UNIT 5

Co-ordination and controlling

Co-ordination:
Meaning:
"Co-ordination is a process of linking various process of the enterprise". Every department in
a concern function independently. But the activities of one department influence those of
another department. For example, that to this of the production influence those of the sales
department and vice versa. likewise, the activities of the finance department influence those
of the production and sales departments. Thus, it becomes clear that the various departments
in an enterprise are inter-related and inter-dependent. Co-ordination is only concerned with
that task of establishing a link between the activities of the different departments. Every
department has its own goal. But what is important is the contribution of various departments
to the goal of the enterprise. Co-ordination ensures that All the departments contribute to the
attainment of the goal of the whole enterprise.

Need for Co-ordination:

[Link] number of persons:
When many people work in a big organization, it becomes hard to co-ordinate. Each person is
different and may not always act in a logical or expected way. They may not always think
about others while working, which can lead to a lack of teamwork and poor co-ordination.

[Link]:
Modern organizations need specialists because of complex technology and different tasks.
Each specialist has their own way of doing things. This can lead to a lack of teamwork. So,
co-ordination is needed to make sure everyone works well together.

[Link] differentiation:
Functional differentiation means different departments have different goals. Each manager
focuses on their own work, which can create imbalance.
For example, marketing may want to sell more than what production can make. So, co-
ordination is needed to keep all departments working in harmony.

[Link]:
Co-ordination is needed in organizations because different departments and people depend on
each other. One department’s work can affect others, so everyone must work together
smoothly. There are three types of interdependence:
1. Pooled – Units work separately but contribute to overall goals (e.g., a company making
both textiles and cement).
2. Sequential – One unit’s work depends on another’s (e.g., car parts being assembled in
order).
3. Reciprocal – Units rely on each other back and forth (e.g., vehicle operations and
maintenance).
More interdependence means more need for co-ordination.

Individual versus organizational interests:

Sometimes, what a person wants and what the organization needs can be different. People
join to meet their own goals, while the organization expects them to help reach its goals.
When these don't match, problems can happen, and work may suffer. So, it's important to co-
ordinate and align both interests for better results.

Types of Co-ordination:

1. Internal Co-ordination:
Meaning: Co-ordination within the organization.
Explanation: Ensures that departments, units, teams, and individuals within the same
organization work harmoniously towards common goals.
Focuses on: Synchronizing the activities of marketing, finance, HR, production, etc.

2. External Co-ordination:
Meaning: Co-ordination with outside parties.
Explanation: Aligns the organization’s activities with external stakeholders like customers,
suppliers, government, competitors, and society.
Focuses on: Meeting market demands, legal compliances, and public relations.

3. Vertical Co-ordination:
Meaning: Co-ordination between different levels of the hierarchy.
Explanation: Connects top-level, middle-level, and lower-level management. It ensures
policies and instructions flow smoothly from top to bottom, and feedback flows from bottom
to top.
Focuses on: Clear reporting relationships, responsibility sharing, and decision-making.

4. Horizontal Co-ordination:
Meaning: Co-ordination across departments or units at the same level.
Explanation: Ensures that various departments (like sales, production, R&D) at the same
level collaborate effectively.
Focuses on: Avoiding duplication of work, delays, and conflicts between departments.

5. Procedural Co-ordination:
Meaning: Co-ordination through rules and procedures.
Explanation: Standardized policies and workflows ensure that everyone follows a common
method.
Focuses on: Uniformity and consistency in work processes.

6. Personal Co-ordination:
Meaning: Co-ordination through direct human interaction.
Explanation: Involves informal communication, meetings, and interpersonal relationships.
Focuses on: Trust-building and mutual understanding among individuals.

7. Impersonal Co-ordination:
Meaning: Co-ordination through systems and schedules.
Explanation: Utilizes technology, documents, memos, and emails instead of personal contact.
Focuses on: Efficiency and time-saving.

Essential Requisites for Excellent Co-ordination:

1. Clearly Defined Goals:
Everyone must know the common objectives.

2. Proper Planning:
Well-structured plans to guide all activities.

3. Effective Communication:
Smooth flow of information across all levels.

4. Mutual Understanding:
Respect and trust among team members.

5. Good Leadership:
Strong guidance to unite efforts.

6. Unity of Direction:
All departments work towards the same goal.

7. Team Spirit:
Co-operation and willingness to work together.

8. Continuous Supervision:
Regular monitoring to maintain co-ordination.

9. Timely Feedback:
Quick sharing of results to correct deviations.

10. Flexibility:
Ability to adjust plans according to changing situations.

Merits of Co-ordination:
1. Achieves Organizational Goals:
Harmonizes individual and departmental efforts toward common objectives.

2. Promotes Team Spirit:

Encourages mutual co-operation and reduces conflicts.

3. Increases Efficiency:
Eliminates duplication of work and improves resource utilization.

4. Facilitates Proper Planning & Execution:

Aligns various activities for smooth implementation of plans.

5. Improves Relations:
Builds strong interdepartmental relationships through collaboration.

6. Encourages Innovation:
With departments working together, new ideas and improvements emerge.

Demerits of Co-ordination:
1. Time-Consuming:
Requires continuous communication and effort, which may delay decisions.
2. Requires Strong Leadership:
Without effective leadership, co-ordination becomes difficult.

3. Difficult in Large Organizations:

The larger the organization, the harder it is to co-ordinate all departments effectively.

4. Risk of Over Co-ordination:

Too much focus on co-ordination may lead to bureaucracy and rigidity.

5. Costly Process:
May involve high administrative costs due to frequent meetings and communication systems.

Controlling:
Meaning:
If planning is "looking ahead" controlling is looking back". planning helps to attain the goals
of the enterprise in a system manner. Control, on the other hand, ensures that everything has
been done as planned. It checks or verifies whether the actual performance corresponds to the
expected performance. For example, if the production department has planned to produce
10000 units of output during a specified period, my profile in the controlling function, it can
be verified whether the target of 10000 units has been achieved within the stipulated period.
In case, there is a short fall, say to the extent of 1000 units, it because necessary to find out
the cause for the same and take necessary corrective actions. Be said that, "planning without
control is useless uncontrol without planning is meaningless".

Benefits/Important of Control:
[Link] ensures attainment of enterprise objective:
While planning helps to work systematically, control helps to ascertain whether the fruits of
labour have been realised.

2. It highlights the quality of plans:

Control brings out the positive and negative aspects of the various plans of the enterprise. If
there is any deficiency in planning, steps may be taken to improve the quality of plans.

3. It ensures successful implementation of plans:

It is only control that ensures whether the plans of the enterprise are being properly
implemented. It points out the bottlenecks in the implementation of plans and also suggests
remedial measures.

4. It ensures that employees work with commitment:

Control requires the employees at all levels to perform their duties as planned in order to
attain the targets within the stipulated time. In the absence of control, there may be a
tendency to go slow.

5. It provides scope for delegation:

In every department of the enterprise, target attainment gets the focus in view of the control
function. To attain the target, the departmental heads have to assign work to their
subordinates and also give them the requisite authority to carry out their tasks. Thus, control
gives scope for delegation of authority by a superior to his subordinates.

6. It facilitates co-ordination:
The work of every employee influences and is influenced by the work of others. What is,
therefore, required is a co- ordinated effort. Control requires the employees to integrate their
efforts and work as a team in order to achieve the targets.

7. It promotes efficiency:
By fixing the deadline for the accomplishment of targets, control and money are put to
optimum use. This leads to higher efficiency.

Important Control Techniques:

The following are some of the important techniques of control:
1. Budgetary Control.
2. Cost Control.
3. Inventory Control.
4. Break Even Point Analysis.
5. Profit and Loss Control.
6. Statistical Analysis.
7. External and Internal Control.
8. Management Information System.

Functions of Controlling:
1. Establishing Standards:
The controlling process begins with the setting of standards. Standards are the criteria against
which actual performance is measured. These can include quantity, quality, cost, time, or
behaviour-based standards. These standards should be specific, measurable, and achievable.
Clear standards ensure everyone in the organization knows what is expected.

2. Measuring Actual Performance:

This step involves collecting data and information about the actual performance of tasks and
activities. The measurement must be accurate, timely, and aligned with the type of standard
set. It can be done through direct observation, reports, statistical data, or performance
tracking systems. This function ensures that the organization stays aware of what is actually
happening in operations.

3. Comparing Actual Performance with Standards:

After measurement, the next step is to compare the actual performance with the
predetermined standards. This helps in identifying whether there is any deviation or not. The
comparison process reveals the degree of difference (if any) between expected and actual
results. This function helps the management understand where things are going as planned
and where they are not.

4. Analysing Deviations:
Once deviations are identified, it is important to analyse them properly. Not all deviations
need corrective action; minor ones may be ignored while major deviations require attention.
This function helps in identifying the causes of the problem and prioritizing which deviations
to address first. It focuses managerial attention on critical areas that affect organizational
performance significantly.

5. Taking Corrective Action:

This is the final step in the controlling process. It involves taking suitable steps to correct the
deviation and bring the performance in line with standards. Corrective actions could be in the
form of changes in operations, restructuring of teams, revising plans, or improving
communication. It ensures that future activities are aligned with plans and organizational
goals are effectively achieved.

The Control Process in Management:

[Link] performance standards.
[Link] actual performance.
[Link] it with the standards.
[Link] deviations.
[Link] corrective actions.
These processes ensure that organizational activities align with plans and goals.

1. Setting Performance Standards:

This involves establishing clear, measurable, and attainable goals or benchmarks against
which performance will be evaluated. Standards can be quantitative (e.g., production output,
sales figures) or qualitative (e.g., customer satisfaction, employee morale).

2. Measuring Actual Performance:

This step involves gathering data on how well the organization is performing against the set
standards. This could involve using various methods like surveys, reports, or direct
observation
3. Comparing Performance to Standards:
The actual performance data is then compared with the established standards to identify any
deviations or discrepancies.

4. Analysing Deviations:
This step involves understanding why deviations occurred. It could be due to ineffective
processes, inadequate resources, or unforeseen circumstances.

5. Taking Corrective Actions:

Based on the analysis, appropriate actions are taken to address the deviations and bring
performance back on track. This may involve revising processes, providing additional
training, or adjusting resources.

Types of Control:

The organisation, like other man-made systems, does not have automatic controls. Instead
they require constant monitoring and adjustment to control deviations. For this purpose, on
basis of analysis of possible causes, the manager takes corrective action. According to the
Tim when corrective actions are taken, there could be three types of control; post, current and
control.

[Link] Control:
Most of the organisations do have this type of control. This is also known as ‘feedback
‘control or after the event control. Post-control includes the collection of information about
the completed activity, the evaluation of information and the taking of corrective action to
improve performance. In other words, it permits the manager to use information on past
performance to bring future performance in line with planned objectives and standards. For
example, by monitoring the complaints of CA students who appeared in an examination, the
chairman of the CA institute learns that the evaluation division required action of time so the
Post-control helps in testing the validity and appropriateness of standards. If they prove
possible to be attained, they should be made more reasonable. And if they prove too easy,
they to be raised.
For example, a bank loan officer learns that potentially profitable business has been reduced
because of strict credit criteria used to grant [Link] as possible and initiate prompt corrective

2. Current Control:
This type of control is also known as ‘real time control because it is more concerned with the
present rather than the future or the past. This is the reason that current control is exercised by
many organisations in respect of inventory control, production control, quality control, etc. It
is also known as ‘steering control’ because control is designed to detect deviations from
standards and allow corrective action to be taken before a particular sequence of activities is
completed. ‘Internal control system installed in the organisation to control the use of financial
resources is also an example of current control.
For example, leakage of a question paper in an examination may prompt the authorities to
cancel or postpone the examination.

3. Pre-Control (or) Feed Forward Control:

This is also known as ‘pro-active’ or ‘preventive control’ or ‘feed forward control’. This is
because in this type of control, the main emphasis is placed on preventing the performance of
the system to be deviated from standards. Preventive control, like current control, is very
expensive and difficult to operate. It addresses the issue of ‘what can we do ahead of time to
help our plans being implemented?’ It aims at protecting the system from environmental
pressures and disturbances and allows it to function in a planned manner. On the basis of the
above discussion, it can be safely inferred that successful managers must exercise all three
types of controls to meet the requirements of a modern complex organisation. Feed forward
control helps managers to avoid mistakes in the first place, current control enables them to
catch mistakes as soon as they are made, and finally feedback control keeps them away from
repeating past mistakes. Thus, it seems to be desirable to maintain a workable balance among
these three types of control. It is done to prepare an optimal contribution of these to exercise
efficient control.
For example, if the purchase manager of a home appliance manufacturing company warns
production and marketing managers of a delay in receiving an important sub-component,
corrective action can be taken to avoid a costly delay.

Introduction to MIS:
MIS is an organised system that provides the management with the relevant information at
the most appropriate time and with the highest level of accuracy. The information provided
by MIS is vital for making certain important decisions in business pertaining to inventory
level, wage payment and so on. MIS relies mainly on computers that can process complex
information with maximum speed and accuracy. A system is an organised body of inter-
related parts called sub-systems.
For example: if the human body is considered as a system, the brain system, the heart system
etc., are the various sub-systems.
An information system is one that accepts data as input and process the same to produce
information, which is the output. The relationship between data and information is the same
as that of raw materials and finished goods. Computer undertake the task of processing the
data in MIS. MIS support the activities of the employees, clients, owners and all those who
deal with an organisation by providing the information they need, that too in the manner in
which it is required.

Importance of MIS:
1. It does not rely only on manpower. MIS is a man-machine system.
2. It accepts the data in a raw form, process it and provides useful information.
3. It provides information at the right time and in the manner in which it is desired so that
vital decisions can be made without any delay.
4. Several functions areas of management like accounting, production and marketing rely on
MIS these days.
5. With MIS the task of feeding, processing, storing, retrieving and dissemination of
information has become easy. It can also be done with maximum speed and accuracy.

Merits of Controlling:
1. Ensures Goal Achievement:
Keeps activities aligned with organizational objectives.

2. Facilitates Decision-Making:
Provides data for evaluating performance and planning future actions.

3. Improves Employee Performance:

Encourages employees to meet standards through regular feedback.

4. Minimizes Wastage:
Helps in cost control by identifying inefficiencies.

5. Enables Coordination:
By measuring performance and setting standards, it supports coordination among
departments.

Demerits of Controlling:
1. Resistance from Employees:
Too much control can lead to resentment or stress among employees.

2. Costly Process:
Involves setting up control systems, which may increase administrative expenses.

3. Delay in Action:
Sometimes decisions are made after problems occur, making it reactive.

4. Limited Scope:
Control may not be effective in areas that require creativity or innovation.

5. Overdependence on Reports:
Excessive reliance on reports may ignore human aspects like morale and motivation.