Group 7

Controlling
in Management
What is control?
• Control in management means setting standards,
measuring actual performance and taking corrective action.
Organizational Control
refers to the process by which an organization influences its
subunits and members to behave in ways that lead to the
attainment of organizational goals and objectives. When
properly designed, such controls should lead to better
performance because an organization is able to execute its
strategy better (Kuratko, et. al., 2001).
 Controlling Definition
 A process of monitoring performance and taking action to
ensure desired results. It sees to it that the right things happen,
in the right ways, and at the right time.

 It helps to check the errors and to take the corrective action

so that deviation from standards are minimized and stated
goals of the organization are achieved in a desired manner.

• Deviation can be defined as the gap between actual

performance and the planned targets.
 Benefits of Organizational Control
 Improves Cost and productivity control — ensures that the firm functions
effectively and efficiently.
 improves Quality control — contributes to cost control (i.e., fewer defects,
less waste), customer satisfaction (i.e., fewer returns), and greater sales (i.e.,
repeat customers and new customers).
 Opportunity recognition — helps managers identify and isolate the source of
positive surprises, such as a new growth market. Though opportunities can also
be found in internal comparisons of cost control and productivity across units.
 Manage uncertainty and complexity — keeps the organization focused on its
strategy, and helps managers anticipate and detect negative surprises and
respond opportunistically to positive surprises.
 Decentralized decision making — allows the organization to be more
responsive by moving decision making to those closest to customers and areas
of uncertainty.
Process of Controlling
 Establishment of standards
- Standards are the plans or the targets which have to be achieved in
the course of business function. They can also be called as the
criterions for judging the performance. Standards generally are
classified into two.

 Measurable/Output STANDARDS - Those standards which can be measured

and expressed are called as measurable standards. They can be in form of cost,
output, expenditure, time, profit, etc.

 Non-measurable/Input STANDARDS - measures work efforts that go into a

performance task. These are standards which cannot be measured numerically.
For example- performance of a manager, deviation of workers, their attitudes
towards a concern.
 Measurement of performance
- Measurements must be accurate enough to
spot deviations or variances between the performance
in what really occur and what is most
desired.

Actual Performance Standard Performance

Performance should be measured based on an employee’s overall

impact, cost efficiency, effectiveness, productivity and ability to
implement best practices according to their respective fields.

.
Comparison of actual and standard
performance
- Comparison of actual performance with the planned targets is
very important. Once actual performance has been determined, this
will be compared with what the organization seeks to achieve. Actual
production output will be compared with the target output.
Deviation can be defined as the gap between actual performance
and the planned targets.

» Ways of making such comparisons include:

• Historical / Relative / Engineering
• Benchmarking / Reports (monthly, yearly)
• Output and product
 Taking remedial actions
- Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures
for it. There are two alternatives here.

 Taking corrective measures for deviations which have

occurred; and

 After taking the corrective measures, if the actual

performance is not in conformity with plans, the manager
can revise the targets. It is here the controlling process
comes to an end. Follow up is an important step because it is
only through taking corrective measures, a manager can
exercise controlling.
What are the 3 different types of controlling?
Feed-forward Control
Control that takes place before work
is performed. Managers using this type of control
create policies, procedures and rules aimed at
eliminating behavior that will cause undesirable
work results. This type of control is helpful to
managers because it allows a manager to plan
work effectively. Although this control can be
costly and can slow down the planning process,
they help to avoid problems later on.
• Concurrent control
This refers to the control that takes place as
work is being performed. this means that systems are
monitored in real-time. Concurrent controls begin
with standards and all employee activity is measured
against the standard. Usually these include quality
control standards. This means that products and
services can be checked as they are being produced
or performed to be sure that the highest quality
product or service is being produced or provided.
• Feedback control
This refers to the control that concentrates on
the post organizational performance. Managers
exercising this type of control are attempting to take
corrective action by looking at organizational history
over a specified time period. This history may involve
one factor, such as inventory levels, and may involve
the relationships among many factors, such as net
income before taxes, sales volume and marketing
cost.
PERT – CPM /
GANTT CHART
PERT CHART
(Program Evaluation Review Technique)

 A PERT chart is a project management tool that provides

a graphical representation of a project's timeline, breaks
down the individual tasks of a project for analysis.
 A PERT chart shows the sequence in which tasks must be
completed. Project management planning tool used to
calculate the amount of time it will take to realistically
finish a project.
 In each node of a PERT chart, you typically show the
elapsed time and effort estimates.
CPM (Critical Path Method)

• The critical path method (CPM) is a step-by-

step project management technique for process
planning that defines critical and non-critical tasks
with the goal of preventing time-frame problems.
The CPM is ideally suited to projects consisting of
numerous activities that interact in a complex
manner.
PERT-CPM CHART
 GANTT CHART - A Gantt chart is a type of bar chart
that illustrates a project schedule.

 A Gantt chart, commonly used in project management, is one of the

most popular and useful ways of showing activities (tasks or events)
displayed against time. On the left of the chart is a list of the activities
and along the top is a suitable time scale. Each activity is represented
by a bar; the position and length of the bar reflects the start date,
duration and end date of the activity. This allows you to see at a
glance:
• What the various activities are
• When each activity begins and ends
• How long each activity is scheduled to last
• Where activities overlap with other activities, and by how much
• The start and end date of the whole project
Financial Controls

Financial control may be constructed as the analysis of a

company's actual results, approached from different
perspectives at different times, compared to its short, medium
and long-term objectives and business plans.

THREE BASIC FINANCIAL REPORTS

• (1) the balance sheet,
• (2) the income/profit and loss (P&L) statement, and
• (3) the cash flow statement.
• A Balance Sheet is a statement of the financial position of a
business which states the assets, liabilities, and owners' equity at a
particular point in time. In other words, the balance sheet
illustrates your business's net worth.
• The Income Profit and Loss Statement, which shows net income
for a specific period of time, such as a month, quarter, or year. The
P&L statement is divided into five major categories: (1) sales or
revenue, (2) cost of goods sold/cost of sales, (3) gross profit, (4)
operating expenses, and (5) net income.
• The Cash flow Statement, which shows the movements of cash
and cash equivalents in and out of the business. Chronic negative
cash flow is symptomatic of troubled businesses.
Non Financial Controls - are defined
as controls where nonfinancial performance outcomes are
measured.

List of Non-Financial Performance Objectives

1. Employee Engagement and Satisfaction

– Focusing on employee satisfaction allows you to create a
workforce of engaged, loyal employees. With increased employee
morale often comes better attendance and effort.
2. Quality
– The quality of work produced by your company affects your
reputation and amount of business you receive. Whether you sell
a product or a service, you want every sale from your company to
be top-notch.
Non Financial Controls

3. Customer Service
-Along with a quality product or service, aim to provide your
customers with a positive experience every time they interact with
your business. Making your customers feel valued encourages them
to give your company additional business in the future.
4. Public Relations
-Another non-financial area for goals is your company's public
image. Improving the way the general public views your company
can mean increased business and stronger relationships with the
community. Potential objectives include to maintain a professional
image, establish a positive social media presence and give back to
the community. Donating time and money to charitable
organizations helps establish your company as a fixture in the
community.
Examples of Nonfinancial Performance Controls

• Human Resources
• Marketing
• Production
• Purchasing
• Research and Development
• Customer Service
 The End
Thank You 