6 6 As mentioned in Chapter 1, every organization attempts to effectively and efficiently reach its goals. Therefore, the organization will want to have goals and objectives that are at several levels in the organization so that performance can be measured, compared to the standard established, and take the appropriate corrective action.
Prof. Preeti BhaskarSymbiosis Centre for Management Studies, Noida1
Controlling• Meaning• Importance• Steps in the process of control• Relationship between Planning and controlling2
ControllingA process of monitoring performance and takingaction to ensure desired results.It sees to it that the right things happen, in the rightways, and at the right time.3
CharacteristicsofcontrollingEndFunctionContinuousprocessDynamicprocessActionOrientedForwardlookingExercised at alllevelsManagementFunction
Goals andGoals andObjectivesObjectivesOrganizationalOrganizationalDivisionalDivisionalDepartmentalDepartmentalIndividualIndividualSetting StandardsMeasurement of actual PerformanceMeasurement of actual PerformanceTaking Corrective ActionControl ProcessComparison of Actual Performance withStandardsFollow Up
Establish Objectives and Standards• Standards are the plans or the targets which have tobe achieved in the course of business function• They can also be called as the criterions for judgingthe performance7
Cont.… Standards generally are classified into two-:• Measurable or tangible - Those standards which can bemeasured and expressed are called as measurablestandards.They can be in form of cost, output,expenditure, time, profit, etc.• Non-measurable or intangible- There are standardswhich cannot be measured monetarily. For example-performance of a manager, deviation of workers, theirattitudes towards a concern.These are called as intangible standards.8
Measuring Actual PerformanceMeasurements must be accurate enough to spotdeviations or variances between what really occurs andwhat is most desired.Without measurement, effective control is not possible.9
Comparing Results with Objectivesand Standards• Comparison of actual performancewith the planned targets is veryimportant.• Deviation can be defined as the gapbetween actual performance and theplanned targets.• The manager has to find out twothings here- extent of deviation andcause of deviation 10
For example, if stationery charges increase by a minor5 to 10%, it can be called as a minor deviation.On the other hand, if monthly production decreasescontinuously, it is called as major deviation.11
Cont…Once the deviation is identified, a manager hasto think about various cause whichhas led to deviation.The causes can be-• Erroneous planning,• Co-ordination loosens,• Implementation of plans is defective, and• Supervision and communication is ineffective,etc.12
Taking Corrective ActionOnce the causes and extent of deviations are known, the manager hasto detect those errors and take remedial measures for it.There aretwo alternatives here-1. Taking corrective measures for deviations which have occurred;2. After taking the corrective measures, if the actual performance is notin conformity with plans, the manager can revise the targets. It is herethe controlling process comes to an end.Follow up is an important step because it is onlythrough taking corrective measures, a managercan exercise controlling.13
Relationship between planningand controllingPlanning and controlling are two separate fuctions ofmanagement, yet they are closely related.Without the basis of planning, controlling activitiesbecomes baseless and without controlling, planningbecomes a meaningless exercise.In absence of controlling, no purpose can be servedby.Therefore, planning and controlling reinforce eachother14
Cont.According to Billy Goetz, " Relationship between the two can besummarized in the following points:•Planning precedes controlling and controlling succeeds planning.•Planning and controlling are inseparable functions ofmanagement.•Activities are put on rails by planning and they are kept at rightplace through controlling.•The process of planning and controlling works on SystemsApproach which is as follows:Planning Results Corrective Action→ →•Planning and controlling are integral parts of an organization asboth are important for smooth running of an enterprise.•Planning and controlling reinforce each other. Each drives theother function of management.