Controlling

• It is the process of comparing actual performance with

standards and taking any necessary corrective action.
• It is making something happen the way it was planned to
happen.
• It involves keeping the organizational activities and functions
on right track and aligned with plans and goal.
• controlling helps the managers to develop
Appropriate standards
Compare ongoing performance against those standards
Take steps to ensure that corrective action are taken when
necessary
Importance:
Accomplishing Organizational Goals : It helps in guiding the
organizational goals which can be achieved by performing a controlling
function.
Judging Accuracy of Standards : A good control system enables
management to verify whether the standards set are accurate &
objective.
Making Efficient use of Resources: Another important function of
controlling is that in this, each activity is performed in such manner so
an 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.
Improving Employee Motivation : Another important function
is that controlling help in accommodating a good control
system which ensures that each employee knows well in
advance what they expect & what are the standards of
performance on the basis of which they will be appraised.
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.
Process:
Step- I Establishment of standards:
• The first step in the control process is establishing standards.
Standards are the targets against which subsequent
performance will be compared.
• They are, by definition, simply criteria of performance.
• They serve as the benchmarks because they specify
acceptable levels of performance.
• Control standards are broadly divided into two categories.
• Quantitative standards: These are generally expressed in physical
or monetary terms.
• Such standards are set up in respect of production, finance,
sales etc. where results can be measured in exact quantitative
terms.
• Quantitative terms may be further divided as follows:
• Time standards: Time standards state the length of time it should
take to make a certain good or perform a certain service.
• An airline pilot has a standard time span in which to make a
certain trip.
Cost standards: cost standards are based on the cost of
producing the goods or services.
• Ex- the material cost might be Rs. 10 per unit. Cost standards
specify the cost limits within results should be achieved.
Productivity standards: standards of productivity are based on
the output of goods or services during a set time period.
• A productivity standard might be to complete 10 units or
serve 150 customers per hour.
• Revenue standards: they arise from attaching monetary
values to sales. they may include such standards as revenue
per passenger-mile, average sale per customer or sales per
capita in a given market area.
Qualitative standards:

• Standards of quality are based on the level of perfection

desired in respect of certain intangible items such as
goodwill, employee morale, industrial relations etc, tests,
survey and sampling techniques are used to prove human
attitudes and drives in respect of above items before
specifying a limit.
Step-II Measurement of actual performance

• The second step in control process is the measurement of

actual performance. Here, the actual performance of
employee is measured against the standard fixed for his job.
• This should be done in an objective manner. Where
standards are expressed in numerical terms, measurement
does not create problems.
• Ex- performance of a worker in terms of units produced in a
week could be easily measured against the standards output
for the week.
• To make the checking process effective, the manager has to
concentrate on three key aspects of measurement viz,
completeness, objectivity and responsiveness.
• Completeness: complete measured provide an opportunity for
the manager to concentrate on all aspects of the job instead of
neglecting unmeasured tasks in favors of measured ones.
• Objectivity: objective measured avoid the risk of bias and
resentment, inherent in subjective assessment of task and
people.
• Responsiveness: responsive measures support the belief that
effort and performance lead to improvement in the systems of
control.
Step – III comparison of actual performance with standard:
• The comparing step determines the degree of variation
between actual performance and the standard.
• Some variation in performance can be expected in all activities.
• It is, thereof, important to determine the acceptable range of
variation.
• Deviations in excess of this range become significant and
receive manager’s attention.
• All such deviations may be due to errors in planning, defective
implementation or careless performance of the operative.
Step-IV taking corrective action:
• The last and final step in the control process is taking corrective
action, when required.
• Corrective steps are initiated by managers with a view to rectify
the defects in actual performance.
• If actual performance for example, falls short of standards due to
non- availability of materials, managers tries to procure these
materials and thus sets things in order.
• If it is due to poor results shown by employees, it could be
rectified through the introduction of attractive incentive plans.
• Thus, a corrective action may involve a change in methods, rules,
procedures etc.
Factors influencing control effectiveness:
Suitable: The control system must be suitable to the needs of
organizations.
• It must conform to the nature and needs of the job and the
area to be controlled.
• Ex- the control system used in production department will be
different from that used in sales department
Simple: The control should be easy to understand and operate. A
complicated control system, will cause unnecessary mistakes,
confusion and frustration among employees.
• When the control, system is understood properly, employees
can interpret the same in a right way and ensure its
implementation.
Selective: To be useful, the control system must focus attention
on key, strategic and important factors which are critical
performance.
Insignificant deviation need not be looked into. By concentrating
attention on important aspects, mangers can save their time and
meet problems head on in an effective manner.
Flexible: We live in a world of supersonic change. Competitive,
technological and other environmental changes force
organizations to change their plans.
As a result, control should be necessarily flexible. It must be
flexible enough to adjust to adverse changes or to take
advantage of hew opportunities.
• Foreword-looking: An effective control system should be
forward looking.
• It must provide timely information on deviation.
• Any departure from the standard should be caught as soon
as possible.
• It helps managers to take remedial steps immediately before
things go out of gear.
Objective: A control system would be effective only when it is
objective and impersonal.
• It should not be subjective and arbitrary.
• When standards are set in clear terms, it is easy to evaluate
performance.
Types of control:
Feedback control :( historical or post control):

• It is the process of gathering information about a complete

activity, evaluating that information and taking step to improve
similar activities in the future.
• Feedback control enables managers to use information on past
performance to bring future performance into line with
planned objectives.
• Critics of feedback control argue that it is like closing the gate
after the horse is gone.
• Because corrective action is taken after the fact, costs tend to
pile up quickly while problems and deviations persist.
• On the positive side, feedback control tests the quality and
validity of standards.
Concurrent control: it is also called” real time” control.
Concurrent control techniques immediately consider any
problem and analyze it to take necessary and corrective steps
before any major damage is done.
• Control chart is an example of this control.
• Concurrent controls are also known by another name “
steering controls” and occur while an activity is taking place.
The navigator of an aircraft who adjust the aircraft’s
movements is an example of concurrent control.
Feed forward control: Here the control system anticipates
problems that the management encounters in future.
• Cash budget is an example of this type where the financial
manager is in a position to estimate the next year’s flow of
cash.
• If there is a shortage of funds in a particular month, he can
arrange for bank loan or some other alternative.
• Predictive control is also frequently termed as feed forward
control.