Controlling

CHAPTER – 8
Controlling

❖ Controlling as a Function of Management

Controlling refers to the function of management that involves evaluating, assessing and monitoring
the progress of the work done. It is a rigorous process involving setting up standards for
performance, comparing the actual performance with the set standards, analysing deviations and
taking the required corrective measures.

❖ Controlling: A Forward-Looking as well as a Backward-Looking Process

• Controlling is a backward-looking function in the sense that it assesses the past performance
and analyses deviations from the pre-defined set of standards.
• It is also forward-looking in the sense that the corrective actions taken under controlling form
the basis of future plans and policies. In this way, it guides the future course of action and aims
at improving both performance and efficiency in the long run.

Controlling and Planning are Interlinked

Both planning and controlling are important functions of management. While planning is the first
step in the management process, controlling is the final step. They are interdependent; one cannot
function properly without the other. The following points highlight the relationship between these
two functions of management:
• Planning provides the base for controlling. It lays down standards for working against which the
performance can be measured. In this way, it helps in making controlling a much easier and
effective process.
• Controlling provides useful information based on the evaluation of past performance and takes
corrective measures in case of any deviations. These assessments and corrective actions form
the base for future planning.
• Controlling without planning is meaningless. Without standards or objectives, there is nothing
to control.

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• Without controlling, planning cannot be accomplished. Controlling is a requisite for analysing
whether the plans are being properly implemented.
In this regard, we can say that both planning and controlling are interlinked with each other and
incomplete without each other.

❖ Features of Controlling

1) Pervasive-Controlling is a pervasive function. It is exercised by all managers irrespective of

their level, department or division.
2) Backward-looking as well as forward-looking- Controlling is backward-looking in the sense
that it evaluates the past performance against the pre-defined set of standards and takes the
required corrective actions in case of any deviations. This assessment and corrective actions
form the base for future planning. That is, it is on the basis of corrective actions taken under
controlling that future plans are formed. In this way, it is said to be a forward-looking function.
3) Positive process- Controlling is a positive process as it aims at achieving the organisational
goals despite of working constraints.
4) Continuous process- Controlling is an on-going process as it involves a constant assessment
and evaluation of the progress of current tasks and activities as against the set standards.
5) Goal-oriented function- Controlling keeps a close watch on the work in progress and constantly
works towards the accomplishment of organisational goals.
6) Not the last function of management- it brings back the management cycle back to planning.

Importance of Controlling

1) Accomplishing organisational goals-

● Controlling indicates the deviations in performance
● takes the required corrective measures.
● Keeps the organisation on right track
2) Evaluating the standards-
● It helps in assessing and reviewing the accuracy and feasibility of the set standards
● Verify the standards
3) Optimum utilisation of resources-

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● Controlling ensures that each task is performed as per the set standards, thereby helping in
minimising the wastage of resources.
4) Employee motivation-
● The employees know well in advance as to what is expected from them and the standards
against which their performance will be judged.
● This encourages them to work to the best of their capabilities and achieve the assigned targets.
5) Order and discipline-
● The employees are aware of the fact that they are being continuously observed.
● Thus, dishonesty and inefficiency in behaviour is minimised.
6) Promoting coordination-
● Proper controlling ensures that every department is aware of its respective activities and tasks
and coordinates with one another.

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Controlling Process

The process of controlling involves the following steps:

1) Setting standards- This forms the first step in controlling and involves developing both the
qualitative and quantitative benchmarks against which the actual performance would be
measured. Standards should be flexible
2) Measuring actual performance- The actual performance is measured through various
techniques such as personal observation, checking the sample, performance reports, etc. It must
be ensured that the evaluation is done in an objective and reliable manner.
3) Comparing performances- Once the performances are measured, they are then compared with
the pre-defined standards. Such a comparison helps in assessing the deviations in the
performance.
4) Analysing deviations- The deviations are then properly analysed using two methods namely,
‘Critical Point Control’ and ‘Management by Exception’. Once the deviations are recognised,
the cause for these deviations is identified.
5) Corrective measures- When deviations go beyond the admissible limits, corrective actions are
taken to ensure the errors do not occur again. And if deviations cannot be corrected the
standards may have to be revised.

Important Standards Involved in the Controlling Process

• Qualitative standards- Qualitative standards are those that cannot be quantified in numeric
terms. For example, level of coordination in work, goodwill of the organisation, motivation
level of employees, etc.
• Quantitative standards- These standards can be quantified in numeric terms. They can be in the
form of sales targets, production units to be produced, time to be spent on a particular action,
etc.

❖ Techniques of Controlling

The following are the two techniques of controlling used by managers:

• Critical Point Control- This technique is based on the belief that a manager cannot control each
and every activity of the organisation. Thus, focus should solely be on the key result areas
(KRAs) that are critical to the success of the organisation.

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• Management by Exception- According to this technique ‘an effort to control everything may
end up in controlling nothing’. Thus, only significant deviations which are beyond the
permissible limit should be acknowledged.

Some 1 markers.
1. Standards are the criteria against which actual performance is measured
2. Measurement of performance should be done after task is completed or if possible during the
performance like in assembling task each component should be checked before assembling
3. Employee performance can be measured by preparation of performance report by superior
4. Organisation performance can be measured by calculating ratios etc
5. Efficiency of production may be measured by counting the no. of units produced and no. Of
defective pieces in a batch
6. In small organizations, each piece produced may be checked and in large organizations sample
checking can be done.
7. Deviations may have multiple causes for their occurrence