UNIT 5

CONTROLLING AND COORDINATING

Introduction: Coordination is the force that binds all the other functions of management.
Coordination the function of management which ensures that different departments and groups
work in sync. sometimes it is considered as a separate function of management and it also brings
harmony in carrying the different tasks and activities to achieve the organization's objectives
efficiently.

Meaning: Coordination is the integration of group efforts to achieve common goals.

It is the force that connects all management functions and ensure the smooth and efficient
function of an organization.

Co-ordination is a process by which the management achieves proportional group effort and
unity in the track of a common purpose. The manager brings about this process as he performs
the basic managerial functions of planning, organizing, staffing, directing and controlling.

Importance of co-ordination.
Efficiency and Productivity:

Coordination is essential to achieving efficiency and productivity. The risks of working alone,
with a lack of coordination, include duplication of efforts, waste of resources, and conflicting
priorities. As a result, effective coordination minimizes redundancy and maximizes productivity
by aligning everyone with the overall objectives.

It is possible to streamline operations and achieve more with the same or fewer resources if tasks,
timelines, and resources are coordinated.

Coordination is crucial for optimizing production processes in a business context. In a

manufacturing facility, for instance, coordination among different production units prevents
bottlenecks or overstocking by ensuring each unit produces the right number of components at
the right time.

The same concept applies to project management, where tasks are assigned to the right members
of the team, dependencies are managed properly, and deadlines are met without delay.

Resource Optimization:

Resources, whether financial, human, or material, are limited and valuable in every endeavor.
Coordination assists in ensuring that these resources are optimized and strategically utilized.

As a result of coordination, resources can be allocated to different tasks and projects based on
their importance and urgency, which prevents resource shortages or over utilization, leading to
greater efficiency and cost-effectiveness.

It is possible for businesses to save significant amounts of money by optimizing their resources
through coordination. For example, coordination with suppliers and distributors in supply chain
management helps manage inventory levels, reduce carrying costs, and minimize stock outs.

The right people are assigned to the right roles when human resource management is properly
coordinated with workforce planning and talent allocation, which maximizes employee
productivity and job satisfaction.

Alignment with Organizational Goals and Strategy:

Coordination ensures that all actions and efforts are aligned with the organization or project’s
overarching goals and strategies. As a result of effective coordination, all teams or individuals
are aware of how they contribute to the broader objectives and direct their efforts accordingly.
As a result, efforts and resources are not dispersed in unrelated or contradictory directions.
Organizations with a wide range of functions or business units need to coordinate their strategic
efforts. To ensure that each subsidiary’s activities are aligned with the company’s overall
strategy, a multinational corporation with multiple subsidiaries worldwide needs to coordinate its
global operations.

Coordination is crucial in government for aligning different agencies and departments towards
common policy goals.

Conflict Resolution:

The resolution of conflicts is inevitable in complex endeavors with multiple stakeholders and
teams. Communication, understanding different perspectives, and finding mutually agreeable
solutions are vital to resolving conflicts. Conflicts can be identified and addressed promptly
when there is effective coordination, preventing long-term disputes that could hinder progress.

In order to ensure harmony within organizations and to ensure productive collaborations among
different groups, conflict resolution through coordination is essential. There may be conflicts in
project management when priorities, resource allocation, or decision-making authority differ.

A collaborative and positive work environment can be fostered by effective coordination, which
can help project managers resolve these conflicts proactively.

Cross-functional Collaboration:

In modern organizations, tasks often require collaboration between multiple departments or

functional units. Effective coordination makes it possible to communicate and cooperate
seamlessly between these different units. In addition to encouraging information sharing and
interdisciplinary problem-solving, it also fosters a sense of shared purpose within the
organization.

When an industry has complex and interdependent operations, cross-functional collaboration is

especially important. For example, engineering, design, marketing, and sales teams might need
to collaborate on the development of a new product in the technology sector.

By coordinating, each team is aware of the progress and challenges of the other, which facilitates
effective teamwork and faster product development.

Adaptability and Flexibility:

An organization’s ability to adapt and change quickly, despite rapidly changing circumstances, is
vital to its success. Coordination allows organizations to adjust their strategies and operations
quickly in response to changing conditions.

When different parts of an organization are coordinated, decision-making becomes more agile,
allowing for timely responses to emerging opportunities and challenges.
As a result of unexpected events, organizations can pivot their plans and resources to address
new circumstances in a timely manner. It is vital, for example, to coordinate healthcare providers,
government agencies, and community organizations in times of public health crisis, such as the
COVID-19 pandemic.

Risk Management:

A proactive approach to risk management is coordination, which helps identify and address
potential risks. Organizations can identify potential risks by exchanging information and
monitoring progress.

In addition to reducing risk, coordination ensures effective communication of response strategies,

thereby minimizing the impact of unforeseen events. Thus, they can implement mitigation
measures and contingency plans before problems escalate.

As a component of financial risk management, risk analysts and decision-makers coordinate their
efforts so that potential market risks can be identified and mitigated. As part of project
management, project scope and timeline risks are monitored and addressed.

Communication and Transparency:

Coordination fosters open communication within organizations. It facilitates the sharing of

information and updates between team members and leaders. When communication is
transparent, misunderstandings are reduced, trust is enhanced, and individuals are empowered to
make informed decisions because they have access to the needed information.

Leadership must communicate the organization’s vision, goals, and expectations to all
employees effectively when it has a hierarchical structure. Likewise, employees must
communicate their progress, challenges, and suggestions to their superiors in order to ensure that
decisions are well-informed.

Learning and Knowledge Sharing:

Coordination facilitates the exchange of knowledge and best practices within organizations. By
collaborating and coordinating efforts, different teams or individuals gain insights, experiences,
and lessons learned from each other. The result is a learning culture that values continuous
improvement and enables organizations to adapt and innovate as a result.

Coordination of knowledge sharing is especially important in research and development.

Coordination of discoveries, methodologies, and findings in scientific research accelerates
innovation by facilitating the sharing of discoveries, methodologies, and findings.
Timely Execution and Project Management:

Effective coordination is crucial to successful project management and timely completion. It is

important to coordinate activities logically when there are multiple tasks, dependencies, and
deadlines involved in a project. By doing so, delays are reduced, bottlenecks are avoided, and
overall project efficiency is improved.

It is the responsibility of project managers to coordinate project activities, assign responsibilities,

and ensure project milestones are met on time. To keep stakeholders informed of project status,
coordination also involves tracking progress, managing risks, and communicating with
stakeholders.

In conclusion, coordination is a fundamental element in achieving success across various

domains. In an organization or project, it is the glue that binds different parts together, ensuring
alignment of efforts, optimization of resources, resolution of conflicts, and transparent
communication. In addition to enhancing efficiency, productivity, collaboration, and adaptability,
coordination also has a great deal of importance.

Principles of co-ordination.

Coordination plays a vital role in the organization, every manager tries to maintain good
collaboration with other executives which helps in the growth of the organization.
Principle of Direct Contact

The principle of direct contact states that Coordination can be achieved by direct contact among
people whose activities are to be coordinated. Such contact can be established through the
provision of an effective communication system.

Direct contact helps in bringing agreement on work methods, actions and achievement of
ultimate objectives. It helps to wither away the controversies and misunderstandings among
organizational members as well as external parties.

The principle of direct contact is based on the theme that Coordination is better achieved through
mutual understanding and not by force order or coercion.

Coordination at Early Stages

Coordination can better be achieved if it is attempted at the early stage of the work cycle that is
at the planning stage. At the stage of planning such as objective setting, strategy and policy
formulation, etc., Coordination can be sought from organizational members.

This may be done through their participation in the decision-making process. When members are
involved in the decision-making process, they realize how their work performance affects other
members of the organization.

This happens because participative decision-making enables members to commit and agree on
various issues. Conflict and in congruency are reduced which are major hurdles to effective
Coordination.

Principle of Continuity

The principle of continuity states that Coordination should be treated as a continuous process; it
should be taken on a regular basis. Coordination should be treated as a never-ceasing and never-
ending exercise of all managers and in all functions.

Principle of Dynamism

The principle of dynamism states that Coordination does not work on the basis of rigid and fixed
basis but on a dynamic basis. Dynamism is required because changes occur in external factors,
which necessitate changes in the organization and its processes including Coordination.

When organizational changes take place, many old organizational practices do not remain
workable. This is true for Coordination too.
Principle of Timing

The principle of timing involves that various organizational units and members should
synchronise the timing of their work performance. One member of the organization facilitates the
working of another if he synchronises the timing of his work with the working of another.

For example, in an assembly work, the different stages of the work are interrelated in such a way
that a subsequent stage can be undertaken only when the earlier stage has been completed. In
such a case, Coordination of timing at different stages is important.

Principle of Reciprocal Relationship

A reciprocal relationship exists between two or more parties in which each party affects the
functioning of others and in turn, is affected by others. In the organizational context, various
departments may have reciprocal relationships though the amount of reciprocity may not be
equal in the reciprocal relationship.

If a department is affected by some functions of another department but the former does not have
control over these functions, the problem of Coordination arises. In this situation, the functions
and the way of performing such functions are altered in such a way that these affect others
positively.

Other Coordination Principles: Co-ordination will be effective, when the following principles
are followed:

1. Self-Coordination: This principle explains that expecting coordination from other

departments is as essential as maintaining the same thing in our department. It is like to give
respect and take respect. Initially, if we are perfect, then we can expect the same thing from
others. So self coordination is the initial measure or principle of effective coordination.

2. Clear-Cut Objectives: The objectives and standards were set by high-level management.
These objectives should be properly facilitated and create awareness of all the departmental
heads and other employees. All the employees have a clear idea of what they need to achieve;
then they can work according to that.

3. Clear Definition of Authority and Responsibility: The high cutter employees should explain
and define the authorities and responsibilities to the respected person, and it should be explained
to all the lower-level employees. Every employee needs to understand to he needs to report and
what his responsibilities are. This kind of coordination is significant for a healthy organization.

4. Effective Communication: Communication is the basic principle of coordination. Clear and

proper communication avoids several problems and provides multiple solutions for a single
problem. So proper communication should be I'm graduating within the staff, which helps to
exhibit their skills.
5. Effective Supervision: The high-end executives should monitor and supervise all
subordinate's works regularly. They should not neglect their responsibility and should not
mislead their supervision. This helps to maintain effective coordination as well as reduce the
chances of making mistakes.

Aims of Coordination:

 To ensure a smooth reciprocity of the functions and forces of all the different component
parts of the organizations.

 Operation of various business activities in a systematic sequence.

 To conclude the various activities of the enterprise as per planned schedule by the
management.

 To avoid variability's in priorities, objectives and policies which may adversely affect the
realization of overall objectives of the company.

 To avoid interruptions in operations due to the reasons like delay in the supply of
materials, tools or vague directions or omissions or wrong allocation of duties etc.

 Elimination of overlapping or duplication of work. .

 To ensure proper synchronization of the activities of the enterprise, i.e., the actions of
different departments are properly scheduled or timed, so that the various operations and
processes are completed in a planned way.

 To remove the possible causes of difference of views and conflict of interests among the
personnel of the concern.

 To develop team spirit among the staff and to canalize their efforts in the direction of
reaching the chosen goals of business.

Steps for effective Coordination

i. Proper delegation of authority and responsibility.

ii. An effective communication should be in place.

iii. The entire organizational activities should be properly divided according to department wise
and section wise.

iv. Management should motivate the employees to actively take part in committees, conferences,
seminars etc.
v. Management should provide opportunities for employees across the levels to attend training in
the areas of leadership, team building coordination, etc.

vi. Grievance cell should be there to address employees grievances.

CONTROLLING

Introduction: Control, or Controlling, is one of the managerial functions just like planning.
Organizing, staffing and directing. One of the most essential qualities required in a manager is
that he/ she should command the respect of his/her team. This process helps in the formulation of
future plans in light of the problems that were identified &, thus, helps in better planning in the
future periods. Controlling function should not be misunderstood as the last function of
management. It is a function that brings back the management cycle to the planning function.

Controlling helps managers monitor the effectiveness of their planning, organizing, and leading
activities. It determines what is being accomplished- that is, evaluating the performance and, if
necessary, taking corrective measures so that the performance takes place according to plan. It
can also be viewed as detecting and correcting significant variations in the results obtained from
planned activities.

Controlling

Controlling function can be defined as ensuring that activities in an organization are performed
as per the plans. Controlling also ensures that an organization's resources are being used
effectively & efficiently for the achievement of predetermined goals. It is a primary and goal-
oriented function.

Definition: Control is defined as a process of comparing the actual performance with the set
standards of the company to ensure that the activities are performed according to the plans and to
take corrective actions if required.

Features of Controlling

 Controlling helps in achieving organizational goals.

 It evaluates the accuracy of the standards set.

 It facilitates maximum utilization of resources.

 It also sets discipline and order.

 It motivates the employees and boosts employee morale.

 It ensures future planning by revising standards.

 It improves overall performance of an organization.

  It also minimizes errors in operations.

Importance of Controlling

Control is an indispensable function of management without which the controlling function in an

organization cannot be accomplished and the best of plans which can be executed can go away.
A good control system helps an organization in the following ways:

1. Attaining Organizational Goals: The controlling function is an accomplishment of measures

that further makes progress towards the organizational goals & brings to light the deviations, &
indicates corrective action. Therefore it helps in guiding the organizational goals which can be
achieved by performing a controlling function.

2. Enduring with 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.

3. Judging Accuracy of Standards: A good control system enables management to verify

whether the standards set are accurate. The efficient control system also helps in keeping careful
and progress check on the changes which help in taking the major place in the organization & in
the environment and also helps to review & revise the standards in light of such changes.

4. Maximum use of Resources: Each activity is performed in such a manner so that it will be in
accordance with predetermined standards & norms so as to ensure that the resources are used in
the most effective & efficient manner for the further availability of resources

5. Triggering employees: Modern participative management has changed the nature of the
control process. Under the traditional system, the manager would specify both the standards for
performance and the methods for achieving them. Under a new participative system, manage
communicate the standards, but then let employees, either as individuals or as teams, use their
creativity to decide how to solve certain work problems.

6. Creating better quality: Employees are empowered to inspect and improve their work and
this also helps change their attitudes and approaches to achieving effective control.

7. Ensuring Order & Discipline: Controlling creates an atmosphere of order & discipline in the
organization which helps to minimize dishonest behavior on the part of the employees. It keeps s
close check on the activities of employees and the company can be able to track and find out the
dishonest employees by using computer monitoring as a part of their control system.

8. Adding value: An organization that strives to survive through competition should be able to
"add value" to products or services so that customers prefer them to those offered by the
organization's rivals.
9. Facilitating Coordination in Action: The last important function of controlling is that each
department & employee is governed by such pre-determined standards and goals which are well
versed and coordinated with one another. This ensures that overall organizational objectives are
accomplished in an overall manner.

Process of Controlling

Control process involves the following steps as shown in the figure:

Step 1: Establishing/Setting performance Standards

Step 2: Measurement of actual performance
Step 3: Comparison of actual performance with standard
Step 4: Analyzing Deviations
Step 5: Taking Corrective actions

Step 1-Establishing standards: The first step of the process of controlling is to establish
standards of performance against which the actual performance of the organization is measured.
Under this step standards will be established to set up the target which needs to be achieved to
meet organizational goals eventually. Standards indicate the criteria of performance.

Control standards are categorized as quantitative and qualitative standards. Quantitative

standards are expressed in terms of money. Qualitative standards, on the other hand, includes
intangible items

Step 2 - Measurement of actual performance: Once the organization has established the
standards, the second step of the process of controlling is to measure the actual performance in a
reliable and objective manner. The actual performance of an organization can be measured
through different techniques such as sample checking, personal observation, etc., and should be
measured in the same units in which the standards are fixed to make the comparison easy.
Usually, the actual performance is measured at the end of the performance. However, in some
cases, organizations measure performance throughout the performance.
Step 3-Comparison of actual performance with the standard: The third step of the process of
controlling is to compare the actual performance of the organization with the established
standards (in the first step). By comparing the actual performance with the standards, an
organization can determine the deviation between them. When the standards are expressed in
quantitative terms, it becomes easy for the organization to make comparisons as there is no
subjective evaluation required.

Step 4-Analysing Deviations: The actual performance and set standards of an organization
rarely match with each other. Usually, there is always some variation between the expected and
actual performance. Therefore, the fourth step of the process of controlling is to analyse the
deviations. To do so, an organization must fix an acceptable range of deviation in performance.
Besides, an organization should focus more on the significant deviation and less on the minor
deviations.

Step 5 - Taking corrective actions: The last and final step of the process of controlling is to
take corrective action. If the deviations are within the acceptable limits set by the managers, then
there is no need to take corrective action. However, if the deviations go beyond the set
acceptable limit in the key areas, then proper and immediate managerial actions are required. An
organization can easily rectify the defects in the actual performance through the corrective steps.

Essentials of sound control system:

A management control system or MCS is a framework that allows organizations to compare the
actual outcomes with their goals and objectives set by them.

1. Simplicity: A good control system must be simple and easily understandable so that all the
managers can apply it [Link] control techniques fail to communicate the
meaning of control data to the managers.

2. Objectivity: The standards of performance should be objective and specific, quantified and
verifiable. They should be based on the facts so that control is acceptable and workable.

3. Promptness: The control system should provide information soon enough so that the
managers can detect and report the deviations promptly and necessary corrective actions may be
taken in proper time. Corrective measures are of no value if those are taken too late.

4. Economy:The control system must justify the expenses involved. In other words, anticipated
earnings from it should be greater than the expected costs in its working. A small organization
cannot use the expensive control technique applied in large enterprises.

5. Flexibility: Internal goals and strategies must be responsive to the changes in the environment
and the control system should be flexible enough to adapt the changing conditions or unforeseen
situations. It should be adaptable to the new developments. Flexibility in control system can be
introduced by making alternative plans.
6. Accuracy: The control system should encourage accurate information in order to detect
deviations. The technique of control used should be appropriate to the work being controlled.

7. Suitability: Control must reflect the needs and nature of the activities of the organization, The
control system should focus on achieving the organizational goals.

8. Forward-looking Nature: The control system must be directed towards the future. It must
pay attention on how the future actions can be conformed with the plans adopted.

9. Focus on Strategic Points: The control system should focus attention on strategic or critical
deviations. Only exceptional deviations require the attention of the managers.

10. Motivating: A good control system should pay due attention to the human factor, It should
be designed to secure positive action from the workers. Self-control tends to be motivated. Direct
contact between the controller and the controlled also helps in making the control system
motivational.

11. Reflection of organization Pattern: Control must reflect organization pattern. Since the
events are controlled through people, it is essential that controls must conform to the
organization pattern. The control process should be acceptable on the psychological front.

12. Corrective Action: Control system must ensure corrective actions. An adequate control
technique should not only detect the deviations and failures, but should also disclose where they
are occurring; who is responsible for them; and what should be done to correct them.

Techniques of control:

Controlling helps the managers in eliminating the gap between organizations actual performance
and goals. Comparing the standard with actual performance gives the visibility that activities
performed according to the plan or not. If it is not performed then necessary corrective action
should taken.

There are various techniques of managerial control which can be classified into two broad
categories namely

1. Traditional techniques

2. Modern techniques

1. Traditional Techniques of Managerial Control: Traditional techniques are those which

have been used by the companies for a long time now. These include:

 i) Personal Observation

 ii) Setting examples

 iii) Plans and policies

 iv) Organization charts and manuals

 v) Disciplinary system

 vi) Written instructions

 vii) Special reports and records

 viii) Operational audit

 ix) Financial statements

 x) Cost Accounting and Cost Control

Personal Observation

Personal observation is the oldest and most important controlling techniques. Under this
technique, managers or superiors personally visit the work place irregularly and observe the
performance of employees. They check if the work is going as per plans or not. If any
discrepancy is found, they give instructions on the spot immediately. Personal observation
technique results into first hand evaluation of work. But control through this technique is
time consuming and may not be applicable in all situations.

Setting Examples

Managers set their own examples of good performance before their employees and expect the
same from them. For example if managers show their examples of punctuality before their
employees, they will also follow the same easily. Hence, the exemplary behaviour of
managers can control the behaviour and actions of their employees.

Plans and Policies

The organizational plans, policies, procedures, strategies, rules etc. govern and control all the
activities of the organization. They play an important role in controlling activities and
prevent deviations and ensure the conformity of actions with plans and policies.

Organization Charts and Manuals

organization charts and manuals sets out organizational relationships, responsibilities and
duties of the employees of the organization. These documents are also used to control the
performance of employees and fixing responsibilities.
Disciplinary System

Disciplinary system comprising punishments, criticism, disciplinary actions etc. act as an

important tool of control. It acts as a negative control tool. Where employees commit
mistakes repeatedly and mistakes are crucial, strict disciplinary action is taken by the
managers. This technique of control should be used by managers carefully as it results into
fear in the minds of employees. It can cause reduced morale also.

Written Instructions

Instructions in written form are issued by managers and superiors from time to time for the
subordinates. Instructions are issued in the form of notices, letters, circulars, bulletins, etc.
they provide information and instructions in the light of changing rules and situations.
Written instructions act as supplementary control techniques.

Special Reports and Records

Special reports and records relating to different operations of the concern are also prepared in
addition to normal reports and records. Experts prepare these reports. For example, in case of
a serious problem in the organization, expert committee may be appointed by the
management to go into the depth of the problem and suggest the ways or means to solve the
problem. The investigation reports relating to a specific problem or area are the examples of
special reports and records.

Operational Audit

Audit is an effective controlling tool. Operational audit refers to audit of internal operations
of the organization. The organization conduct internal audit with the help of some specialised
internal staff or may also hire the services of external audit team. Internal audit gives a
review of overall working of the organization. It depicts whether organizational policies,
plans, procedures etc. are being adopted by the employees in their day to day working or not.
Thus internal audit provides an internal check over the operations of the employees and
hence improve their efficiency.

Financial Statements

Financial statements comprise Profit and Loss account and Balance Sheet. These statements
show the true picture of the organization in the form of working and financial position of the

business. These statements also act as controlling technique. For example, the comparison
and analysis of statements of different time periods reveal the trends in performance and
depict the present position of the enterprise. This comparison and analysis can be used for
controlling the financial position of the concern.

Some of the types of budgets prepared by an organization are as follows,

  Sales budget

 Material budget

 Production budget

 Cash budget

 Capital budget

 Research & development budget

2. Modern Techniques of Managerial Control: These techniques provide a refreshingly new

thinking on the ways in which various aspects of an organization can be controlled. Modern
techniques of controlling are those which are of recent origin & are comparatively new in
management literature. These include:

 Return on investment

 Responsibility accounting

 Ratio analysis

 Management audit

(a) Return on Investment: ROI can be used to measure the overall performance of an
organization or of its individual departments or divisions. It refers to one of the important and
useful techniques which provides the basics for measuring whether or not invested capital has
been used effectively for generating a reasonable amount of return. It can be calculated as
follows Net income before or after tax may be used for making comparisons. Total investment
includes both working as well as fixed capital invested in the business.

(b) Ratio Analysis: The most commonly used ratios used by organizations are Liquidity ratios,
Solvency ratios, Profitability ratios, Turnover ratios etc. to judge the efficiency and improvement
in organization’s performance.

(c) Responsibility Accounting: Responsibility accounting refers to a system of accounting in

which overall involvement of different sections, divisions & departments of an organization are
set up as "Responsibility centers'. The head of the center is responsible for achieving the target
set for his center. Responsibility centers may be of the following types:

 Cost center

 Revenue center

 Profit center
  Investment center

(d) Management Audit: Management audit refers to a systematic appraisal of the overall
performance of the management of an organization. The purpose of management audit is to
review the efficiency & effectiveness of management & to improve its performance in future
periods.

Therefore, these techniques are so interrelated and deal with such factors as time scheduling &
resources allocation for these activities.