MODULE 4: LEADERSHIP, DIRECTING AND CONTROLLING
LEADERSHIP
MEANING
Leadership refers to the ability to awaken in others the desire to follow a
common objective.
DEFINITION
“Leader is one who guides and directs other people. He must give
effective direction and purpose”
LEADERSHIP STYLES
1. Positive Style:
A leader motivates his followers to work hard by offering them
rewards. A rule is framed in such a way that a reward will be
ensured to those who show high efficiency. Positive leaders promote
industrial peace. For example, highest bonus will certainly increase
efficiency of the workers. Wages are paid under piece rate system.
2. Negative Style:
A leader forces his followers to work hard and penalize them if the
work is not up to the organization’s standard. The penalty is given
according to the performance. The penalty is given according to the
performance. For example, if the manager gives ousting order for
continuous absence from duty for ten days even though the worker
is absent due to unavoidable circumstances. It is a negative style.
3. Autocratic Style:
When the leaders tell their subordinates/followers at their own what
work they want to get done, and how – it is known as authoritarian
or autocratic leadership style. It works well if the leader is
competent and knowledgeable enough to decide about everything.
All decision-making powers are centralised in the leader, as with
autocratic leaders. No suggestions or initiatives from subordinates
are acceptable. This style should be used only when the leader has
all the information and is short of time and the employees are well
motivated. If the leader wants to gain greater commitment and
motivate his subordinates, then it should be used very rarely.
4. Democratic Style:
Democratic style leader is also known as participative style of
leadership. A Participative leader seeks to involve other people
including subordinates, peers, superiors and other stakeholders in
the process. Here the leader takes his subordinates into confidence
about what to do and how to do, but the final authority vests in the
leader. This style can be divided into two – one, where leader
consults, and two, where decision is taken through consensus.
Using this style is the strength, your subordinates will respect. This
style is used when the employees are knowledgeable and skilful.
This style is also known as consultative, empowerment, joint
decision-making, democratic leadership, Management by Objective
(MBO) and power-sharing. It helps in ascertaining and identifying
future leaders among the subordinates. Also, it keeps a team’s spirit
and morale high, as the team members feel that their opinions are
valued by their leader. For example, an advertising manager
approaches his subordinates on how to promote a particular product
of a company. The team members brain storm over the issue, some
suggest print media and others suggest electronic media. The
participative leader takes all these suggestions, and decides after
weighing their pros and cons.
5. Free-rein Style:
A free-rein leader does not lead, but leaves the group entirely to
itself. Such a leader allows maximum freedom to subordinates, i.e.,
they are given a free hand in deciding their own policies and
methods. It is used when the leader has full trust and confidence in
the abilities of his subordinates. Since a leader cannot do
everything. He prioritises the work and delegates certain tasks. This
style may be used but with caution. This style is also known as
laissez faire (non-interference in the affairs of others). For example,
a manager has newly joined a firm. He is still learning how various
things move in the organization. In such a situation, he relies on the
suggestions and opinions of his team members and lets them do the
things the way they are used to, till the time he can gain sufficient
knowledge and can suggest some more feasible changes.
THEORIES OF LEADERSHIP
1. Trait Theories:
Trait theories assume that People are born with inherited qualities
and traits that make them better suited to leadership. Some traits
are particularly suited to leadership. Trait theories often identify
personality or behavioural characteristics shared by leaders. People
who make good leaders have the right (or sufficient) combination of
traits. Early research on leadership was based on finding the traits
which differentiated leaders from non-leaders. If we look at Ratan
Tata of Tata Sons, Kumar Mangalam Birla of Aditya Birla Group, Azim
Premji of Wipro, Kamath of Infosys, Anand Mahindra of Mahindra and
Mahindra, all these leaders possess some common traits.
The traits are vision, self-confidence, simplicity, integrity, and
adherence to values. Traits are matched by skills. There have been
many different studies of leadership traits and they agree only in
the general saintly qualities needed to be a leader.
2. Behavioural Theories:
Behavioural theories of leadership are based upon the beliefs that
great leaders are made, not born (a big leap from Trait Theory) and
exhibit something unique in their behaviour. Behavioural theories of
leadership do not seek inborn traits or capabilities. Rather, they look
at what leaders actually do, like democratically or autocratically.
People can learn to become leaders through learning and
observation. This is the crux behind leadership development
programmes.
3. The Situational Theories:
The situational theories emphasize not on personal qualities or traits
of a leader, but upon the situation in which he operates. The leaders
of this approach believe that leadership is greatly affected by a
situation and maintain that leadership pattern is the product of
situation at a particular time. A good leader is one who moulds
himself according to the needs of a given situation. The situational
theory of leadership suffers from the drawback that it fails to
consider the fact that in the complex process of leadership,
individual qualities and traits of the leader also play an important
role. In the words of Thomas Gordon, Situationist have overlooked
the possibility that some traits influence their possessors to attain
leadership success and some others increase the chances of their
becoming leaders.
4. The Follower Theory:
The shortcomings of the Trait Theory, the Behavioural Theory, and
the Situational Theory influenced certain researchers to focus their
attention on the followers. According to this theory, the essence of
leadership is followership and it is the willingness of people to follow
that makes a person a leader. The members of a group tend to
follow only those whom they recognize as providing means for
achieving their personal desires, wants and needs. Like all other
theories, the Follower Theory also sounds well but it also represents
only one-sided view. The best thing will be to integrate the various
theories to study leadership pattern. To conclude, we can say that
effective leadership depends on the traits of the leader, situation
and the type of the followers.
5. Path-Goal Model:
Path goal theory of leadership is developed by Robert House. It is
highly respected model for studying leadership. The theory tries to
predict effectiveness of leadership in various situations. According to
the theory the leader must specify goals for the employees and
clear the paths leading to the accomplishment of goals by providing
essential support and guidance and rewards. A leader has to
influence subordinates, perceptions of outcome and performance.
The theory is designed based on Vroom’s expectancy theory of
motivation. A leader must motivate the subordinates by clarifying
goals and paths to achieve them.
DIRECTING
MEANING
Directing is concerned with carrying out the desired plans. It initiates
organized and planned action and ensures effective performance by
subordinates towards the accomplishment of group activities.
Direction is called management in action. In order to make any
managerial decision meaningful, it is necessary to convert it into effective
action, which the manager accomplishes by directing. Without this
managerial function nothing or at best very little is likely to come about.
DEFINITION
“Directing concerns, the total manner in which a manager influences the
action of subordinates. It is the final action of manager in getting others to
act after all preparations have been completed.” Massie
PRINCIPLES OF EFFECTIVE DIRECTION
Effective direction leads to greater contribution of subordinates to
organization goals. The directing function of management can be effective
only when certain well accepted principles are followed. The following are
the basic principles of effective direction:
1. Harmony of Objectives: It is an essential function of management
to make the people realize the objectives of the group and direct
their efforts towards the achievement of their objectives. The
interest of the group must always prevail over individual interest.
The principle implies harmony of personal interest and common
interest. Effective direction fosters the sense of belongingness
among all subordinates in such a way that they always identify
themselves with the enterprise and tune their goals with those of
the enterprise.
2. Unity of Command: This principle states that one person should
receive orders from only one superior, in other words, one person
should be accountable to only one boss. If one person is under more
than one boss then there can be contradictory orders and the
subordinate fails to understand whose order to be followed. In the
absence of unity of command, the authority is undermined,
discipline weakened, loyalty divided and confusion and delays are
caused.
3. Unity of Direction: To have effective direction, there should be one
head and one plan for a group of activities having the same
objectives. In other words, each group of activities having the same
objectives must have one plan of action and must be under the
control of one supervisor.
4. Direct Supervision: The directing function of management
becomes more effective if the superior maintains direct personal
contact with his subordinates. Direct supervision infuses a sense of
participation among subordinates that encourages them to put in
their best to achieve the organizational goals and develop an
effective system of feed-back of information.
5. Participative or Democratic Management: The function of
directing becomes more effective if participative or democratic style
of management is followed. According to this principle, the superior
must act according to the mutual consent and the decisions reached
after consulting the subordinates. It provides necessary motivation
to the workers by ensuring their participation and acceptance of
work methods.
6. Effective Communication: To have effective direction, it is very
essential to have an effective communication system which provides
for free flow of ideas, information, suggestions, complaints and
grievances.
7. Follow-up: In order to make direction effective, a manager has to
continuously direct, guide, motivate and lead his subordinates. A
manager has not only to issue orders and instructions but also to
follow-up the performance so as to ensure that work is being
performed as desired. He should intelligently oversee his
subordinates at work and correct them whenever they go wrong.
TECHNIQUES OF DIRECTION
There are three techniques of direction followed by the management.
They are briefly explained below:
1. Consultative direction: The supervisor or superior has
consultation with his subordinates before issuing a direction. The
consultation is made to find out the feasibility, enforceability and
nature of problem. It does not mean that the superior is not capable
of acting independently. Ultimately, the superior has the right to
take any decision and give the directions. The co-operation of
subordinates is necessary for successful implementation of any
direction. Better motivation is available to the subordinates under
this direction technique. The supervisor could instill high morale into
the subordinates.
2. Free-rein direction: The subordinate is encouraged to solve the
problem independently under this direction technique. The superior
assigns the task generally. The subordinates should take initiative to
solve the problem. Only highly educated, efficient and sincere sub-
ordinates are required to apply these direction techniques.
3. Autocratic direction: This direction is just opposite to free-rein
direction technique. Here, the supervisor commands his
subordinates and has close supervision. The supervisor gives clear
and precise orders to his sub-ordinates and act accordingly. There is
no way left to the sub-ordinates to show their initiatives.
CONTROLLING
Control is the last function of management. The controlling function will be
unnecessary to the management if other functions of management are
performed properly. If there is any imperfection in the planning and actual
performance, control will be needed. The deviations are set right by the
controlling function. This function ensures desired results. Planning
identifies the activities and controlling regulates the activities. Success or
failure of planning depends upon the result of success or failure of
controlling.
MEANING
It is a process of comparing the actual performance with the set standards
of the company to ensure that activities are performed according to the
plans and if not then taking corrective action
DEFINITION
Knootz and O'Donnel, "Controlling is the measurement of accomplishment
against the standards and the correction of deviations to assure
attainment of objectives according to plans."
CHARACTERISTICS OR FEATURES OF CONTROL
The main characteristics or the features of control are briefly discussed:
1. Continuous process: Controlling is also a continuous process just
like other functions of management. The superior has continuous
watch over the entire operations Besides, he ensures that all the
efforts are made to achieve the desired objectives and if not,
necessary control action will be taken to correct them. According to
Koontz and O'Donnell, just as the navigator continually takes
reading to ascertain whether he is relative to a planned course, so
should the business manager continually take reading to assure that
his enterprise or department is on course".
2. Universal: Control is applied at all levels of management and
irrespective of the organisation. The manager of business and non-
business concern uses control to regulate the on-going activities to
obtain desired goals. The nature, scope and limit of control
exercised by the manager vary according to the levels of
management.
3. Forward looking: Control has links with future. How? Past cannot
be controlled. But the future activities may be controlled on the
basis of past experience. The presence of control reduces the
wastages, losses and deviation from standards.
4. Dynamic process: The control technique is changed according to
the nature of deviations. The same technique is not followed
throughout the year or a particular period. Besides, the control
results in changes in the performance of other functions of
management.
5. Control involves management: Control recommends the future
course of action based on evaluation and measurement. Evaluation
and measurement are the eyes of the control process.
6. Influencing factor: The behaviour of a responsible person is
influenced by the control process for the effective performance of
activities. Control avoids the undesirable happenings and shapes
the future. Control influences the people to conform to the norms
and standards in performance.
7. An essence of action: The corrective action should be taken by
the management based on information available. If it does not do
so, the purpose of control will not be achieved. The corrective action
will be taken if there is any deviation from the standards.
STEPS IN CONTROL PROCESS
Control points out the deviations of the plans and suggests remedial
action to improve future plans. Some of the procedures are to be found
defective because of human limitations. So, control is necessary and it has
the following steps:
1. Establishing standards: It is necessary to find the results which
are desired. It is very useful to setting the standards. If it is not,
useful control will not be possible. Standards may be quantitative or
qualitative. Most of the standards are expressed in terms of
quantity. Number of units produced, number of men, hours
employed, total cost incurred, revenue earned, the amount of
investments etc., are some of the examples of quantitative
standard. If expression of standards in quantitative terms is not
possible, they will be expressed in qualitative terms such as
goodwill, employee's morale, motivation, etc. The standards should
have some characteristics to produce effective performance. The
characteristics may be time, cost, efforts, result oriented,
quantitative terms expressed, accurate, periodical revision and the
like.
2. Measuring performance: The performance should be compared
with the established standards. So, necessary information should be
collected about the performance. The effective management
information system provides the necessary information i.e.,
performance particulars. If standards are expressed in quantitative
terms, quantitative information can be collected. In other words, if
standards are expressed in qualitative terms, qualitative
information’s can be collected. Several techniques are used by the
management to measure the performance.
3. Comparison of actual with standards: Whenever the actual
performance is compared with standards, the deviations are known
to the management. Then, the management may find the extent of
deviations and identify the reasons for deviations. Comparison is
very easy when standards are expressed in terms of quantity. If
results are intangible or qualitative, personal observation will be
used to find out the extent of deviation. When the actual
performances are equal to the standards, there is no need for
further action. Control process comes to an end with this stage.
However, if the standards are not achieved, the management has to
decide the type of corrective action. beyond the reasonable limits
should be reported to the top management. This is termed as All the
deviations need not be reported to the management. Deviations
which are control by exception or management by exception. Then,
the reasons and causes for the deviations are analysed. The causes
may be controllable or non-controllable. The management must take
necessary corrective action only in case the causes are controllable
However, no need will arise to the management to take corrective
actions if the causes are uncontrollable.
4. Taking corrective action: Management must find out the causes
of deviation before taking corrective action. The causes of deviation
may be due to ineffective and inadequate communication, defective
system of wage payment, defective system of selection of
personnel, lack of proper training, lack of motivation, ineffective
supervisions, and the like. The management has to take necessary
corrective action on the basis of nature of causes of deviations.
TECHNIQUES OF CONTROLLING
A) BUDGETARY CONTROL TECHNIQUES: The various types of
budgets are as follows
1. Revenue and Expense Budgets: The most common budgets spell
out plans for revenues and operating expenses in rupee terms. The
most basic of revenue budget is the sales budget which is a formal
and detailed expression of the sales forecast. The revenue from
sales of products or services furnishes the principal income to pay
operating expenses and yield profits. Expense budgets may deal
with individual items of expense, such as travel, data processing,
entertainment, advertising, telephone, and insurance.
2. Time, Space, Material, and Product Budgets: Many budgets are
better expressed in quantities rather than in monetary terms. e.g.
direct-labour hours, machine-hours, units of materials, square feet
allocated, and units produced. The Rupee cost would not accurately
measure the resources used or the results intended.
3. Capital Expenditure Budgets: Capital expenditure budgets
outline specifically capital expenditures for plant, machinery,
equipment, inventories, and other items. These budgets require care
because they give definite form to plans for spending the funds of
an enterprise. Since a business takes a long time to recover its
investment in plant and equipment, (Payback period or gestation
period) capital expenditure budgets should usually be tied in with
fairly long-range planning.
4. Cash Budgets: The cash budget is simply a forecast of cash
receipts and disbursements against which actual cash "experience"
is measured. The availability of cash to meet obligations as they fall
due is the first requirement of existence, and handsome business
profits do little good when tied up in inventory, machinery, or other
noncash assets.
5. Variable Budget: The variable budget is based on an analysis of
expense items to determine how individual costs should vary with
volume of output. Some costs do not vary with volume, particularly
in so short a period as 1 month, 6 months, or a year. Among these
are depreciation, property taxes and insurance, maintenance of
plant and equipment, and costs of keeping a minimum staff of
supervisory and other key personnel. Costs that vary with volume of
output range from those that are completely variable to those that
are only slightly variable. The task of variable budgeting involves
selecting some unit of measure that reflects volume; inspecting the
various categories of costs (usually by reference to the chart of
accounts); and, by statistical studies, methods of engineering
analyses, and other means, determining how these costs should
vary with volume of output.
6. Zero Based Budget: The idea behind this technique is to divide
enterprise programs into "packages" composed of goals, activities,
and needed resources and then to calculate costs for each package
from the ground up. By starting the budget of each package from
base zero, budgeters calculate costs afresh for each budget period;
thus they avoid the common tendency in budgeting of looking only
at changes from a previous period
B) NON-BUDGETARY CONTROL TECHNIQUES: There are, of course,
many traditional control devices not connected with budgets,
although some may be related to, and used with, budgetary
controls. Among the most important of these are: statistical data,
special reports and analysis, analysis of break- even points, the
operational audit, and the personal observation.
1. Statistical data: Statistical analyses of innumerable aspects of a
business operation and the clear presentation of statistical data,
whether of a historical or forecast nature are, of course, important
to control. Some managers can readily interpret tabular statistical
data, but most managers prefer presentation of the data on charts.
2. Break-even point analysis: An interesting control device is the
break even chart. This chart depicts the relationship of sales and
expenses in such a way as to show at what volume revenues exactly
cover expenses.
3. Operational audit: Another effective tool of managerial control is
the internal audit or, as it is now coming to be called, the
operational audit. Operational auditing, in its broadest sense, is the
regular and independent appraisal, by a staff of internal auditors, of
the accounting, financial, and other operations of a business.
4. Personal observation: In any preoccupation with the devices of
managerial control, one should never overlook the importance of
control through personal observation.
5. PERT: The Program (or Project) Evaluation and Review Technique,
commonly abbreviated PERT, is a method to analyse the involved
tasks in completing a given project, especially the time needed to
complete each task, and identifying the minimum time needed to
complete the total project.
6. GANTT Chart: A Gantt chart is a type of bar chart that illustrates a
project schedule. Gantt charts illustrate the start and finish dates of
the terminal elements and summary elements of a project. Terminal
elements and summary elements comprise the work breakdown
structure of the project. Some Gantt charts also show the
dependency (i.e., precedence network) relationships between
activities.