Module IV

Directing, Motivation and Controlling

Directing
Directing is said to be a process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals. Directing is said to be the heart
of management process. Planning, organizing, staffing has got no importance if direction
function does not take place.
Directing initiates action and it is from here actual work starts. Direction is said to be
consisting of human factors. In simple words, it can be described as providing guidance to
workers is doing work. In field of management, direction is said to be all those activities
which are designed to encourage the subordinates to work effectively and efficiently.
According to Human, “Directing consists of process or technique by which instruction can
be issued and operations can be carried out as originally planned” Therefore, Directing is
the function of guiding, inspiring, overseeing and instructing people towards accomplishment
of organizational goals.
Direction has following elements:
 Supervision
 Motivation
 Leadership
 Communication

1. Supervision- implies overseeing the work of subordinates by their superiors. It is the

act of watching & directing work & workers.
2. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
3. Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.
4. Communications- is the process of passing information, experience, opinion etc from
one person to another. It is a bridge of understanding.

Nature of Directing
Directing is a crucial function of management that involves guiding, leading, and influencing
individuals to achieve organizational goals. It is a process of instructing, guiding, motivating,
and overseeing the performance of employees to ensure that they contribute effectively to the
organization's objectives. Here are the key features of directing:
1. Leadership: Leadership is a central feature of directing. It involves influencing and
inspiring individuals to willingly and enthusiastically contribute their efforts toward
achieving organizational goals. Effective leaders provide direction, vision, and
support to their team members.
 2. Initiates Action: The directing function involves taking the initiative to set the
organization in motion. Managers need to initiate and drive actions that align with the
overall plans and objectives of the organization.
3. Integration of Efforts: Directing aims to integrate the efforts of individuals and
teams towards common goals. It involves harmonizing diverse activities and functions
to ensure that they collectively contribute to the achievement of organizational
objectives.
4. Motivation: Motivation is a key aspect of directing. Managers must understand the
needs and desires of their team members and employ various motivational techniques
to encourage high performance and commitment.
5. Communication: Effective communication is essential in directing. Managers must
convey information, expectations, and feedback clearly and efficiently to ensure that
employees understand their roles and responsibilities.
6. Supervision: Supervision is a part of directing where managers oversee the work of
their subordinates. It involves monitoring performance, providing feedback, and
intervening when necessary to ensure that tasks are completed as per expectations.
7. Guidance and Support: Directing involves providing guidance and support to
employees. Managers assist their team members in understanding their roles,
overcoming challenges, and developing the skills needed to perform their tasks
effectively.
8. Initiates Change: Directing often involves implementing changes within the
organization. Managers must be proactive in initiating and managing change
processes, ensuring that employees adapt to new situations and requirements.
9. Feedback and Control: The directing process includes providing feedback on
performance. Managers use feedback to control and adjust ongoing activities,
ensuring that they align with organizational objectives.
10. Human Factor Emphasis: Directing recognizes the importance of the human factor
in achieving organizational goals. It involves understanding and addressing the needs,
attitudes, and behaviors of individuals within the organization.
11. Continuous Process: Directing is not a one-time activity; it is a continuous and
dynamic process. Managers engage in ongoing interactions with their team members,
adapting their approach as needed to address changing circumstances.

In summary, directing is a multifaceted management function that involves leadership,

motivation, communication, supervision, and the integration of individual and team efforts to
achieve organizational goals. It is a proactive and continuous process that focuses on guiding
and influencing people within the organization.
Scope of Directing
The scope of directing in the context of management refers to the range and extent of
activities involved in guiding, leading, and influencing individuals within an organization to
achieve its objectives. Directing is one of the fundamental functions of management, and its
scope encompasses various aspects of managerial responsibilities. Here's an overview of the
scope of directing:
1. Leadership: Leadership is a significant component of directing. Managers must
exhibit leadership qualities to guide and inspire their teams. The scope includes
setting a vision, providing direction, and fostering a positive work environment.
2. Communication: Effective communication is a crucial aspect of directing. The scope
involves not only conveying information but also ensuring that there is clear
understanding among team members. Managers must communicate goals,
expectations, feedback, and other relevant information.
3. Motivation: The scope of directing extends to motivating individuals and teams. This
involves understanding the needs and aspirations of employees and implementing
strategies to boost morale, engagement, and productivity.
4. Supervision: Supervision is an integral part of directing. Managers are responsible
for overseeing the work of their subordinates, providing guidance, and ensuring that
tasks are performed efficiently and in line with organizational objectives.
5. Guidance and Support: Directing includes providing guidance and support to
employees. Managers assist their team members in understanding their roles,
acquiring necessary skills, and overcoming challenges. This aspect of directing is
crucial for individual and team development.
6. Conflict Resolution: The scope of directing involves addressing conflicts that may
arise within the organization. Managers must possess conflict resolution skills to
ensure a harmonious working environment and maintain productive relationships
among team members.
7. Decision-Making: Directing includes participating in decision-making processes.
Managers must make decisions that align with organizational goals and guide their
teams in implementing those decisions effectively.
8. Change Management: Directing encompasses managing change within the
organization. Managers play a key role in initiating and implementing changes,
guiding employees through transitions, and ensuring that the organization adapts to
evolving circumstances.
9. Feedback and Performance Appraisal: The scope of directing involves providing
regular feedback on performance. Managers conduct performance appraisals, identify
areas for improvement, and recognize and reward achievements to maintain high
levels of employee performance.
10. Training and Development: Directing includes identifying training needs and
organizing development programs to enhance the skills and capabilities of employees.
This ensures that the workforce is well-equipped to meet the challenges of their roles.
11. Team Building: Managers are responsible for building and maintaining effective
teams. The scope of directing includes fostering collaboration, promoting a positive
team culture, and addressing issues that may affect team dynamics.
12. Ethical Considerations: The scope of directing also involves ethical considerations.
Managers must ensure that their actions and decisions align with ethical standards,
promoting a culture of integrity and responsibility within the organization.
In essence, the scope of directing is broad and encompasses various managerial activities
aimed at guiding, leading, and influencing individuals and teams to achieve organizational
goals in an effective and ethical manner.
Motivation
‘Motivation’ is the process of inspiring people in order to intensify their desire and
willingness for executing their duties effectively and for co-operating to achieve the common
objectives of an enterprise. In other words, it means to induce, instigate, incite or prompt
someone to a particular course of action for getting the results expected from him.
In the words of E.F.L. Brech, “Motivation is a general inspiration process which gets the
members of the team pull their weight effectively to give their loyalty to the group, to carry
out properly the tasks they have accepted and generally to play an effective part in the job
that the group has undertaken.”
In fact, motivation may be regarded as an integral part of the process of direction. In directing
the subordinates, the manager has to try to create in them the willingness to pursue the goals
of the organisation enthusiastically. In trying to do so, the manager may be said to concern
himself with motivation.
Importance of Motivation
1. Removal of Apathy: It is the considered view that the workers as a rule do not exert
adequate energy for the accomplishment of a task assigned to them. This is because
they are somehow dissatisfied with work, work situation or with the management
authority. Motivation removes this apathy of the workers for peak performance.
2. Combining ‘Will to work’ with ‘Capacity for work’: The will to work differs from
the capacity for work. A man may have the capacity for doing a work having physical
strength, technical skill, sufficient intelligence and mental alertness; but he may not
have the mentality to apply them in full to his work. Motivation removes this
psychological barrier and combines the will to work with the capacity for work of the
workers.
3. Securing Full Support of Workers: The vital mark of a successful manager is his
capacity to ensure full support and co-operation of the workers with their energy,
ability and enthusiasm. “You can buy a man’s time, you can buy a man’s physical
presence at a given place, but you cannot buy his enthusiasm, initiative or loyalty and
his capacity, will and energy without motivation.” The vital mark of a successful
manager is, thus, associated with motivation.
4. Understanding the Employees’ Needs: Motivation makes the managers understand
and realise the needs of the employees and gives satisfaction to them accordingly. If
there is this understanding, and motivation works behind it, the managers are sure to
receive needed co-operation of the employees for the profitability of the enterprise.
5. Maximum Utilization of the Resources: Motivation inspires the workers to make
the best possible use of different factors of production. They work whole-heartedly to
apply their abilities in minimising waste and cost. This will enable the enterprise to
utilise its human, physical and financial resources to the maximum.
 6. Increase in Efficiency and Output: Motivation is an effective instrument in the
hands of the managers to maximise efficiency of operations and output of the
enterprise. Motivated employees put higher performance as compared to other
employees. A happy and contended work force ensures improved efficiency and
higher output. Increase in labour productivity results in higher wages for the workers
and increased profits for the enterprise. The high performance is a must for an
organisation being successful and this performance comes through motivation.
7. Low Employee Turnover and Absenteeism: Motivated employees stay in the
organisation and their absenteeism is quite low. High labour turnover and absenteeism
create many problems in the organisation. Existence of attractive financial and non-
financial incentives helps to retain the employees. They are not easily tempted away
by offers from the competitors. With reduced labour turnover, it becomes possible for
the enterprise to plan its activities on a long-term basis.
8. Acceptance of Organisational Changes: Organisations are integral parts of the
society. The changes taking place in the society, i.e., changes in technology,
knowledge, value system, etc., require an organisation to incorporate those changes to
cope up with the requirement of the time. When these changes are introduced in the
organisation, there is a tendency to resist changes by the employees. However, if they
are properly motivated, they will accept, introduce and implement these changes and
keep the organisation on the right track of progress.
9. Better Industrial Relations: Existence of attractive motivational schemes promotes
closer identification between the enterprise and its workers. They merge their
individual interests with the organisational objectives. There arises a sense of
belonging and mutual co-operation at all levels. Motivation will foster team spirit
among the workers. This will reduce labour unrest and create better relations between
the managers and workers.
10. Facilitating other Functions of Management: The successful accomplishment of
different functions such as planning, organising, directing, coordinating and
controlling— all are inter-linked with motivation. Motivation is the right force that
can make planning successful, organisation sound, direction forceful, co-ordination
tight and control effective.

Theories of Motivation
Maslow’s Need Priority Model
Maslow’s Hierarchy of Needs Theory is regarded as one of the most popular theories on
motivation. It is a theory of psychology that explains that humans are highly motivated in
order to fulfill their needs, which is based on hierarchical order.
It was first introduced by Abraham Maslow in 1943 for his paper titled Theory of Motivation
and is based on a hierarchy of needs, which starts with the most basic needs and subsequently
moves on to higher levels. The main goal of this need hierarchy theory is to attain the highest
position or the last of the needs, i.e. need for self-actualization.
In business studies, it is used as a part of organisational behaviour and also regularly used in
psychology lectures.
Levels of Hierarchy
The levels of hierarchy in Maslow’s need hierarchy theory appear in the shape of a pyramid,
where the most basic need is placed at the bottom while the most advanced level of hierarchy
is at the top of the pyramid.
Maslow was of the view that a person can only move to the subsequent level only after
fulfilling the needs of the current level. The needs at the bottom of the pyramid are those
which are very basic and the most complex needs are placed on the top of the pyramid.
Let us read in detail about the various steps in Maslow’s hierarchy of needs theory.
1. Physiological Needs: The physiological needs are regarded as the most basic of the
needs that humans have. These are needs that are very crucial for our survival. The
examples of physiological needs are food, shelter, health and water, etc.
2. Safety Needs: Once the basic needs of food, shelter, water, etc are fulfilled, there is
an innate desire to move to the next level. The next level is known as the safety needs.
Here the primary concern of the individual is related to safety and security. Safety and
security can be regarding many things like a stable source of income that provides
financial security, personal security from any kind of unnatural events, attacks by
animals and emotional security and physical safety which is safety to health.
The various actions taken by an individual in ensuring safety and security are finding
a job, getting an insurance policy, choosing a secure neighborhood for staying with
family, etc.
3. Social Needs: This is the third level in the need hierarchy theory. It is that stage
where an individual having fulfilled his physiological needs as well as safety needs
seeks acceptance from others in the form of love, belongingness. In this stage, human
behaviour is driven by emotions and the need for making emotional relationships is
dominant here. The following examples can satisfy this need:
 Friendship
 Family
 Intimacy
 Social Groups
When an individual is deprived of the above needs, he/she feels lonely and depressed.
4. Esteem Needs: This is considered as the fourth level of the hierarchy of needs theory.
It is related to the need of a person being recognised in the society. It deals with
getting recognition, self-respect in the society. The need for recognition and
acceptance arises when a person has fulfilled their need for love and belongingness. In
addition to recognition from others, there is a need for the person to develop self-
esteem and personal worth.
5. Self-actualization Needs: This is the final level of the theory of hierarchy of needs as
proposed by Maslow. It is the highest level of needs and is known as the self-
actualization needs. It relates to the need of an individual to attain or realise the full
potential of their ability or potential. At this stage, all individuals try to become the
best version of themselves. In other words, self-actualization is the journey of
personal growth and development.
Herzberg’s Two-Factor Theory of Motivation
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the
motivator-hygiene theory. According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction. According to
Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of
“Dissatisfaction” is “No Dissatisfaction”.
Herzberg classified these job factors into two categories-
1. Hygiene Factors: Hygiene factors are those job factors which are essential for
existence of motivation at workplace. These do not lead to positive satisfaction for
long-term. But if these factors are absent/if these factors are non-existent at
workplace, then they lead to dissatisfaction.
In other words, hygiene factors are those factors which when adequate/reasonable in a
job, pacify the employees and do not make them dissatisfied. These factors are
extrinsic to work.
Hygiene factors are also called as dissatisfiers or maintenance factors as they are
required to avoid dissatisfaction. These factors describe the job environment/scenario.
The hygiene factors symbolized the physiological needs which the individuals wanted
and expected to be fulfilled. Hygiene factors include:
 Pay: The pay or salary structure should be appropriate and reasonable. It must
be equal and competitive to those in the same industry in the same domain.
 Company Policies and Administrative Policies: The company policies
should not be too rigid. They should be fair and clear. It should include
flexible working hours, dress code, breaks, vacation, etc.
 Fringe Benefits: The employees should be offered health care plans
(mediclaim), benefits for the family members, employee help programmes,
etc.
 Physical Working conditions: The working conditions should be safe, clean
and hygienic. The work equipments should be updated and well-maintained.
 Status: The employees’ status within the organization should be familiar and
retained.
 Interpersonal relations: The relationship of the employees with his peers,
superiors and subordinates should be appropriate and acceptable. There should
be no conflict or humiliation element present.
 Job Security: The organization must provide job security to the employees.
2. Motivational Factors: According to Herzberg, the hygiene factors cannot be
regarded as motivators. The motivational factors yield positive satisfaction. These
factors are inherent to work. These factors motivate the employees for a superior
performance.
These factors are called satisfiers. These are factors involved in performing the job.
Employees find these factors intrinsically rewarding. The motivators symbolized the
psychological needs that were perceived as an additional benefit. Motivational factors
include:
  Recognition: The employees should be praised and recognized for their
accomplishments by the managers.
 Sense of Achievement: The employees must have a sense of achievement.
This depends on the job. There must be a fruit of some sort in the job.
 Growth and Promotional Opportunities: There must be growth and
advancement opportunities in an organization to motivate the employees to
perform well.
 Responsibility: The employees must hold themselves responsible for the
work. The managers should give them ownership of the work. They should
minimize control but retain accountability.
 Meaningfulness of the Work: The work itself should be meaningful,
interesting and challenging for the employee to perform and to get motivated.

Limitations of Two-Factor Theory

 The two-factor theory overlooks situational variables.
 Herzberg assumed a correlation between satisfaction and productivity. But the
research conducted by Herzberg stressed upon satisfaction and ignored productivity.
 The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters
may spoil the findings by analyzing same response in different manner.
 No comprehensive measure of satisfaction was used. An employee may find his job
acceptable despite the fact that he may hate/object part of his job.
 The two-factor theory is not free from bias as it is based on the natural reaction of
employees when they are enquired the sources of satisfaction and dissatisfaction at
work. They will blame dissatisfaction on the external factors such as salary structure,
company policies and peer relationship. Also, the employees will give credit to
themselves for the satisfaction factor at work.
 The theory ignores blue-collar workers.

Despite these limitations, Herzberg’s Two-Factor theory is acceptable broadly.

Implications of Two-Factor Theory:
 The Two-Factor theory implies that the managers must stress upon guaranteeing the
adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers
must make sure that the work is stimulating and rewarding so that the employees are
motivated to work and perform harder and better.
 This theory emphasizes upon job-enrichment so as to motivate the employees. The
job must utilize the employee’s skills and competencies to the maximum. Focusing on
the motivational factors can improve work-quality.

Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of
human behaviour at work, or in other words, two different views of individuals (employees):
one of which is negative, called as Theory X and the other is positive, so called as Theory Y
According to McGregor, the perception of managers on the nature of individuals is based on
various assumptions.
Assumptions of Theory X
 An average employee intrinsically does not like work and tries to escape it whenever
possible.
 Since the employee does not want to work, he must be persuaded, compelled, or
warned with punishment so as to achieve organizational goals. A close supervision is
required on part of managers. The managers adopt a more dictatorial style.
 Many employees rank job security on top, and they have little or no aspiration/
ambition.
 Employees generally dislike responsibilities.
 Employees resist change.
 An average employee needs formal direction.

Assumptions of Theory Y
 Employees can perceive their job as relaxing and normal. They exercise their physical
and mental efforts in an inherent manner in their jobs.
 Employees may not require only threat, external control and coercion to work, but
they can use self-direction and self-control if they are dedicated and sincere to achieve
the organizational objectives.
 If the job is rewarding and satisfying, then it will result in employees’ loyalty and
commitment to organization.
 An average employee can learn to admit and recognize the responsibility. In fact, he
can even learn to obtain responsibility.
 The employees have skills and capabilities. Their logical capabilities should be fully
utilized. In other words, the creativity, resourcefulness and innovative potentiality of
the employees can be utilized to solve organizational problems.

Thus, we can say that Theory X presents a pessimistic view of employees’ nature and
behaviour at work, while Theory Y presents an optimistic view of the employees’ nature and
behaviour at work. If correlate it with Maslow’s theory, we can say that Theory X is based on
the assumption that the employees emphasize on the physiological needs and the safety
needs; while Theory X is based on the assumption that the social needs, esteem needs and the
self-actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he
encouraged cordial team relations, responsible and stimulating jobs, and participation of all in
decision-making process.
Implications of Theory X and Theory Y
 Quite a few organizations use Theory X today. Theory X encourages use of tight
control and supervision. It implies that employees are reluctant to organizational
changes. Thus, it does not encourage innovation.
  Many organizations are using Theory Y techniques. Theory Y implies that the
managers should create and encourage a work environment which provides
opportunities to employees to take initiative and self-direction. Employees should be
given opportunities to contribute to organizational well-being.
 Theory Y encourages decentralization of authority, teamwork and participative
decision making in an organization. Theory Y searches and discovers the ways in
which an employee can make significant contributions in an organization. It
harmonizes and matches employees’ needs and aspirations with organizational needs
and aspirations.

William Ouchi’s Theory Z of Motivation

William Ouchi developed Theory Z after making a comparative study of Japanese and
American management practices. Theory Z is an integrated model of motivation. Theory Z
suggests that large complex organisations are human systems and their effectiveness depends
on the quality of humanism used. A type Z organisation has three major features—trust,
subtlety and intimacy.
Mutual trust between members of an organisation reduces conflict and leads to team work.
Subtlety requires sensitivity towards others and yields higher productivity. Intimacy implies
concern, support and disciplined unselfishness. The distinguishing features of Theory Z are as
follows:
1. Mutual Trust: According of Ouchi, trust, integrity and openness are essential
ingredients of an effective organisation. When trust and openness exist between
employees, work groups, union and management, conflict is reduced to the minimum
and employees cooperate fully to achieve the organisation’s objectives.
2. Strong Bond between Organisation and Employees: Several methods can be used
to establish a strong bond between the enterprise and its employees. Employees may
be granted lifetime employment which leads to loyalty towards the enterprise. During
adverse business conditions shareholders may forgo dividends to avoid retrenchment
of workers. Promotions may be slowed down.
As against vertical movement of employee’s greater emphasis should be placed on
horizontal movement which reduces stagnation. A career planning for employees
should be done so that every employee is properly placed. This would result in a more
stable and conducive work environment.
3. Employee Involvement: Theory Z suggests that involvement of employees in related
matters improves their commitment and performance. Involvement implies
meaningful participation of employees in the decision-making process, particularly in
matters directly affecting them. Such participation generates a sense of responsibility
and increases enthusiasm in the implementation of decisions, Top managers serve as
facilitators rather than decision-makers.
4. Integrated Organisation: Under Theory Z, focus is on sharing of information and
‘resources rather than on chart, divisions or any formal structure. An integrated
organisation puts emphasis on job rotation which improves understanding about
interdependence of tasks. Such understanding leads to group spirit.
 5. Coordination: The leader’s role should be to coordinate the efforts of human beings.
In order to develop common culture and class feeling in the organisation, the leader
must use the processes of communication, debate and analysis.
6. Informal Control System: Organisational control system should be made informal.
For this purpose, emphasis should be on mutual trust and cooperation rather than on
superior-subordinate relationships.
7. Human Resource Development: Managers should develop new skills among
employees. Under Theory’ Z, potential of every person is recognized and attempts are
made to develop and utilise it through job enlargement, career planning, training, etc.

Thus, Theory Z is a hybird system which incorporates the strengths of American management
(individual freedom, risk taking, quick decision-making, etc.) and Japanese management (job
security, group decision-making, social cohesion, holistic concern for employees, etc.)
systems.
Japanese companies operating in the United State have successfully used Theory Z. After
collaboration between Japanese and Indian companies, some experts have suggested
application of this theory in India, in Maruti Udyog, which has collaboration with Suzuki
motors of Japan an attempt has been made to apply Theory Z.
The workplace has been designed on the Japanese pattern, which involves open offices. The
same uniform has been introduced for all employees irrespective of their designation.
Similarly, there is a common canteen for all. These practices are expected to avoid status
differentials and class feeling among employees and thereby facilitate teamwork in the
company.
Limitations of Theory Z:
Theory Z suffers from the following limitations:
1. Provision of lifetime employment to employees to develop a strong bond between
organisation and employees may fail to motivate employees with higher level needs.
It merely provides job security and may fail to develop loyalty among employees.
An employee may leave the organisation when better employments are offered to him
by some other enterprise. Moreover, complete security of job may create lethargy
among many employees. Employers also do not like to retain inefficient employees
permanently.
2. Participation of employees in the decision-making process is very difficult. Managers
may dislike participation as it may hurt their ego and freedom. Employees may be
reluctant to participate due to fear of criticism and lack of motivation. Even if they sit
along with management they may contribute little unless they understand the issues
and take initiative. Involvement of all employees may also slow down the decision-
making process.
3. Theory Z suggests organisation without any structure. But without structure there may
be chaos in the organisation as nobody will know who is responsible to whom.
4. It may not be possible to develop a common culture in the organisation because
people differ in their attitudes, habits, languages, religions, customs, etc.
 5. Theory Z is based on Japanese management practices. These practices have been
evolved from Japan’s unique culture. Therefore, the theory may not be applicable in
different cultures.

Thus, Theory Z does not provide complete solution to motivational problems of all
organisations operating under different types of environments. However, it is not merely a
theory of motivation but a philosophy of managing.
Achievement Motivation Model
The Achievement motivation theory relates personal characteristics and background to a need
for achievement and the associated competitive drive to meet standards of excellence.
Achievement Motivation Theory (AMT) explains the integral relationship between an
individual’s characteristics and his/her need to achieve something in life. In doing so, it also
takes into account the kind of competitive drive a person has to achieve set goals.
Achievement Motivation Theory Driving Factors
AMT was put forward and refined by a group of researchers Murray (1938), Lowel (1953),
Atkinson, Clark and Mc Clelland (1961) over the years. According to this theory, an
individual’s motivation to achieve something in life or the dire need to achieve a specific goal
is governed by various internal factors such as willingness, determination, punctuality,
personal drive along with numerous external factors (also known as environmental factors)
such as pressures, expectations, targets, etc., set by relevant organizations, members of the
family or the society.
A person’s need to achieve something and the reason behind his/her overall motivation to
achieve a certain goal, according to the AMT, more often than not, comes from within and is
strongly related to the individuals need for power and affiliation.
Importance of Putting the Message Across
However, the theory also fondly explains that it is imperative for an organization to
thoroughly understand the reason behind an individual’s motivation to achieve something and
propagate the message to his/her colleagues in an attempt to inspire them as well. Passing
along such inspirational messages to other employees becomes all the more important in
organizations where the firm’s success is mostly dependent on certain departments working
in crucial areas, such as the marketing or sales department.
Choosing Potential Employees Carefully
Taking the above factors into consideration, that can have a strong influence on a company’s
success rate, it very important for a firm to thoroughly investigate the backgrounds of the
potential employees before hiring them. In doing so, the HR department should pay enough
attention towards the personal characteristics of an interviewee as well as the reasons behind
his/her motivation or need for achievement.
Other Influential Factors
Apart from the factors mentioned above, there are various other factors that can potentially
influence and interact with an individual’s achievement motivation. For example, an
Individual’s values (understanding the importance of achieving goals compared to personal
relationships), educational background, cultural background, external support from the
organization in the form of appraisals, promotions, appropriate awards and timely rewards,
encouraging and celebrating accomplishments, recognizing success, providing constructive
feedback and helping the employee evolve from within by providing proper support
mechanism, are all equally important and play a vital role in achieving the required
motivation.
Simply put, apart from looking for self-drive, an organization must evaluate and nurture an
employ’s internal and external need for motivation to get the best out of them.
AMT also states that, no matter how many motivational schemes an organization may
introduce, no matter how good the incentives are for achieving pre-determined goals; they
can only play their part and contribute to the overall organizational success only and only if
the individual is willing to stand up and grab them. Without the willingness and self-drive of
an employee, great results are always hard to achieve.
At the same time, no matter how motivated the individual is in achieving organizational
goals, lack of proper encouragement and motivation from the top management in the form of
rewards, incentives, promotions, remuneration, etc., can always put the employ on a
backfoot.
Conclusion
In conclusion, Achievement Motivation Theory states that “as an employee starts tasting
success and moves up the ladder, he/she starts feeling that they have achieved something and
this feeling is what keeps them fuelling to achieve even more.” However, in organizations
where moving up the ladder is a bit hard pertaining to the limited vacancies, handing the
employees with a variety of incentives and rewards will always help them keep motivated to
achieve what is required on both organizational and personal fronts

Equity Theory of Motivation

The Adams Equity Theory was developed by the American psychologist John Stacey Adams
in 1963. It’s about the balance between the effort an employee puts into their work (input),
and the result they get in return (output).
Input includes hard work, skills, and enthusiasm. Output can be things like salary,
recognition, and responsibility. A proper balance between input and output ensures that an
employee feels satisfied and motivated, contributing to their productivity.
The Adams Equity Theory shows why salary and benefits alone don’t determine an
employee’s motivation. It explains why a promotion or raise rarely has the desired effect. It
can even undermine the motivation of other employees. Employees place great importance on
being treated fairly and equally.
This ensures that they’ll be motivated at work. It’s treating different employees differently
and unfairly that leads to bad blood and will damage a lot of people’s motivation. After all,
we all wanted to be treated fairly. When that’s not the case, employees will be unhappy,
which can manifest itself in different ways.
For instance, they won’t perform optimally, and there’ll be a risk of high employee turnover
as employees choose to try their luck at another employer. That’s why fair treatment of
everyone involved is essential.
Input: The input referred to in Adams Equity Theory includes both the quantity and the
quality of the contributions employees make to carrying out their work. They spend time,
energy, and engagement at work. They work hard, share ideas, trust their superiors and
support their co-workers. It’s about the effort they put into the organisation. The number of
examples are endless, but the most common forms of input are listed below:
1. Effort: Every day employees make an effort by coming into work and carrying out
their job and tasks. No effort means no work. It’s the most basic level of input.
2. Skills: Employees have skills they use to carry out their job competently and
professionally. They’ve gained these skills through training and experience.
3. Knowledge: This is valuable input employees accrue through schooling and training,
being interested in their field, and by developing and evolving.
4. Experience: Employees can’t make good use of their knowledge without experience.
That’s why experience is considered to be very valuable input with a remarkable
characteristic. Moreover, experience can’t easily be replaced.
5. Social Skills: Employees take part in company outings, celebrate each other’s
birthdays, and are able to create pleasant working conditions by engaging each other
in conversation. By treating each other with empathy, employees ensure that they’re
part of the group and therefore the organisation as a whole. Acceptance is also part of
 this. By accepting and tolerating the behaviour of others, employees can foster mutual
respect.
6. Loyalty: This includes everything related to personal sacrifice. An employee who
remains loyal to his organisation, despite a job offer at another organisation, is loyal.
Employees who work late every day and sacrifice their own free time are loyal too.

Output: Employees’ output can generally be divided into 1) financial rewards, 2) immaterial
rewards. The most common forms of output are discussed based on this division.
 Financial rewards:
1. Salary: This is considered the most important output for employees. In return for all
their input, they get a fixed amount of money that’s paid by the company every
month.
2. Bonus: The extra money on top of the salary as a bonus is also considered a financial
reward. Bonuses can be based on commission or targets. The harder an employee
works, the higher this bonus.
3. Profit Sharing: Profit sharing also falls under this type of output. When the whole
organisation and all its employees work hard, this results in a shared reward at the end
of the year.
 Immaterial Rewards
1. Recognition: Employees want to be intrinsically motivated. This means they feel it’s
important that their hard work is recognised. When a co-worker takes credit for an
employee’s work, this leads to a massive imbalance in the Equity Theory. It’s
important for managers to be aware of this factor and actively give employees the
recognition they deserve.
2. Challenge: Employees enjoy interesting and important challenges in their work. This
makes them feel proud of the work they do and committed to the organisation.
3. Responsibility: This ensures employees experience a sense of ownership and control
in their work. This responsibility makes them feel confident and gives them the
freedom to organise and carry out their work as they see fit. As a result, responsibility
leads to intrinsic motivation. The employees feel that they matter in the organisation.

Adams Equity Theory: Balance

The core of the Adams Equity Theory is that there needs to be a balance between employee
input and output. What an employee brings to an organisation needs to be relatively equal to
what they get out of it.
In return for a monthly salary, employees bring knowledge, skills, effort, experience, loyalty,
and much more to the table. When their input outweighs their output, there’s an imbalance,
and the employees will be unhappy. They’ll feel that they’re not being treated fairly and will
feel disillusioned with the organisation. That may lead to demotivated behaviour,
recalcitrance, calling in sick, or finding other employment.
Every employee will attempt to maintain a balance between their input and output. That’s the
foundation of the equity principle; people look for fair and equal treatment. Balance in the
Equity Theory offers ways to help motivate employees. By engaging them in conversation
and finding out what motivates them, supervisors will be better able to inspire employees and
increase productivity.
The Adams Equity Theory and Equity
Finding equitable and just treatment is something that is always relevant for employees.
They’ll always compare their own efforts (input) and the rewards they get for this (output) to
their co-workers’ input and output, striving for equity.
This despite the fact that employees are aware that different types of effort and skills are
required for different levels and are therefore rewarded differently. Regardless, employees
should not be made to feel that they put in the same amount of effort as colleagues at higher
levels without being paid the same salary. This means that when tasks are delegated to lower-
level employees, this needs to be rewarded fairly in order to keep everyone happy.
The constant comparing of input and output makes the Adams Equity Theory complex.
Adams calls this ‘referent’, meaning employees use each other as reference points.
Expectancy Theory of Motivation
The expectancy theory was proposed by Victor Vroom of Yale School of Management in
1964. Vroom stresses and focuses on outcomes, and not on needs unlike Maslow and
Herzberg. The theory states that the intensity of a tendency to perform in a particular manner
is dependent on the intensity of an expectation that the performance will be followed by a
definite outcome and on the appeal of the outcome to the individual.
The Expectancy theory states that employee’s motivation is an outcome of:
 How much an individual wants a reward (Valence),
 The assessment that the likelihood that the effort will lead to expected performance
(Expectancy) and
 The belief that the performance will lead to reward (Instrumentality).

In short, Valence is the significance associated by an individual about the expected outcome.
It is an expected and not the actual satisfaction that an employee expects to receive after
achieving the goals.
Expectancy is the faith that better efforts will result in better performance. Expectancy is
influenced by factors such as possession of appropriate skills for performing the job,
availability of right resources, availability of crucial information and getting the required
support for completing the job.
Instrumentality is the faith that if you perform well, then a valid outcome will be there.
Instrumentality is affected by factors such as believe in the people who decide who receives
what outcome, the simplicity of the process deciding who gets what outcome, and clarity of
relationship between performance and outcomes.
Thus, the expectancy theory concentrates on the following three relationships:
 Effort-performance relationship: What is the likelihood that the individual’s effort
be recognized in his performance appraisal?
  Performance-reward relationship: It talks about the extent to which the employee
believes that getting a good performance appraisal leads to organizational rewards.
 Rewards-personal goals relationship: It is all about the attractiveness or appeal of
the potential reward to the individual.

Vroom was of view that employees consciously decide whether to perform or not at the job.
This decision solely depended on the employee’s motivation level which in turn depends on
three factors of expectancy, valence and instrumentality.
Transactional Analysis
In the 1950s Eric Berne began to develop his theories of Transactional Analysis. He said that
verbal communication, particularly face-to-face, is at the centre of human social relationships
and psychoanalysis.
His starting point was that when two people encounter each other, one of them will speak to
the other. This he called the Transaction Stimulus. The reaction from the other person he
called the Transaction Response. The person sending the Stimulus is called the Agent. The
person who responds is called the Respondent. Transactional Analysis became the method of
examining the transaction wherein: 'I do something to you, and you do something back'.
Berne also said that each person is made up of three alter ego states:
1. Parent: This is our ingrained voice of authority, absorbed conditioning, learning and
attitudes from when we were young. We were conditioned by our real parents,
teachers, older people, next-door neighbours, aunts and uncles, Father Christmas and
Jack Frost. Our Parent is made up of a huge number of hidden and overt recorded
playbacks. Typically embodied by phrases and attitudes starting with 'how to', 'under
no circumstances, 'always' and 'never forget', 'don't lie, cheat, steal', etc. Our parent is
formed by external events and influences upon us as we grow through early
childhood. We can change it, but this is easier said than done.
2. Child: Our internal reaction and feelings to external events form the 'Child'. This is
the seeing, hearing, feeling, and emotional body of data within each of us. When
anger or despair dominates reason, the Child is in control. Like our Parent we can
change it, but it is no easier.
3. Adult: Our 'Adult' is our ability to think and determine action for ourselves, based on
received data. The adult in us begins to form at around ten months old and is the
means by which we keep our Parent and Child under control. If we are to change our
Parent or Child we must do so through our adult.

In other words:
 Parent is our 'Taught' concept of life
 Child is our 'Felt' concept of life
 Adult is our 'Thought' concept of life

When we communicate, we are doing so from one of our own alter ego states, our Parent,
Adult or Child. Our feelings at the time determine which one we use, and at any time
something can trigger a shift from one state to another. When we respond, we are also doing
this from one of the three states, and it is in the analysis of these stimuli and responses that
the essence of Transactional Analysis lies.
At the core of Berne's theory is the rule that effective transactions (ie successful
communications) must be complementary. They must go back from the receiving ego state to
the sending ego state. For example, if the stimulus is Parent to Child, the response must be
Child to Parent, or the transaction is 'crossed', and there will be a problem between sender
and receiver.
If a crossed transaction occurs, there is ineffective communication. Worse still either or both
parties will be upset. In order for the relationship to continue smoothly, the agent or the
respondent must rescue the situation with a complementary transaction.
In serious break-downs, there is no chance of immediately resuming a discussion about the
original subject matter. Attention is focused on the relationship. The discussion can only
continue constructively when and if the relationship is mended.
Here are some simple clues as to the ego state sending the signal. You will be able to see
these clearly in others, and in yourself:
Parent
 Physical - angry or impatient body-language and expressions, finger-pointing,
patronising gestures,
 Verbal - always, never, for once and for all, judgmental words, critical words,
patronising language, posturing language.

Child
 Physical - emotionally sad expressions, despair, temper tantrums, whining voice,
rolling eyes, shrugging shoulders, teasing, delight, laughter, speaking behind hand,
raising hand to speak, squirming and giggling.
 Verbal - baby talk, I wish, I dunno, I want, I'm gonna, I don't care, oh no, not again,
things never go right for me, worst day of my life, bigger, biggest, best, many
superlatives, words to impress.

Adult
 Physical - attentive, interested, straight-forward, tilted head, non-threatening and non-
threatened.
 Verbal - why, what, how, who, where and when, how much, in what way,
comparative expressions, reasoned statements, true, false, probably, possibly, I think,
I realise, I see, I believe, in my opinion.

And remember, when you are trying to identify ego states: words are only part of the story.
To analyse a transaction you need to see and feel what is being said as well.
 Only 7% of meaning is in the words spoken.
 38% of meaning is paralinguistic (the way that the words are said).
 55% is in facial expression.
There is no general rule as to the effectiveness of any ego state in any given situation (some
people get results by being dictatorial (Parent to Child), or by having temper tantrums, (Child
to Parent), but for a balanced approach to life, Adult to Adult is generally recommended.
Transactional Analysis is effectively a language within a language; a language of true
meaning, feeling and motive. It can help you in every situation, firstly through being able to
understand more clearly what is going on, and secondly, by virtue of this knowledge, we give
ourselves choices of what ego states to adopt, which signals to send, and where to send them.
This enables us to make the most of all our communications and therefore create, develop and
maintain better relationships.
Leadership
Leadership is a process by which an executive can direct, guide and influence the behavior
and work of others towards accomplishment of specific goals in a given situation. Leadership
is the ability of a manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity
to influence a group towards the realization of a goal. Leaders are required to develop future
visions, and to motivate the organizational members to want to achieve the visions.
According to Keith Davis, “Leadership is the ability to persuade others to seek defined
objectives enthusiastically. It is the human factor which binds a group together and
motivates it towards goals.”
George R. Terry, “Leadership is the activity of influencing people to strive willingly for
group objectives.”
Functions of Leadership
1. Setting Goals: A leader is expected to perform creative function of laying out goals
and policies to persuade the subordinates to work with zeal and confidence.
2. Organizing: The second function of a leader is to create and shape the organization
on scientific lines by assigning roles appropriate to individual abilities with the view
to make its various components to operate sensitively towards the achievement of
enterprise goals.
3. Initiating Action: The next function of a leader is to take the initiative in all matters
of interest to the group. He should not depend upon others for decision and judgment.
He should float new ideas and his decisions should reflect original thinking.
4. Co-Ordination: A leader has to reconcile the interests of the individual members of
the group with that of the organization. He has to ensure voluntary co-operation from
the group in realizing the common objectives.
5. Direction and Motivation: It is the primary function of a leader to guide and direct
his group and motivate people to do their best in the achievement of desired goals, he
should build up confidence and zeal in the work group.
6. Link between Management and Workers: A leader works as a necessary link
between the management and the workers. He interprets the policies and programmes
of the management to his subordinates and represents the subordinates’ interests
 before the management. He can prove effective only when he can act as the true
guardian of the interests of his subordinates.
7. Develop Team Work: The three vital determinates of team work are the leader, sub-
ordinates and the environment. These factors are interdependent. It is the leader’s
responsibility to make the environment conductive to work. He inculcates the sense of
collectivism in employees to work as a team.
8. Use Power Properly: If a leader is to effectively achieve the goals expected of him,
he must have power and authority to act in a way that will stimulate a positive
response from the workers. A leader depending on the situation exercise different
types of power viz., reward power, conceive power, legitimate power, represents
power and expert power. Besides the formal basis the informal basis of power also
has a more powerful impact on organizational effectiveness. No leader is effective
unless the subordinates obey his order.
9. Time Management: Time is precious and vital but often overlooked in management.
There are three dimensions of time, boss-imposed time, system-imposed time and
self- imposed time that is prominent in literature. Because the leader has through
knowledge of the principles of time management such as time preparing charts,
scheduling techniques etc., he is in a position to utilize the time productivity in the
organizations.
10. Conductive Work Environment: He studies the followers individually. He instills in
them the interest to work. He creates proper environment encouraging the inquisitive
employees and by prohibiting insidious elements. He inculcates a sense of collectivity
in employees to work as a team.

Types of Leadership
A leadership style is a way in which a leader accomplishes their team’s objective by
motivating employees to work towards the common goal and focusing on their well-being.
Understanding leadership style is imperative for a team to work together and also keep
growing while embracing changes. Here are some reasons why leadership style matters:
 Increases team engagement
 Improves team communication and collaboration
 Strengthens the effectiveness of the team

1. Democratic Leadership: A democratic leader makes decisions based on their team’s

opinion and feedback. In simpler words, they get everyone involved in the decision-
making process. However, this type of leadership cannot be used in the long run
because of drawbacks like losing the leader’s authority, debates, and
miscommunication between team members. Here are some scenarios in which one
can adopt a democratic leadership style:
 New project that requires constant brainstorming
 Solve complex business problems
 Tight-knit or small organisations like start-ups, etc.
Here are some features of this leadership style
  Transparent conversations
 Everyone’s opinion counts
 Values collaboration and teamwork
 Encourages discussions
2. Autocratic Leadership: This is precisely the opposite of democratic leadership. The
opinions of team members are not considered while making any business decision.
Instead, leaders expect others to adhere to their decisions, which is not sustainable in
the long run.
3. Laissez-faire Leadership: Laissez-faire means “let them do”. This leadership style is
the least intrusive and ensures that the decision-making authority lies with the team
members. This leadership style empowers team members and holds them accountable
for their work. This motivates many team members to put their best foot forward,
improving the organization’s efficiency and productivity.
4. Strategic Leadership: Strategic leadership is when leaders use their skills and
capabilities to help team members and organisation achieve their long-term goals.
Strategic leaders strive to get the best out of people or situations. Here are some
unique traits of strategic leaders:
 They are interested in the well-being of others
 They are open-minded
 They are self-aware
 They are good at interpersonal communication
5. Transformational Leadership: Transformational leaders inspire others to achieve
the unexpected. They aim to transform and improve team members’ and
organisations’ functions and capabilities by motivating and encouraging them.
6. Transactional Leadership: This type of leadership is task-oriented, which means
team members who meet the leader’s expectations will be rewarded, and others will
be punished. It is a prevalent leadership style based on the action-and-reward concept.
7. Coach-Style Leadership: This leadership style focuses on identifying and nurturing a
team member’s strengths and weaknesses. A coaching leader develops strategies that
emphasis team members’ success. Though this is similar to strategic and democratic
leadership styles, the focus here is more on the individual.
8. Bureaucratic Leadership: This kind of leadership style sticks to the rules. For
example, they might listen to their team members’ opinions while deciding. Here are
some of the benefits of this type of leadership:
 Lowers the risk of favouritism among team members
 Increases creativity for some employees

Qualities of Good Leader

A leader has got multidimensional traits in him which makes him appealing and effective in
behavior. The following are the requisites to be present in a good leader:
1. Physical Appearance: A leader must have a pleasing appearance. Physique and
health are very important for a good leader.
 2. Vision and Foresight: A leader cannot maintain influence unless he exhibits that he
is forward looking. He has to visualize situations and thereby has to frame logical
programmes.
3. Intelligence: A leader should be intelligent enough to examine problems and difficult
situations. He should be analytical who weighs pros and cons and then summarizes
the situation. Therefore, a positive bent of mind and mature outlook is very important.
4. Communicative Skills: A leader must be able to communicate the policies and
procedures clearly, precisely and effectively. This can be helpful in persuasion and
stimulation.
5. Objective: A leader has to be having a fair outlook which is free from bias and which
does not reflects his willingness towards a particular individual. He should develop
his own opinion and should base his judgement on facts and logic.
6. Knowledge of Work: A leader should be very precisely knowing the nature of work
of his subordinates because it is then he can win the trust and confidence of his
subordinates.
7. Sense of Responsibility: Responsibility and accountability towards an individual’s
work is very important to bring a sense of influence. A leader must have a sense of
responsibility towards organizational goals because only then he can get maximum of
capabilities exploited in a real sense. For this, he has to motivate himself and arouse
and urge to give best of his abilities. Only then he can motivate the subordinates to the
best.
8. Self-confidence and Will power: Confidence in himself is important to earn the
confidence of the subordinates. He should be trustworthy and should handle the
situations with full will power.
9. Humanist: This trait to be present in a leader is essential because he deals with
human beings and is in personal contact with them. He has to handle the personal
problems of his subordinates with great care and attention. Therefore, treating the
human beings on humanitarian grounds is essential for building a congenial
environment.
10. Empathy: It is an old adage “Stepping into the shoes of others”. This is very
important because fair judgement and objectivity comes only then. A leader should
understand the problems and complaints of employees and should also have a
complete view of the needs and aspirations of the employees. This helps in improving
human relations and personal contacts with the employees.

Leadership v/s Management

There is an ongoing debate about the correlation between leadership and management, does a
manager have to be a great leader and does a leader need to have good management skills?
What is the difference between leadership and management?
“Leadership is doing the right things; management is doing things right.” Peter Drucker

Basis of Comparison Leadership Management

Definition Leadership means "the Management comprises
ability of an individual to directing and controlling a
influence, motivate, and group of one or more
enable others to contribute people or entities for the
toward the effectiveness purpose of coordinating and
and success of the harmonizing that group
organizations of which they towards accomplishing a
are members." goal.

Personality Styles Are often called brilliant Tend to be rational, under

and mercurial, with great control problem solvers.
charisma. Yet, they are also They often focus on goals,
often seen as loners and structures, personnel, and
private people. They are availability of resources.
comfortable taking risks, Managers’ personalities
sometimes seemingly wild lean toward persistence,
and crazy risks. Almost all strong will, analysis, and
leaders have high levels of intelligence.
imagination

Orientation People-oriented Task-oriented

Focus Leading people Managing work

Outcomes Achievements Results

Approach to tasks Simply look at problems Create strategies, policies,

and devise new, creative and methods to create
solutions. Using their teams and ideas that
charisma and commitment, combine to operate
they excite, motivate, and smoothly. They empower
focus others to solve people by soliciting their
problems and excel. views, values, and
principles. They believe
that this combination
reduces inherent risk and
generates success

Approach to risk Risk-taking Risk-averse

Role in decision-making Facilitative Involved

Styles Transformational, Dictatorial, Authoritative,

Consultative & Transactional, Autocratic,
Participative Consultative and
Democratic

Power through Charisma & Influence Formal authority &

Position
Organization Leaders have followers Manager have subordinates

Appeal to Heart Head

Controlling
For making people act, different types of the methods like planning, the organising, the
staffing, the leading etc. are used. But after the people start acting, generally the result that is
obtained seems to be a mere waste. Now here, the role of the management of the organisation
is very critical and should be performed very carefully.
The main responsibility of the management here is that it should take proper care of the fact
that the results that are produced are strictly according to the objectives and none of them is a
waste or use-less in the nature. This responsibility of the management of the organisation is
often referred to as the ‘Controlling’.
The Controlling acts as a very useful managerial function or the tool as it ensures that the
actions conform to the expected results with the help of the suitable feedback systems. This
process also includes correcting any deviation time in order to see that the results are ensured
within the proper time and the costs as per the planned standards.
According to George Terry, “Controlling is determining what is being accomplished, that is
evaluating the performance and, if necessary, applying corrected measures so that the
performance takes place according to plan.”
In the words of Koontz & O’Donnell, “Controlling is the measuring and correcting of
activities of subordinates to assure that events conform to plans”.
According to Brech, “Controlling is a systematic exercise which is called as a process of
checking actual performance against the standards or plans with a view to ensure
adequate progress and also recording such experience as is gained as a contribution to
possible future needs.”
Need for Control
1. Achievement of Objectives: With the help of controlling, deviations are immediately
detected and corrective action is taken. Therefore, the difference between the
expected results and the actual results is reduced to the minimum. Hence, controlling
is helpful in achieving the goals of the organisation.
2. Accuracy of Standards: While performing the function of controlling, a manager
compares the actual work performance with the standards. He tries to find out whether
the laid down standards are not more or less than the general standards. In case of
need, they are redefined.
3. Optimum use of Resources: Controlling makes it possible to use human and
physical resources efficiently. Under controlling, it is ensured that no employee
deliberately delays his work performance. In the same way, wastage in all the
physical resources is checked.
 4. Improving Motivation: Through the medium of controlling, an effort is made to
motivate the employees. The implementation of controlling makes all the employees
to work with complete dedication because they know that their work performance will
be evaluated and if the progress report is satisfactory, they will have their identity
established in the organisation.
5. Order and Discipline: Controlling ensures order and discipline. With its
implementation, all the undesirable activities like theft, corruption, delay in work and
uncooperative attitude are checked.
6. Facilitates Coordination: Coordination among all the departments of the
organisation is necessary in order to achieve the organisational objectives
successfully. All the departments of the organisation are interdependent. For example,
the supply of orders by the sales department depends on the production of goods by
the production department.
Through the medium of controlling an effort is made to find out whether the
production is being carried out in accordance with the orders received. If not, the
causes of deviation are found out and corrective action is initiated and hence,
coordination between both the departments is established.
7. Decentralization of Authority: Since managers at every level of an organization
have to exercise control, the controlling process leads to decentralization. This, in
turn, enables middle and lower-level managers to have some autonomy in making
decisions. An organization that distributes authority at every level always works
smoothly and efficiently.
8. Increasing Managerial Abilities: By enabling all managers to possess the autonomy
to make decisions, controlling enhances their managerial abilities. With these skills,
managers can further their organization’s goals by adapting to diverse situations and
problems. Furthermore, this also helps managers grow and develop at an individual
level by giving them new experiences.
9. Structuring Human Behaviour: Since all organizations have to depend on humans
for functioning, they need to regulate human behaviour of their employees.
Controlling rationalizes this human behaviour and prevents employees from behaving
arbitrarily and badly. It basically does so by providing for sanctions in case employees
do not prescribe to expected standards of behaviour. For example, managers often
take disciplinary action against employees who take unauthorized leaves.
10. Adaptation of Changes: Every modern organization has to cope with changes in the
environment. New products and technologies emerge, government regulations are too
often amended or enacted, and competitors change their strategies. The control
function helps managers to respond to these environmental changes as and when
necessary.

Techniques of Managerial Controlling

1. Direct Supervision and Observation: 'Direct Supervision and Observation' is the
oldest technique of controlling. The supervisor himself observes the employees and
their work. This brings him in direct contact with the workers. So, many problems are
solved during supervision. The supervisor gets firsthand information, and he has
 better understanding with the workers. This technique is most suitable for a small-
sized business.
2. Financial Statements: All business organisations prepare profit and loss Account. It
gives a summary of the income and expenses for a specified period. They also prepare
balance sheet, which shows the financial position of the organisation at the end of the
specified period. Financial statements are used to control the organisation. The figures
of the current year can be compared with the previous year's figures. They can also be
compared with the figures of other similar organisations. Ratio analysis can be used to
find out and analyse the financial statements. Ratio analysis helps to understand the
profitability, liquidity and solvency position of the business.
3. Budgetary Control: A budget is a planning and controlling device. Budgetary
control is a technique of managerial control through budgets. It is the essence of
financial control. Budgetary control is done for all aspects of a business such as
income, expenditure, production, capital and revenue. Budgetary control is done by
the budget committee.
4. Break Even Analysis: Break Even Analysis or Break-Even Point is the point of no
profit, no loss. The Break-even analysis acts as a control device. It helps to find out
the company's performance. So, the company can take collective action to improve its
performance in the future. Break-even analysis is a simple control tool.
5. Return on Investment: Investment consists of fixed assets 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. ROI is a tool to
improve financial performance. It helps the business to compare its present
performance with that of previous years' performance. It helps to conduct inter-firm
comparisons. It also shows the areas where corrective actions are needed.
6. Management by Objectives: MBO facilitates planning and control. It must fulfill
following requirements:
 Objectives for individuals are jointly fixed by the superior and the subordinate.
 Periodic evaluation and regular feedback to evaluate individual performance.
 Achievement of objectives brings rewards to individuals.
7. Management Audit: Management Audit is an evaluation of the management as a
whole. It critically examines the full management process, i.e. planning, organising,
directing, and controlling. It finds out the efficiency of the management. To check the
efficiency of the management, the company's plans, objectives, policies, procedures,
personnel relations and systems of control are examined very carefully. Management
auditing is conducted by a team of experts. They collect data from past records,
members of management, clients and employees. The data is analysed and
conclusions are drawn about managerial performance and efficiency.
8. Management Information System: In order to control the organisation properly the
management needs accurate information. They need information about the internal
working of the organisation and also about the external environment. Information is
collected continuously to identify problems and find out solutions. MIS collects data,
processes it and provides it to the managers. MIS may be manual or computerised.
With MIS, managers can delegate authority to subordinates without losing control.
 9. Network Technique: ‘Network Techniques’ are being widely utilised as control
systems. In such technique a project or programme is broken down into small
activities which are arranged in a technological sequence. Various activities should be
accomplished according to the sequence. The time limit for each activity is
determined. A network diagram is then drawn in order to present the inter-dependence
and inter-relationships among all the operations involved in the project.
10. Self-Control: Self-Control means self-directed control. A person is given freedom to
set his own targets, evaluate his own performance and take corrective measures as and
when required. Self-control is especially required for top level managers because they
do not like external control. The subordinates must be encouraged to use self-control
because it is not good for the superior to control each and everything. However, self-
control does not mean no control by the superiors. The superiors must control the
important activities of the subordinates.

CPM and PERT

1. CPM is commonly employed in many diverse types of projects. These include
product development, engineering, construction, aerospace and defense, software
development and research projects.
2. The critical path method (CPM) is a step-by-step methodology, technique or
algorithm for planning projects with numerous activities that involve complex,
interdependent interactions. CPM is an important tool for project management
because it identifies critical and non-critical tasks to prevent conflicts and bottlenecks.
CPM is often applied to the analysis of a project network logic diagram to produce
maximum practical efficiency.
3. Program evaluation and review technique (PERT) is a technique adopted by
organizations to analyze and represent the activity in a project, and to illustrate the
flow of events in a project. PERT is a method to evaluate and estimate the time
required to complete a task within deadlines.
4. PERT serves as a management tool to analyze, define and integrate events. PERT also
illustrates the activities and interdependencies in a project. The main goal of PERT is
to reduce the cost and time needed to complete a project.

Difference between CPM and PERT

Basis of CPM PERT
Comparison
Meaning CPM is a statistical technique PERT is a project
of project management that management technique, used
manages well defined to manage uncertain activities
activities of a project. of a project.
Orientation Activity-oriented Event-oriented
Evolution Evolved as Construction Evolved as Research &
project Development project
Model Deterministic Model Probabilistic Model
Focuses on Time-cost trade-off Time
Estimates One time estimate Three time estimates
 Management of Predictable activities Unpredictable Activities
Nature of Job Repetitive nature Non-repetitive nature
Suitable for Non-research projects like Research and Development
civil construction, ship Project
building etc.
Terminology CPM technique involves use PERT technique involves use
of terminology like arrow of words like events, network
diagram, nodes and float. diagram and slacks.
Room for In CPM, no allowance is made In PERT, allowance is made
Uncertainty for uncertainties in the for uncertainties in the
duration of time involved. duration of time involved.

Process of Controlling
The control process of management ensures that every activity of a business is furthering
its goals. This process basically helps managers in evaluating their organization’s
performance. By using it effectively, they can decide whether to change their plans or
continue with them as they are.
The control process consists of the following basic elements and steps:
1. Setting Performance Standards: The first step in the process of controlling is
concerned with setting performance standards. These standards are the basis for
measuring the actual performance. Standards are the benchmarks towards which
efforts of entire organisation are directed. These standards can be expressed both in
quantitative and qualitative terms.
For example, for improving customer satisfaction in a restaurant having self-service,
standard can be set in terms of time taken to get a table, place the order and collect the
order. Moreover, the standards set should be flexible enough so that necessary
changes can be made according to varying situations.
2. Measurement of Actual Performance: Once the standards have been determined,
the next step is to measure the actual performance. The various techniques for
measuring are sample checking, performance reports, personal observation etc.
However, in order to facilitate easy comparison, the performance should be measured
on same basis that the standards have.
3. Comparison with Standards: This step involves comparing the actual performance
with standards laid down in order to find the deviations. For example, performance of
a salesman in terms of unit sold in a week can be easily measured against the standard
output for the week.
4. Analyzing Deviation: Some deviations are possible in all the activities. However, the
deviation in the important areas of business needs to be corrected more urgently as
compared to deviation in insignificant areas. Management should use critical point
control and management by exception in such areas.
5. Corrective Action: The last step in the process of controlling involves taking
corrective action. If the deviations are within acceptable limits, no corrective measure
is required. However, if the deviations exceed acceptable limits, they should be
 immediately brought to the notice of the management for taking corrective measures,
especially in the important areas.

Essentials of Effective Control System

1. Suitable: The control system should be appropriate to the nature and needs of the
activity. A large firm calls for controls different from those needed for a small firm. In
other words, control should be tailored to fit the needs of the organisation. The flow
of information concerning current performance should correspond with the
organizational structure employed. If a superior is to be able to control overall
operations, he must find a pattern that will provide control for individual parts.
Budgets, quotas and other techniques may be useful in controlling separate
departments.
2. Timely and Forward Looking: The control system should be such as to enable the
subordinates to inform their superiors about the threatened deviations and failures.
The feedback system should be as short and quick as possible. If the control reports
are not directed at future, they are of no use as they will not be able to suggest the
types of measures to be taken to rectify the past deviations. A proper system of
control should enable the manager concerned to think of and plan for future also.
3. Objective and Comprehensive: The control system should be both, objective and
understandable. Objective controls specify the expected results in clear and definite
terms and leave little room for argument by the employees. This is necessary both for
the smooth working and the effectiveness of the system.
4. Flexible: The control system should be flexible so that it can be adjusted to suit the
needs of any change in the environment. A sound control system will remain
workable even when the plans change or fail outright. It must be responsive to
changing conditions. It should be adaptable to new developments including the failure
of the control system itself. Plans may call for an automatic system to be backed up
by a human system that would operate in an emergency.
5. Economical: Economy is another requirement of every control. The benefit derived
from a control system should be more than the cost involved in implementing it. A
small company cannot afford the elaborate control system used by a large company. A
control system is justifiable if the savings anticipated from it exceed the expected
costs in its working.
6. Acceptable to Organisation Members: The system should be acceptable to
organisation members. When standards are set unilaterally by upper level managers,
there is a danger that employees will regard those standards as unreasonable or
unrealistic.
7. Motivate People to High Performance: A control system is most effective when it
motivates people to high performance. Since most people respond to a challenge,
successfully meeting to tough standard may well provide a greater sense of
accomplishment than meeting an easy standard. However, if a target is so tough that it
seems impossible to meet, it will be more likely to discourage than to motivate effort.
8. Corrective Action: Merely pointing of deviations is not sufficient in a good control
system. It must lead to corrective action to be taken to check deviations from standard
 through appropriate planning, organizing and directing. In the words of Koontz and
O'Donnell, "An adequate control system should disclose where failure is occurring,
who is responsible for them and what should be done about them." A control system
will be of little use unless it can generate the solution to the problem responsible for
deviation from standards.
9. Reflection of Organisation Pattern: Organization is not merely a structure of duties
and function; it is also an important vehicle of control. In enforcing control the
efficiency and the effectiveness of the organisation must be clearly brought out.
10. Human Factor: A good system of control should find the persons accountable for
results, whenever large deviations take place. They must be guided and directed if
necessary.
11. Direct Control: Any control system should be designed to maintain direct contact
between the controllers and controlled. Even when there are a number of control
systems provided by staff specialists, the foreman at the first level is still important
because he has direct knowledge of performance.
12. Focus on Strategic Points: A good system of control not only points out the
deviations or exceptions but also pinpoints them where they are important or strategic
to his operations.

Management by Exception
Management by Exception is a “policy by which management devotes its time
to investigating only those situations in which actual results differ significantly from
planned results.” The idea is that management should spend its valuable time concentrating
on the more important items, such as shaping the company’s strategic course. With a long-
term orientation, attention is given only to material deviations that require investigation.
Management by exception (MBE) is a management strategy in which managers will only
step in when there are significant deviations from planned outcomes.
The management of exception is a system that helps the manager to which most important
tasks require the attention of the manager at a particular point of time. In this, a manager can
first focus on solving most critical problems first and make decisions and take suitable
actions and problems which are less critical can be tackled later or can be tackled by the
subordinates.
Management by exception helps the organization to grow more as problematic areas in the
organization can be identified, and managers can spend their efficiency to solve these issues
to enhance the productivity of the organization. Managers can learn and prepare strategies for
changing competition and new business opportunities.
Benefits of Management by Exception
1. Time Saving: The top level of management saves a lot of time after delegating the
Authority to perform daily routine jobs and other decisions as per the requirement of
the situation or needs. Hereafter, are able to concentrate upon the key issues & policy
matter of the organization.
 2. Optimum Utilization of Resources: The techniques involved in the management by
exceptions highlights the total decision making pattern at the different levels of
management, whereby each respective individual in his capacity according to his
managerial level is independent to take decision and is totally responsible for its
outcome or action. Hence, the manpower available in the business or industrial unit is
expected to utilize all his abilities to the optimum level. In other words the
organization is prepared to utilize the abilities of its man power to the maximum
extent.
3. Increases Productivity: The application of management by exceptions techniques,
provide middle & lower levels of management with authority and responsibility. This
helps them in job performances and makes them feel to be part of the business or
industrial unit. The above factor raises their esteem and respective managers or
supervisor in turn give their whole hearted efforts for the success of organizations
objectives. Ultimately the productivity & efficiency of the whole team increases many
fold.
4. Enhances Research and Development: Management by Exceptions gives emphasis
to timely consistent supervision and assessment of activities as well as analyzing the
total job performances. Constant supervision facilitates in taking decisions and
drawing logical conclusion. This systematic approach supports research &
developments, thereby helping in reaching to required conclusion and enhancing the
overall performances and results.
5. Develops Subordinates: This technique of Management by Exceptions supports the
development of subordinates, as the authority given and also the freedom to take
independent decisions or take initiatives to proceed to solve upcoming issues or
problems. This unique opportunity of taking independent decisions helps in
developing dedicated and efficient individuals or subordinates, capable of giving
desired results.

Questions for Practice:

1. Define the nature and scope of directing in the context of management, highlighting
its key components.
2. What is motivation in the context of organizational behavior and management?
Explain the concept.
3. Discuss the importance of motivation in the workplace and its impact on employee
performance.
4. Explain Maslow's Hierarchy of Needs and its relevance to understanding employee
motivation.
5. Describe Herzberg's Two-Factor Theory and its implications for job satisfaction and
dissatisfaction.
6. Compare and contrast McGregor's Theory X and Theory Y, highlighting their
assumptions about employee motivation.
7. Explain Ouchi's Theory Z and its application in organizational management,
particularly in the context of employee motivation.
8. Discuss the Achievement Motivation Model and how it influences individual behavior
and performance.
9. Outline Adam's Equity Theory and its implications for understanding fairness and
motivation in the workplace.
10. Describe Vroom's Expectancy Theory and how it explains the relationship between
effort, performance, and outcomes.
11. Explain the concept of Transactional Analysis and its relevance to interpersonal
communication and motivation in the workplace.
12. Define leadership in the context of management and organizational behavior.
13. Outline the key functions that leaders perform within an organization.
14. Discuss different leadership styles, such as autocratic, democratic, laissez-faire, and
their characteristics.
15. Identify and explain the essential qualities that distinguish a good leader.
16. Compare and contrast leadership and management, highlighting their differences and
complementary roles.
17. Define the concept of controlling in the management process.
18. Discuss the reasons why organizations need to implement control mechanisms.
19. Compare traditional and modern techniques of managerial control, providing
examples of each.
20. Outline the steps involved in the control process, from establishing standards to taking
corrective actions.
21. Identify the key components or essentials that contribute to the effectiveness of a
control system.
22. Define the concept of Management by Exception and how it is applied in
organizational management.
23. Discuss the benefits of implementing Management by Exception in the decision-
making process.