plans are formulated out of the basic or main plan and almost invariably required
to support the basic plan.

Step # 8. Establishing Sequence of Activities:

After formulating basic and derivative plans, the sequence of activities is determined so those
plans are put into action. After decisions are made and plans are set, budgets for various
periods and divisions can be prepared to give plans more concrete meaning for
implementation.

The overall budgets of an enterprise represent the sum total of income and expenses, with
resultant profit or surplus, and budgets of major balance sheet items such as cash and capital
expenditures. Each department or programme of a business or other enterprise can have its
own budgets, usually of expenses and capital expenditures, which tie into the overall budget.

NEED / IMPORTANCE FOR PLANNING

The following reasons are the need for planning:

1. Essential for Modern business: The growing complexities for modern business, rapid
technological changes, meaning of economics to international competition, changes in
consumer testes necessitate. Planning not only in the current context but also in the future
environment. Planning always takes into account all possible features development.

2. Related to Performances: Planning helps in setting goals for each function and for each
employee. Studies have provide that planning has been an instrument in improved
performance.

3. Focus on Objectives: The thrust of formal planning is on setting objectives and providing
guidelines for reaching them. Objectives provide a direction and all planning decisions are
directed towards achieving them. It ensures maximum utilisation of managerial time and
efforts.
4. Proper Allocation of Resources: The needs of the organisation are anticipated with the
help of planning. The acquisition and allocation of resources can be properly planned thus
minimizing wastages and ensuring optimal utility of these resources.

5. Facilitates Control: Planning can be used to devise a mechanism of control. There can be
quantitative targets and their comparison with actual performance can bring to notice any
deviations. A periodical review can also help in pointing out low performance. The
deviations in production, sales, profits etc. may come to light during periodic investigations
and remedial action can be taken.

6. Helpful in Decision making: Planning is helpful in the process of decision-making. Since

planning helps in specifying the actions to be taken for achieving organisational objectives, it
serves as a basis for decision-making for the future. The objectives, plans, policies, schedules,
rules etc. serve as guidelines for routine decision making.

7. Avoiding Business Failures: Business failures may be due to wrong and unscientific
planning. A bad planning may result into wastage of human and physical resources. The
enterprise may not be able to face competition from well-planned units. Good planning will
help in utilizing available resources in a best possible way thus reducing the chances of
failures.

TYPES OF PLANNING

There are three types of planning. These are identified on the following dimensions:

1. On the basis of coverage of activities

(i) Corporate planning

(ii) Functional planning

2. On the basis of Importance of Contents.

(i) Strategic Planning.

(ii) Operational Planning

3. On the basis of time period involved.

(i) Long term planning.

(ii) Short-term Planning

1. On the basis of coverage of activities

(a) Corporate Planning: Corporate planning is undertaken at the top level, also known as
corporate level, and covers the entire organizational activities.

The basic focus of corporate planning is to determine the long-term objectives of the
organization as a whole and to generate plans to achieve these objectives bearing in mind the
probable changes in the environment. Corporate planning, generally, has long-term
orientation and provides basis for functional planning.

(b) Functional Planning: Functional planning is of segmental nature and is undertaken for
each major function of the organization like production/operations, marketing, finance,
human resource, etc. At the second level, functional planning is undertaken for subfunctions
within each major function.

For example, marketing planning is undertaken at the level of marketing department and to
put marketing plan in action, planning at subfunctions of marketing like sales, product
promotion, marketing research, etc. is undertaken. A basic feature of functional planning is
that it is derived out of corporate planning and, therefore, it should contribute to the latter.
This contribution is achieved by integrating and coordinating functional planning with
corporate planning.

2. On the basis of Importance of Contents.

(a) Strategic Planning: Strategic planning involves setting long-term direction of the
organization in which it wants to proceed in future.

Strategic planning deals with strategic issues like type of business to be undertaken,
diversification of business into new lines, type of products to be offered, and so on. This way,
strategic planning encompasses all the functional areas of business and is effected within the
existing and long-term framework of environmental factors.

Strategic planning also involves rigorous analysis of various environmental factors to relate
the organization relates to its environment.

(b) Operational Planning: Operational planning is the process of deciding the most effective
use of the resources already allocated through strategic planning and to develop a control
mechanism to ensure effective implementation of the actions so that organizational objectives
are achieved.

Usually operational planning covers one year or so. It aims at sustaining the organization in
its production/generation and distribution of current products (goods and services) to the
existing markets

3. On the basis of time period involved.

(a) Long-term Planning: Long-term planning is of strategic nature and involves more than
one year period, usually 3-5 years though period of 5 years is more common in Indian
context. Long-term planning usually covers all the functional areas of the business and is
undertaken within the existing and long-term future environmental scenario. In the longterm
planning process, high emphasis is placed on analysis of environmental factors. Sometimes,
basic changes in the organization like change in organizational mission, major change in
organization structure, change in key personnel of the organization, etc. become the
significant factor for long-term planning.

(b) Short-term Planning: Short-term planning usually covers one year. This aims at making
effective use of organizational resources — financial, physical, and human resources. Short-
term planning directly and immediately affects functional areas — production, marketing,
finance, etc..

ORGANIZING

Organizing is the process of defining and grouping activities, and establishing authority
relationships among them to attain organizational objectives. ‘Organising’ refers to a
dynamic process and a managerial activity by which different elements or parts of an
enterprise are brought together to obtain a desired result.

Allen defines Organising as “the process of identifying and grouping of the work to be
performed, defining and delegating responsibility and authority and establishing relationships
for the purpose of enabling people to work most effectively together in accomplishing their
objectives.”

Importance of Organizing

Efficient Administration

It brings together various departments by grouping similar and related jobs under a single
specialization. This establishes coordination between different departments, which leads to
unification of effort and harmony in work.

Resource Optimization

Organizing ensures effective role-job-fit for every employee in the organization. It helps in
avoiding confusion and delays, as well as duplication of work and overlapping of effort.

Benefits Specialization
It is the process of organizing groups and sub-divide the various activities and jobs based on
the concept of division of labor. This helps in the completion of maximum work in
minimum time ensuring the benefit of specialization.

Promotes Effective Communication

Organizing is an important means of creating coordination and communication among the

various departments of the organization. Different jobs and positions are interrelated by
structural relationship. It specifies the channel and mode of communication among different
members.

Creates Transparency

The jobs and activities performed by the employees are clearly defined on the written
document called job description which details out what exactly has to be done in every job.
Organizing fixes the authority-responsibility among employees. This brings in clarity and
transparency in the organization.

Expansion and Growth

When resources are optimally utilized and there exists a proper division of work among
departments and employees, management can multiply its strength and undertake more
activities. Organizations can easily meet the challenges and can expand their activities in a
planned manner.

Principles of Organizing

1. Principle of Specialization
According to the principle, the whole work of a concern should be divided among the
subordinates on the basis of qualifications, abilities and skills. It is through division of work
specialization can be achieved which results in effective organization.

2. Principle of Functional Definition

According to this principle, all the functions in a concern should be completely and clearly
defined to the managers and subordinates. This can be done by clearly defining the duties,
responsibilities, authority and relationships of people towards each other. Clarifications in
authority-responsibility relationships helps in achieving co-ordination and thereby
organization can take place effectively.
For example, the primary functions of production, marketing and finance and the authority
responsibility relationships in these departments should be clearly defined to every person
attached to that department. Clarification in the authority-responsibility relationship helps in
efficient organization.

3. Principles of Span of Control/Supervision

According to this principle, span of control is a span of supervision which depicts the number
of employees that can be handled and controlled effectively by a single manager. According
to this principle, a manager should be able to handle what number of employees under him
should be decided. This decision can be taken by choosing either from a wide or narrow span.
There are two types of span of control: Wide span of control, Narrow span of control

4. Principle of Scalar Chain

Scalar chain is a chain of command or authority which flows from top to bottom. With a
chain of authority available, wastages of resources are minimized, communication is not
affected, overlapping of work is avoided and easy organization takes place. A scalar chain of
command facilitates work flow in an organization which helps in achievement of effective
results. As the authority flows from top to bottom, it clarifies the authority positions to
managers at all level and that facilitates effective organization.

5. Principle of Unity of Command

It implies one subordinate-one superior relationship. Every subordinate is answerable and
accountable to one boss at one time. This helps in avoiding communication gaps and
feedback and response is prompt. Unity of command also helps in effective combination of
resources, that is, physical, financial resources which helps in easy co-ordination and,
therefore, effective organization.

Concepts:

(i) Span of control- Span of control (or span of management) is the number of
subordinates who report directly to a manager or leader

 Organisation with Narrow span – superior with less number of subordinate to

monitor.

Advantages
 • Close supervision.

• Close control.

• Fast Communication, between communication between subordinates & superiors.

Disadvantages

• Superiors tend to get too involved in subordinate work.

• Many levels of Management.

• High cost due to many levels.

• Excessive distance between lowest level and top level.

 Organisation with wide span - superior with more number of subordinate to

monitor.

Advantages

• Superiors are forced to delegate.

• Clear policies must be made.

• Subordinates must be carefully selected.

Disadvantages

• Tendency of overloaded superiors to become decision bottlenecks.

• Danger of superiors loss of control.

• Requires exceptional quality of managers.

(ii) Departmentation

Departmentation means division of work into smaller units and their re-grouping into bigger
units (departments) on the basis of similarity of features. Each department is headed by a
person known as departmental manager.

BASES OF DEPARTMENTATION
The bases or methods or types of departmentalization are listed as follows:
1. Functional departmentalization.
2. Process departmentalization.
3. Product departmentalization.
4. Geographic departmentalization.
5. Customer departmentalization.
6. Combined departmentalization.
7. Time departmentalization.
8. Number departmentalization.

1. Functional departmentalization
Departmentalization based on function is depicted in the image given below.

2. Process departmentalization
In process departmentalization, departments are separated based on their role in a production
process.

3. Product departmentalization

4. Geographic departmentalization
5. Customer departmentalization

6. Combined departmentalization

7. Time departmentalization

8. Number departmentalization
(iii) Authority and Responsibility

Authority is the power to give orders and get it obeyed or in other words it is the power to
take decisions.

Responsibility means state of being accountable or answerable for any obligation, trust, debt
or something or in other words it means obligation to complete a job assigned on time and in
best way.

(iv) Delegation of authority

- To delegate means to entrust authority to a subordinate.

- Assigns some part of his work to his subordinate and also gives the necessary
authority to make decision within the area of their assigned duties.

Types of Delegation
1. General or Specific
2. Formal or Informal
3. Written or oral
4. Downward and sideward

Types of Authority
1. Line authority – are those that have direct impact on the accomplishment of the objectives
of the enterprises

• it is the direct authority which a superior exercises over his subordinates to carry out
orders and instructions.
 • The flow of line authority is always downward, that is from a superior to a
subordinate.

• Line relationship performs the following roles:

a. as a chain of command

b. as a carrier of accountability (subordinate is answerable to his superior)

c. as a channel of communication

2. Staff authority – Staff refers to those elements of the organisation which help the line to
work most effectively in accomplishing the primary objectives of the enterprises.

• are those that help the line person work most effectively in accomplishing the
objectives.

• Right to provide advice, assistance and information.

3. Functional authority - is the right which an individual or department has delegated to it

over specialized processes, practices, policies or other matters relating to activities
undertaken by personnel in department other than its own.

- generally relates to laying down systems and procedures. For Eg. The personnel manager
may lay down the grievances procedure to be followed in all departments.

- granted to a staff specialist to issue instruction to line executives directly in a specific and
limited area of operation.

BASIS FOR
AUTHORITY RESPONSIBILITY
COMPARISON

Meaning Authority refers to the Responsibility denotes duty or obligation to

power or right, attached to undertake or accomplish a task successfully,
a particular job or assigned by the senior or established by
designation, to give one's own commitment or circumstances.
orders, enforce rules,
make decisions and exact
compliance.

What is it? Legal right to issue Corollary of authority.

orders.
 BASIS FOR
AUTHORITY RESPONSIBILITY
COMPARISON

Results from Formal positition in an Superior-subordinate relationship

organization

Task of manager Delegation of authority Assumption of responsibility

Requires Ability to give orders. Ability to follow orders.

Flow Downward Upward

Objective To make decisions and To execute duties, assigned by superior.

implement it.

Duration Continues for long period. Ends, as soon as the task is accomplished.

Organisation Chart

• An organisation chart is a graphic representation of the various positions in the

enterprise and the formal relationships among them.
• It is a blueprint of the company organization structure.

Characteristics
1. a diagrammatical presentation.
2. represent the formal Organisation structure.
3. it shows the main lines of authority in the Organisation.
4. indicates inter-play of various functions & relationships.
5. indicates the channel of communication.

Types of organization Chart

1. Vertical Chart – lines of command proceeding from top to bottom in vertical lines
2. Horizontal Chart – Highest position shown in left
3. Concentric or Circular Chart

Contents of Organisation Chart

1. Basic Organisation structure & flow of authority
2. Authority & Responsibility of various executives
3. Positions of various office personnel
4. Total number of person working in an Organisation

STAFFING
Staffing is a managerial function which involves obtaining, utilising and retaining, qualified
and competent personnel to fill all positions of an organisation, from top to operative level. In
finer terms, staffing is involves the process of filling the vacant position of the right
personnel at the right job, at right time. In management, the meaning of staffing is an
operation of recruiting the employees by evaluating their skills, knowledge and then offering
them specific job roles accordingly.

Koontz and O’Donnell “The managerial functions of staffing involves manuring the
organizational structure through proper and effective selection, appraisal and development of
personnel to fill the roles designed into structure”.

Staffing is done by identifying the work force requirement inventorying the people available
and recruiting, selecting, placing, promoting, appraising, planning the careers, compensating
and training.

Functions of Staffing
1. Procurement – Job analysis – Man power planning – Recruitment – Selection –
Placement

2. Development - Performance appraisal – Training - Management Development - Career

Planning & Development - Promotion

3. Compensation– Job evaluation – Wage and Salary administration– Incentives – Fringe

Benefits – Social security measures

4. Human Relations - is an area of management in integrating people into work situation in a

way that motivates them to work together productively, co-operatively and with economic,
psychological and social satisfaction.
Process of staffing

1. Manpower Planning

Manpower planning can be regarded as the quantitative and qualitative measurement of labour
force required in an enterprise. Therefore, in an overall sense, the planning process involves the
synergy in creating and evaluating the manpower inventory and as well as in developing the
required talents among the employees selected for promotion advancement

2. Recruitment

Recruitment is a process of searching for prospective employees and stimulating them to apply
for jobs in the organization. It stands for finding the source from where potential employees will
be selected.

3. Selection

Selection is a process of eliminating those who appear unpromising. The purpose of this
selection process is to determine whether a candidate is suitable for employment in the
organization or not. Therefore, the main aim of the process of selection is selecting the right
candidates to fill various positions in the organization. A well-planned selection procedure is of
utmost importance.

4. Placement
Placement means putting the person on the job for which he is selected. It includes introducing
the employee to his job.

5. Training

After selection of an employee, the important part of the programmed is to provide training to
the new employee. With the various technological changes, the need for training employees is
being increased to keep the employees in touch with the various new developments.

6. Development

A sound staffing policy provides for the introduction of a system of planned promotion in every
organization. If employees are not at all having suitable opportunities for their development and
promotion, they get frustrated which affect their work.

7. Promotions

The process of promotion implies the up-gradation of an employee to a higher post involving
increasing rank, prestige and responsibilities. Generally, the promotion is linked to increment in
wages and incentives but it is not essential that it always relates to that part of an organization.

8. Transfer

Transfer means the movement of an employee from one job to another without increment in
pay, status or responsibilities. Therefore this process of staffing needs to evaluated on a timely
basis.

9. Appraisal

Appraisal of employees as to how efficiently the subordinate is performing a job and also to
know his aptitudes and other qualities necessary for performing the job assigned to him.

10. Determination of Remuneration

This is the last process which is very crucial as it involves in determining remuneration which is
one of the most difficult functions of the personnel department because there are no definite or
exact means to determine correct wages.

DIRECTING
Directing refers to a process or technique of instructing, guiding, inspiring, counselling,
motivating and leading people towards the accomplishment of organizational goals. It is one
of the key managerial functions performed by every manager. It is a continuous managerial
process that goes on throughout the life of the organization.

Characteristics of Directing
Significance of directing:

1. Initiates action
2. Ensures coordination
3. Improves efficiency
4. Facilitates change
5. Assists stability and growth

Techniques of directing

1. Delegation - Delegation is the assignment of authority to another person (normally from a

manager to a subordinate) to carry out specific activities.

2. Supervision - Supervision being an element of directing, every manager in the

organisation supervises his/her subordinates. Supervision implies exert overseeing of people
at work in order to ensure compliance with established plans and procedures. Every executive
has to supervise the work of his subordinates.

At the operating level, supervision is the most significant part of the manager job. The
supervisor is in direct touch with the workers. He teaches proper work methods, maintains
discipline and work standards and solve workers grievances or problems.
3. Orders and instructions – Issue orders and instructions are considered as the essential
step in the process of directing subordinates. An order is the fundamental tool for getting
things done. The order and instruction should be complete, clear and attainable. Orders may
be general or specific, formal or informal, written or oral.

4. Motivation - It is the process by which a persons efforts are energized, directed and
sustained toward attaining a goal. Motivation is the process of stimulating people to action to
accomplish desired goals. Motivation depends upon satisfying needs of people

5. Leadership - It is ability to influence a group towards achieving organisational goals.

6. Communication- Communication is defined as “the process of passing information and

understanding from one person to another”. Transferring information from one part of the
business to another that leads to some outcome, changed behaviour or changed practice.

Channels of communication:

1. Formal Communication – follows the route formally laid down in the organization
structure
a. Downward Communication – flow of communication from superior to
subordinate
b. Upward Communication - flow of communication from subordinate to
superior
c. Horizontal Communication – transmission of information among the
positions at the same level of he Organization.

2. Informal Communication or Grapevine – Communication among people through

informal contacts or relations.

CONTROLLING
Controlling is the process of monitoring, and comparing the actual performance against the
set of standards and taking corrective actions when necessary. Managers need to check if the
performance is moving as planned, as budgeted or set as standards. Controlling is said to be
effective, if goals are achieved as planned. The value of control can be seen in planning,
empowering and protecting employees and organization’s assets.

Process of control:
The process of control in management consists of four steps.
1. Setting the standards: Standards refer to the targets a business plans to achieve to
fulfil the organizational goals. These standards are of two types — quantitative and
qualitative. The former is measurable, for example, expenditure, profit, cost, output,
 etc. On the other hand, the latter is immeasurable in monetary terms. A few examples
are managers’ performance, an employee’s attitude toward a specific concern, etc.
2. Gauging the actual performance: The business measures employees’ performance
in the next step. This way, it becomes easier for organizations to identify deviations
from their established standards. That said, one must remember that with the
increasing management levels, measuring actual performance becomes challenging
for companies.
3. Comparing the actual and standard performance: Identifying the deviations from
the established standards is crucial for companies to assess their performance. In this
step, managers must figure out the cause and extent of the deviation. Without
identifying the gaps in performance, an organization cannot take corrective measures.
4. Taking corrective actions: Lastly, companies take the steps necessary to eliminate
deviations from the set standards. Thus, the process of control in management
regulates an organization’s activities to ensure that the actual performance conforms
to the set standards. When companies have an effective control system, the managers
can steer clear of circumstances that lead to financial losses.

Types of control:
Control is of three types in management.
1. Operational Control: This deals with the implementation of operational plans. Besides
regulating the business’s daily results, it is concerned with schedules, budgets, and particular
outputs. Moreover, it also involves taking corrective measures. This is common in an
organization’s lower-level management.
2. Strategic Control: Companies use it to control the development and implementation of
strategic plans. Typically, top-level management is involved in the strategic control process.
3. Tactical Control: This level involves making tactical plans to achieve a long-term goal.
Typically, middle managers implement these plans at all department levels.

Features of the control function:

The features of the control function are as follows:
 Regular or Continuous Process: This is a continuous process, and a company’s
management team must keep track of all activities to ensure that the business is
following the right path.
 Dynamic Process: The control process is flexible, not static, and the system remains
effective as long as it changes according to the business’s requirements.
  Action-Oriented: The process involves eliminating deviations from the set standards
through corrective actions.
 Forward-Looking Process: Controlling is a forward-looking concept, as businesses
can control future happenings, not the past. It aims to minimize losses, wastage, and
gaps between the actual performance and the desired result.
 Coordinate-Integrated Mechanism: It is a coordinated-integrated mechanism; the
system stresses the data accumulated for one reason may differ from those having
another purpose. Such data must be made compatible with each other. On account of
this, the process is a single system. However, one might want to think of it as multiple
interlocking sub-systems.

Control techniques:

There are two types of control techniques in management.

A) Traditional control techniques used in organizations:-
1. Budgeting -A budget is a statement reflecting an organization’s future
expenditures, profits, and earnings. It is an estimate of a company’s future financial position.
Units sold, units produced, and unit labor and material costs are a few of a budget’s crucial
components. Budgeting control involves comparing the actual performance with the budgeted
or planned performance. Some of the different types of budgets are cash budget, sales budget,
and production budget.
2. Personal Observation -This is the easiest way for managers to control organizational
activities. Managers of a business can observe the work in progress to accumulate
information as first-hand information. Then, if they spot any performance gap, they correct it
instantly by taking the necessary action.
3. Break-Even Analysis -Managers utilize this method to study the relationship between
volume, profits, and costs. This helps them understand the possible losses or profits at
different activity levels while analyzing the organization’s overall position.
4. Statistical Reports -This refers to analyzing data and reports presented to an
organization’s managers to give them an idea regarding the business’s performance in
different areas. The information is presented in tables, graphs, charts, etc., enabling managers
to compare with previous periods’ performance easily.

B) Modern control techniques used in organizations:-

1. Return On Investment- Also called ROI, it is a useful technique that helps determine
whether the business has been able to utilize the available capital efficiently. Besides the
overall organizational performance, one can gauge the performance of individual divisions or
departments using this technique.
2. Ratio Analysis- Companies use ration analysis to measure the organization’s performance.
The different types of ratios commonly used are profitability ratios, solvency ratios, liquidity
ratios, and turnover ratios.
3. Responsibility Accounting- This is an accounting sysytem where the involvement of
different sections, departments, and divisions is set up as ‘Responsibility Centers’. These
centers can be of various types, like revenue and cost centers. Every center’s head is
responsible for achieving the center’s predetermined objective.
4. Management Audit- This is the systematic appraisal of an organization’s management
team based on performance. It aims to assess the efficiency of the management. Moreover, it
plays a crucial role in improving future performance.

LEADERSHIP:

Leadership is defined as the ability to influence others toward achievement of goals and
vision. Not all leaders are managers nor all managers are leaders. Managers are given
certain authority to lead. Managers are given a formal authority by the organization. But this
does not assure that managers will become leaders. Further, members within the group may
emerge as leaders.

Koontz and O’Donnell- Leadership is the ability of a manager to induce subordinates to work
with zeal and confidence.
George R. Terry- Leadership is the activity of influencing people to strive willingly for group
objectives.
Chester Barnard- Leadership is the quality of behaviour of individuals whereby they guide
people or their activities in organizing efforts.

Nature of Leadership:
 Leadership is a relationship between two or more people in which influence and power
are unevenly distributed.
 A leader must have followers. Leaders do not flourish in vacuum.
 Leadership is essentially a continuous process of influencing behaviour. It is also a
psychological process.
 A leader guides his followers to achieve the goals of the organization.
 Leadership is exercised in a particular situation at a given point of time and under specific
set of circumstances.

Importance of leadership:
Leadership is an important factor for making any type of organization successful.
 Motivating Employee: Leader develops team work
 Better utilization of manpower
 Creates confidence
 Directing group activities
 Building morale & discipline
Attributes of a leader:

1. Integrity - Integrity is an essential leadership trait for the individual and the organization.
It’s especially important for top-level executives who are charting the organization’s course
and making countless other significant decisions. research has found that integrity may
actually be a potential blind spot for organizations, so make sure your organization reinforces
the importance of honesty and integrity to leaders at various levels.
2. Delegation - Delegating is one of the core responsibilities of a leader, but it can be tricky
to delegate effectively. The goal isn’t just to free yourself up — it’s also to enable your direct
reports to grow, facilitate teamwork, provide autonomy, and lead to better decision-making.
3. Communication - The best leaders are skilled communicators who are able to
communicate in a variety of ways, from transmitting information to inspiring others to
coaching direct reports. And you must be able to listen to, and communicate with, a wide
range of people across roles, geographies, social identities, and more. The quality and
effectiveness of communication among leaders across your organization directly affects the
success of your business strategy, too.
4. Self-Awareness - The better you understand yourself and recognize your own strengths
and weaknesses, the more effective you can be as a leader.
5. Gratitude - Being thankful can lead to higher self-esteem, reduced depression and anxiety,
and better sleep. Gratitude can even make you a better leader.
6. Learning Agility - Learning agility is the ability to know what to do when you don’t know
what to do.Great leaders are really great learners.
7. Influence - For some people, “influence” feels like a dirty word. But being able
to convince people through the influencing tactics of logical, emotional, or cooperative
appeals is an important trait of inspiring, effective leaders. Influence is quite different from
manipulation, and it needs to be done authentically and transparently. It requires emotional
intelligence and trust.
8. Empathy - Empathy is correlated with job performance and is a critical part of emotional
intelligence and leadership effectiveness. If you show more inclusive leadership and
empathetic behaviors toward your direct reports, research shows you’re more likely to be
viewed as a better performer by your boss.
9. Courage - Courage is a key trait of good leaders. Rather than avoiding problems or
allowing conflicts to fester, having courage enables leaders to step up and move things in the
right direction.
10. Respect - Treating people with respect on a daily basis is one of the most important
things a leader can do. It will ease tensions and conflict, create trust, and improve
effectiveness. Creating a culture of respect is about more than the absence of disrespect.

LEADERSHIP STYLES:
Leadership styles refer to a leader’s behaviour. It is the result of the philosophy, personality
and experience of the leader.
1. Autocratic/Authoritarian Leaders: Under the autocratic leadership styles, all decision-
making powers are centralized in the leader as shown such leaders are dictators.
Autocratic leadership is the direct opposite of democratic leadership. In this case, the leader
makes all decisions on behalf of the team without taking any input or suggestions from them.
The leader holds all authority and responsibility. They have absolute power and dictate all
tasks to be undertaken. There is no consultation with employees before a decision is made.
After the decision is made, everyone is expected to support the decision made by the leader.
There is often some level of fear of the leader by the team.

The autocratic type of leadership style can be very retrogressive as it fuels employee
disgruntlement since most decisions would not be in the employees’ interests. An example
can be a unilateral increase in working hours or a change in other working conditions
unfavorable to employees but made by leadership to increase production. Without employee
consultation, the manager may not be fully aware of why production is not increasing,
thereby resorting to a forced increase in working hours. It can lead to persistent absenteeism
and high employee turnover.

However, autocratic leadership can be an effective approach in cases where the leader is
experienced and knowledgeable about the circumstances surrounding the decision in question
and where the decision needs to be made swiftly. There are other instances where it is also
ideal such as when a decision does not require team input or an agreement to ensure a
successful outcome.

Eg - Steve Jobs – Apple

2. Participative or Democratic Leaders: The democratic leadership style favors decision-
making by the group as shown, such as leader gives instruction after consulting the group.
Eg. Sundar Pichai - Google
A democratic leadership style is where a leader makes decisions based on the input received
from team members. It is a collaborative and consultative leadership style where each team
member has an opportunity to contribute to the direction of ongoing projects. However, the
leader holds the final responsibility to make the decision.

Democratic leadership is one of the most popular and effective leadership styles because of
its ability to provide lower-level employees a voice making it equally important in the
organization. It is a style that resembles how decisions are made in company boardrooms.
Democratic leadership can culminate in a vote to make decisions.

Democratic leadership also involves the delegation of authority to other people who
determine work assignments. It utilizes the skills and experiences of team members in
carrying out tasks.

The democratic leadership style encourages creativity and engagement of team members,
which often leads to high job satisfaction and high productivity. However, establishing a
consensus among team members can be time-consuming and costly, especially in cases
where decisions need to be made swiftly.

3. Laissez Faire or Free Rein Leaders: A free rein leader does not lead, but leaves the
group entirely to itself as shown; such a leader allows maximum freedom to subordinates.
Laissez-faire leadership is accurately defined as a hands-off or passive approach to
leadership. Instead, leaders provide their team members with the necessary tools,
information, and resources to carry out their work tasks. The “let them be” style of leadership
entails that a leader steps back and lets team members work without supervision and free to
plan, organize, make decisions, tackle problems, and complete the assigned projects.

The laissez-faire leadership approach is empowering to employees who are creative, skilled,
and self-motivated. The level of trust and independence given to the team can prove to be
uplifting and productive and can lead to job satisfaction.

At the same time, it is important to keep such a type of leadership in check as chaos and
confusion can quickly ensue if the team is not organized. The team can end up doing
completely different things contrary to what the leader expects.

According to research, laissez-faire leadership is the least satisfying and least effective.

Eg – Warren Buffet – Berkshire Hathaway

4. Bureaucratic leadership: In this type of leadership, leaders strictly adhere to
1organisational rules and policies. They make sure that their team members do the same.
Bureaucratic leaders are often organised and self-motivated.
Bureaucratic leadership is a “go by the book” type of leadership. Processes and regulations
are followed according to policy with no room for flexibility. Rules are set on how work
should be done, and bureaucratic leaders ensure that team members follow these procedures
meticulously. Input from employees is considered by the leader; however, it is rejected if it
does not conform to organizational policy. New ideas flow in a trickle, and a lot of red tape is
present. Another characteristic is a hierarchical authority structure implying that power flows
from top to bottom and is assigned to formal titles.

Bureaucratic leadership is often associated with large, “century-old” organizations where

success has come through the employment of traditional practices. Hence, proposing a new
strategy at these organizations is met with fierce resistance, especially if it is new and
innovative. New ideas are viewed as wasteful and ineffective, or even downright risky.

Although there is less control and more freedom than an autocratic leadership style, there is
still no motivation to be innovative or go the extra mile. It is, therefore, not suitable for
young, ambitious organizations on a growth path.

Bureaucratic leadership is suitable for jobs involving safety risks or managing valuable items
such as large amounts of money or gold. It is also ideal for managing employees who
perform routine work.

5. Transactional leadership style:

Transactional leadership is more short-term and can best be described as a “give and take”
kind of transaction. Team members agree to follow their leader on job acceptance; therefore,
it’s a transaction involving payment for services rendered. Employees are rewarded for
exactly the work they would’ve performed. If you meet a certain target, you receive the
bonus that you’ve been promised. It is especially so in sales and marketing jobs.

Transactional leadership establishes roles and responsibilities for each team member and
encourages the work to be completed as scheduled. There are instances where incentive
programs can be employed over and above regular pay. In addition to incentives, there are
penalties imposed to regulate how work should be done.

Transactional leadership is a more direct way of leadership that eliminates confusion between
leader and subordinate, and tasks are clearly spelled out by the leader. However, due to its
rigid environment and direct expectations, it may curb creativity and innovation. It can also
lead to lower job satisfaction and high employee turnover.

6. Transformational Leadership

Transformational leadership is all about transforming the business or groups by inspiring

team members to keep increasing their bar and achieve what they never thought they were
capable of. Transformational leaders expect the best out of their team and push them
consistently until their work, lives, and businesses go through a transformation or
considerable improvement.

Transformational leadership is about cultivating change in organizations and people. The

transformation is done by motivating team members to go beyond their comfort zone and
achieve much more than their perceived capabilities. To be effective, transformational leaders
should possess high levels of integrity, emotional intelligence, a shared vision of the future,
empathy, and good communication skills.

Such a style of leadership is often associated with high growth-oriented organizations that
push boundaries in innovation and productivity. Practically, such leaders tend to give
employees tasks that grow in difficulty and deadlines that keep getting tighter as time
progresses.
However, transformational leaders risk losing track of individual learning curves as some
team members may not receive appropriate coaching and guidance to get through challenging
tasks. At the same time, transformational leaders can lead to high productivity and
engagement through shared trust and vision between the leader and employees.

Eg. Mark Zuckerberg – Facebook

7. Servant leadership style: Servant leaders live by a people-first mindset and believe that
when team members feel personally and professionally fulfilled, they’re more effective and
more likely to regularly produce great work. Because of their emphasis on employee
satisfaction and collaboration, they tend to achieve higher levels of respect. Servant leaders
motivate their teams and have excellent communication skills. You may find this leadership
style a match for your own style if you tend to encourage collaboration and engagement
among team members and if you commit to growing your team professionally.
Eg. Mother Terassa

8. Visionary leadership style: Visionary leaders possess a powerful ability to drive progress
and usher in periods of change by inspiring employees and earning trust for new ideas. A
visionary leader is also able to establish a strong organizational bond. They strive to foster
confidence among direct reports and colleagues alike. Visionary style is especially helpful for
small, fast-growing organizations, or larger organizations experiencing transformations or
restructuring. Visionary leaders tend to be persistent and bold, strategic and open to taking
risks. They're often described as inspirational, optimistic, innovative and magnetic.
Eg. Ratan Tata

How to develop leaders??

While there are several strategies for developing leaders, it's helpful to have a process for
finding potential leaders and helping them grow. Below is a list of nine steps to help you
develop well-rounded leaders:
1. Recognize people with leadership potential
Leaders in the workplace exhibit a lot of traits, like being empathetic about their colleagues,
passionate about their work and committed to the company's goals. Someone may exhibit a
different combination of traits and still be a great candidate for leadership development.
2. Mentor your potential leader
Be an example to the employees you're mentoring by exhibiting leadership qualities in the
workplace. Share some of your personal experiences about how you learned to be a leader.
Try to relate your discussions to the requirements of a leadership role and ask for their
opinion on what it means to be an effective leader so you know how you can motivate them
in the future.
3. Highlight the importance of soft skills
Employees interested in growing their management skills sometimes don't remember that
soft skills can have just as much importance in leadership as hard skills. The soft skills that
leaders use daily, such as problem-solving, creativity, motivating and delegating.
4. Take time to reflect
Teach your potential leaders that it's important to take time to reflect on each project or task
they complete. Consider asking them to take 10 minutes each day to reflect on what they did
throughout the day and list their successes and challenges. Have them write some solutions to
those challenges if they occur again in the future. At the end of each week, you can take time
to meet with all of them and discuss some solutions they wrote and discuss other effective
solutions as well.
5. Ask about their aspirations
Discuss career goals with potential leaders to determine what growth and leadership mean to
them. Based on their responses, design long-term assignments that can help them grow as
leaders and benefit both them and the company. For example, if someone's interested in a
management position, you might ask them to get more involved in organizing upcoming
project goals for the department. Try to make the assignment challenging but achievable so
that by the time they've completed it, they've learned and implemented new leadership
qualities.
6. Give constructive feedback
Many employees want to participate in their career development. Providing informal
and constructive feedback regularly is an effective way to help them be an active participant
in progressing their leadership skills. You can also provide constructive criticism about ways
they can improve, but provide specific examples of how they can make those improvements.
7. Teach them to network
Teaching potential leaders to network with other colleagues can improve their interpersonal
skills and strengthen their confidence. It can help potential leaders connect more easily with
people they've never met and make them more comfortable in situations where they are
speaking with large groups of people. Example: You can start by asking them to network
during company events such as happy hours or holiday parties. Suggest they speak with
colleagues they've had little interaction with before. Once they get more comfortable, you can
bring them with you to a company-wide event and have them practice networking on a larger
scale.
8. Provide opportunities for development
Try to offer a variety of leadership experiences to potential leaders. The skills that you use
frequently are the ones that employees can also benefit from learning. For example, if you
give monthly presentations to an entire department, ask them to watch you present. Let them
know they are going to take turns presenting in the months to come. Although it may not be a
challenging task for all employees, introducing them to experiences they're unfamiliar with
can help them grow as potential leaders.
9. Be available to offer support
Let them know you're available to talk if they have questions about an assignment or would
like extra feedback on their performance. One way employees learn leadership qualities is by
seeing them in their own manager. Providing a safe and welcoming environment for them can
help them thrive and grow into new roles.

Leadership Grid
The Leadership Grid is a model of behavioral leadership developed in the 1960s by Robert
Blake and Jane Mouton. Previously known as the Managerial Grid.

The Leadership Grid is based on two behavioral dimensions:

concern for production, which is plotted on the X-axis on a scale from one to nine points; and
concern for people, which is plotted on a similar scale along the Y-axis.
The model identified five leadership styles by their relative positions on the grid.
The first number in the examples below reflects a leader's concern for production; the second
number is a leader's concern for people.
Impoverished (1,1)
Produce or Perish (9, 1)
Middle of the Road (5, 5)
Country Club (1, 9)
Team (9, 9)

Types of Behaviors Found on the Leadership Grid

• The Impoverished or Indifferent leadership style (1,1) in the model refers to the style
that shows little regard for the team or overall production. Such leaders' efforts and
concerns are more centered on self-preservation.
• The Produce or Perish leadership style(1,9) focuses solely on production with a
disregard for the needs of the workers on the team. The leader who follows this path
may see high attrition rates due to their need for control and neglect of the team's
needs.
• The Middle of the Road leadership approach(5,5) offers a balance of speaking to the
team’s needs as well as the organization’s production needs. This may lead to average
and below average results in team performance and satisfaction.
• Country Club leadership style(9,1) sees the team’s needs first and foremost over
everything else. The assumption by the leader is that happiness within the team will
naturally lead to improved productivity; however, there is no guarantee.
• Team approach(9,9) is considered to be the most effective form of leadership,
according to the Leadership Grid's creators. The leader shows a commitment to staff
empowerment as well as toward increasing productivity. By encouraging the workers
to operate as a team, the belief is they will be motivated to accomplish more.
To conclude:
• The model proposes that the Team leadership style, which displays a high degree of
concern for both production and people, may boost employee productivity.
• Some of the perceived benefits of using the Leadership Grid include its ability to
measure performance as well as the ability to perform a self-analysis of your own
leadership style. So businesses and organizations continue to use the grid.
 • There are some perceived limitations to the Leadership Grid, however.
• For example, it may offer a flawed self-assessment, due in part to its use of minimal
empirical data to support the effectiveness of the grid.
• The model also does not take into account a variety of factors, such as the work
environment and internal or external variables that may be factors.

LEADER VS MANAGER:
Leader Manager
A person becomes a leader by virtue of his A person becomes a manager by virtue of his
1 1
personal qualities. officials authority
2 A leader has followers 2 A manager has subordinates
The relationship between the leader and The relationship between a manager and his
3 3
his followers is generally informal subordinates is formal
A manager has to strive to attain the
4 A leader may strive for personal goal 4
organizational goal
Management is not a part of leadership; A
5 Leadership is part of management 5 manager is a leader in view of his formal
authority.
Leadership qualities are to be a greater
6 6 Managerial qualities are acquired.
extent inherent or in-born.
Leadership is possible both in formal and Management is possible only in formal
7 7
informal group. structure.

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