Controlling

Controlling is the basic managerial function. It is the process of ensuring the actual activities
confined to planned activity. It is an essential function for all levels of management. It ensures
the right things are done in the right manner at right time.

Each and every organization set the goals. All activities are directed towards the goals.
Controlling is defined as a measurement of actual performance and expected performance and
taking corrective action. Its purpose is to make sure that actual performance is consistent with
plans.

Control is the last function of Management. Planning identifies the activities and controlling
regulates the activities.

The purpose of control

1. Adapting to environmental change: now a days the business environment is very complex.
Every business organization have to cope up with the changing environment. Otherwise, it
becomes very hard to fulfill the purpose of the organization. We are not able to utilize the
control process if any organization does not adapt the environmental changes.

2. Limiting the extent of errors: small mistakes and errors do not often seriously damage the
financial health of an organization. Over time however, small errors may accumulate and
become very serious and these mistakes can destroy all the financial capability of an
organization.

A good control system always struggle against errors and try to overcome from these errors if
errors are detected easy.

3. Cope with organizational complexity: when a firm purchase only one raw material,
produces one product, its managers can maintain control with a very basic and simple system.
 But a business produces many products from various types of raw materials and has a large
market area.

A complicated organizational design and many competitors need a sophisticated system to

Fighting against this organizational complexity is the main purpose of a proper control system.

4. Minimizing cost: a good control system keeps eyes on the minimum cost, but maximum
productivity .so, manager should apply all the modern control system for minimizing cost.

Types of control
Controlling

Strategic control Operational control

Preliminary control Screening control Post action control

Strategic control: strategic control focuses on, how effectively the organization’s corporate,
business and functional strategies are succeeding in helping the organization, meet its goals.

Operational control: operational control give emphasize on the functional activities of an

• Preliminary control: its gives attention all the inputs of an organization.

• Screening control: it gives attention how an organization successfully transfers all the
inputs into the outputs.

• Post action control: it evaluates all the outputs that are produced by the company.
Steps of Control Process

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. Thus, standards act as a
lighthouse that warns & guides the ships at sea.

In an industrial enterprise, standards could include sales and production targets, work attendance
goals, safety records etc.

In service industries, on the other hand, standards might include a number of time customers
have to wait in the queue at a bank or the number of new clients attracted by a revamped
advertising campaign.

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.

Following are some of the ways for measuring performance:

(a) Superior prepares a report regarding the performance of an employee.

(b) Various ratios like gross profit ratio return on investment, current ratio etc. are calculated at
periodic intervals to measure company’s performance.
(c) Progress made in areas like marketing can be measured by considering the number of units,
increase in market share etc.

(d) In small organizations, each unit produced can be checked personally to ensure the quality
standards.

(e) In large organization, the technique of sample checking is used. Under this technique, some
pieces are checked at random for quality specifications.

3. Comparing Actual Performance 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. Taking 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.