The document discusses various concepts related to controlling performance in organizations. It defines controlling as measuring and correcting performance to ensure objectives are met. The basic control process involves establishing standards, measuring performance, comparing to standards, and taking corrective actions. It also discusses different types of standards, measurement techniques for quantitative vs qualitative factors, identifying deviations, and remedial actions. Overall, the document provides an overview of key elements in the managerial function of controlling.

1. Controlling

2. • The managerial function of controlling is the measurement and
correction of performance in order to make sure that enterprise
objectives and the plans devised to attain them are being
accomplished.
• Planning and controlling may be viewed as the blades of a pair
of scissors: the scissors cannot work unless there are two
blades.
• Without objectives and plans, control is not possible because
performance has to be measured against some established
criteria

3. The Basic Control Process
1. Establishment of standards
2. Measurement of performance
3. Comparing performance with standards
4. Taking corrective actions

5. Establishment of standards
• first step in control process
• Standards represent criteria for performance.
• A standard acts as a reference line or a basis of comparison of actual
performance.
• Different standards of performance are set up for various operations at
the planning stage.

6. Measurement of performance
• The second step is to measure actual performance of various
individuals, groups or units.
• Management should measure the performance and compare it with the
standards.

7. Measurement of performance
• The quantitative measurement should be done in cases where
standards have been set in numerical terms.
• This will make evaluation easy and simple.
Eg.: Sales, Profit etc.

8. Measurement of performance
• On other cases the performance should be measured in terms of
qualitative factors
e.g. performance of industrial relations manager. His performance can
be measured in terms of attitude of workers, frequency of strikes and
morale of workers.

9. Comparing performance with standards
• Deviation can be defined as the gap between actual performance
and the planned targets.
• Hence, comparison of actual performance with the planned targets is
very important.
• We have to find out the extent of deviation and the cause of deviation.

10. Comparing performance with standards
• Once the deviation is identified, a manager has to think about
various causes, which have led to deviations such as erroneous
planning, lack of co-ordination, implementation defect, supervision
and communication ineffectiveness, etc.

11. Taking corrective actions
• Once the causes and extent of deviations are known, the manager
has to detect those errors and take remedial measures.
• First is by taking corrective measures for deviations which have
occurred;

12. Taking corrective actions
• second is by evaluating the target or standard itself because if
things are not rectified even after corrective actions, it could be due
to erroneous target.
• However, one should take the second option only with due caution.

13. CRITICAL CONTROL POINTS,
STANDARDS, AND BENCHMARKING
• Standards are yardsticks against which actual or expected
performance is measured
• The principle of critical point control, one of the more
important control principles, states that effective control requires
attention to those factors critical to evaluating performance
against plans
Types of Critical Point Standards
• (1) physical standards, (2) cost standards, (3) capital standards,
(4) revenue standards, (5) program standards, (6) intangible
standards, (7) goals as standards, and (8) strategic plans as
control points for strategic control

14. • BUREAUCRATIC AND CLAN CONTROL: Bureaucratic control is
characterized by a wide use of rules, regulations, policies,
procedures, and formal authority. Clan control is based on norms,
shared values, expected behavior, and other aspects relating to
organization culture.
Requirement of effective control
• If controls are to work, they must be specially tailored to plans and
positions, to individual manager and to the needs of efficiency and
effectiveness.
• To be effective, control also should be designed to point out
exceptions at critical points, to be objective, to be flexible, to fit the
organization culture, to be economical and to lead to corrective
action.

15. CONTROL OF OVERALL
PERFORMANCE
Many overall controls in business are financial.
• PROFIT AND LOSS CONTROL: Since the survival of a business usually
depends on profits, and since profits are a definite standard against which to
measure success, many companies use the income statement for divisional or
departmental control.
• CONTROL THROUGH RETURN ON INVESTMENT(ROI):Measuring both the
absolute and the relative success of a company or company unit by the ratio of
earnings to investment of capital
• MANAGEMENT AUDITS AND ACCOUNTING FIRMS:
• THE BALANCED SCORECARD: The balanced scorecard is used by business,
non-profit organizations, and government to align the company activities with the
organizations vision and strategy as well as the improvement of internal and
external communication. To accomplish the vision and the strategy, four sets of
perspectives need to be considered. First, learning and growth deals with
objectives, measures, targets, and initiatives

16. Benchmarking
• It is an approach for setting goals and productivity measures
based on best industry practices. Benchmarking developed out
of the need to have data against which performance can be
measured.
• What should the criteria be? If a company needs six days to fill
a customer’s order and the competitor in the same industry
needs only five days, five days does not become the standard if
a firm in an unrelated industry can fill orders in four days.
• The four-day criterion becomes the benchmark even when at
first this seems to be an unachievable goal.

17. There are three types of benchmarking.
• First, strategic benchmarking compares various strategies and
identifies the key strategic elements of success.
• Second, operational benchmarking compares relative costs or
possibilities for product differentiation.
• Third, management benchmarking focuses on support functions
such as market planning and information systems, logistics,
human resource management, and so on.

18. Types of Control

19. FEEDBACK CONTROL
• Many systems control themselves through information
feedback, which shows deviations from standards and initiates
changes
• Management control is usually perceived as a feedback system
similar to that which operates in the common household
thermostat.
• Sometimes called Post-action controls, they take place after an
action is completed.
• They focus on end results, as opposed to inputs and activities.

20. Feedback Loop of Management Control

21. FEEDFORWARD OR PREVENTIVE
CONTROL
• One of the difficulties with historical data is that they tell
business managers in November that they lost money in
October (or even September) because of something that was
done in July
• What managers need, for effective control, is a system that will
tell them, in time to take corrective action, that certain problems
will occur if they do not do something now

22. Feed-forward Control
• In feed-forward, the system is focused on the input, which can create
a variation in the output and can be corrected in time.
• It is not about post mortem but of proactive action.

23. 23
Feed-forward Control
• Sometimes called the Preliminary controls, they are
accomplished before a work activity begins.
They make sure that proper directions are set and that the right
resources are available to accomplish them.

24. FEEDFORWARD VS FEEDBACK SYSTEM
• Feedforward systems monitor inputs into a process to ascertain
whether the inputs are as planned; if they are not, the inputs, or
perhaps the process, are changed in order to obtain the desired
results
• In a sense, a feedforward control system is really a kind of
feedback system. However, the information feedback is at the
input side of the system so that corrections can be made before
the system output is affected. Also, even with a feedforward
system, a manager would still want to measure the final system
output, since nothing can be expected to work perfectly enough
to ensure that the final output will always be exactly as desired.

26. Control Techniques
and Information
Technology

27. Control Techniques
• Overall performance control
• Budgetary Control
• Non-budgetary control

28. Overall performance control
• It is important to control the overall performance and not confine to
some processes.
• Many overall controls in business are financial in nature.

29. Overall performance control techniques
• Profit and loss control
• Control through Return on Investment (ROI)
• Management audits and accounting
• Bureaucratic and clan control

30. Profit and loss control
• This is the simplest form and captures the revenue and cost.
• It can be made in perspective i.e., ahead of its happening by making a
budget for the next year so that decisions can influence the revenues
and expenses before they actually occur.

31. Control through Return on Investment (ROI)
• ROI measures both the absolute and the relative success of a
company or unit by the ratio of earnings to investment on capital.
• This standard recognises that capital is the core of business.

32. Management audits and accounting
• Although they look at various financial measures, it is possible for an
audit to evaluate the systems by asking penetrating questions on the
financial indicators.
• Thus, for example, if the cost of procurement has increased
substantially from the average in the last decade, then an audit
process gives the feedback base on which the process itself can be
controlled by taking corrective actions.

33. Bureaucratic and clan control
• The organisations are controlled using elaborate rules and
regulations, ‘do it’ instructions, etc. This is called bureaucratic
control.
• Clan control is based on the norms, shared values, and expected
behaviour.
• Most organisations have a combination of these to exercise control.

34. Control Techniques
• Overall performance control
• Budgetary Control
• Non-budgetary control

35. Budgetary Control
• A budget is a plan for a given period in numerical terms.
• They may be in terms of financial figures, labour hours, materials,
sales volumes, etc.
• If done with flexibility, they are excellent tools of control.

36. Budgetary Control
• Usually, budgeting is done by making incremental changes to the
existing budget, which is one of the reasons why it has got a bad
name.

37. Zero based budgeting
• usually done for support functions rather than production.
• In this method, every year, the activities and their costs are worked
from the base.
• Hence every year the necessity of an activity has to be established.

38. Zero based budgeting
• E.g., a training programme and its need have to be established every
year and its cost also has to be estimated every year even if the
programme itself is an old one. Thus, managers will think of new,
more effective, perhaps less expensive faculty, venue, etc. This makes
the manager think fresh every year about efficacy and cost.

39. Control Techniques
• Overall performance control
• Budgetary Control
• Non-budgetary control

40. Non-budgetary control
• There are several non-budgetary controls.
• An inspection visit, managing by walking around, use of statistical
data, benchmarking, operational audit, HR audit, etc. are the non-
budgetary controls.

41. Benchmarking
• Benchmarking is the process of comparing one's business processes
and performance with industry bests and/or best practices from
other firms or industries.
• Several measures are used like Quality, time and cost.

42. Time event network analysis
• Gantt charts
• Program Evaluation and Review Technique (PERT)

43. Gantt Chart
• https://www.youtube.com/watch?v=fB0wsdmV3Sw

44. Gantt charts
• A Gantt chart is a type of bar chart, developed by Henry Gantt, which
illustrates a project schedule.
• Gantt charts illustrate the start and finish dates of elements of a
project.

45. Gantt charts
• If a process requires three months and we know when it should be
completed, then we can plot when it should start and when each of
the sub-activities should finish.

47. Program Evaluation and Review Technique
(PERT)
• A PERT chart is a graphic representation of a project’s schedule.
• It shows the sequence of tasks
• Every work involves various activities till completion stage.
• Every activity requires certain time.
• According to this technique time required is being set.

48. Program Evaluation and Review Technique
(PERT)
• A map is prepared to show the time required to complete each
process.
• E.g.: to complete a work, A, B, C, D, E following events are required.

49. Program Evaluation and Review Technique

50. Program Evaluation and Review Technique
• In the above figure A, B, C, D, E, F are the events and arrow
shows the time require to complete an activity.

51. Advantages of PERT
• It forces the managers to plan since they have to make a time event
chart.
• Forces planning all the way down the line because each subordinate
manager must plan the event for which he/she is responsible.

52. Disadvantages of PERT
• When a programme is new or ambiguous, and no reasonable
estimate of time can be made, PERT is difficult to implement.
• It emphasises only on time and not cost.

53. ANALYTICS IN MANAGING
• In its simplest term, analytics is the science of analysis.
• Analytics uses computer technology, statistics and operations
research to solve business and other problems

54. Management information system(MIS)
• Information technology has promoted the development of MIS.
The definition of the term management information system
varies. It is defined here as a formal system of gathering,
integrating, comparing, analyzing, and dispersing information
internal and external to the enterprise in a timely, effective, and
efficient manner to support managers in performing their jobs.

55. OPPORTUNITIES AND CHALLENGES
CREATED BY INFORMATION
TECHNOLOGY
• Computers are now extensively used. Their impact on managers
at various organisational levels differs. Information Technology
provides many challenges. Computers have also contributed to
telicommunicating, allowing people to work from home at
computer that is linked to a company's mainframe computer.
Increasingly, computers networks are installed to link
workstations with eachother, with larger computers, and with
peripheral equipments

56. THE DIGITAL ECONOMY, E-
COMMERCE, AND M-COMMERCE

57. Customer Relationship Management
(CRM)
• CRM means promoting the interactions between the customer
and the organization by collecting, analyzing, and using the
information to better serve the client.

58. Productivity, Operations
Management, and Total
Quality Management

59. Productivity

60. What is Productivity?
• Productivity is the input-output ratio within a time period
with due consideration for quality

61. Productivity

62. Productivity
The formula indicates that productivity can be improved by:
• Increasing outputs with the same inputs
• Decreasing inputs but maintaining the same outputs
• Increasing outputs and decreasing inputs to change the ratio
favorably.

63. THE OPERATIONS MANAGEMENT
SYSTEM

64. TOOLS AND TECHNIQUES FOR
IMPROVING PRODUCTIVITY
• inventory planning and control: Inventory planning includes creating forecasts to determine how
much inventory should be on hand to meet consumer demand. Inventory control is the process
by which managers count and maintain inventory items in the business
• the just-in-time inventory system: Just-in-time inventory system The supplier delivers the
components and parts to the production line only when needed and “just in time” to be assembled.
• outsourcing: Outsourcing The contracting of production and operations to outside vendors that
have expertise in specific areas.
• operations research: The application of scientific methods to the study of alternatives in a problem
situation, with a view to obtaining a quantitative basis for arriving at a best solution.
• value engineering: A product can be improved and its costs lowered through value engineering,
which consists of analyzing the operations of the product or service, estimating the value of each
operation, and attempting to improve that operation by trying to keep costs low at each step or part.
• work simplification: Work methods can also be improved through work simplification, which is the
process of obtaining the participation of workers in simplifying their work
• Quality circles: Quality Circle A group of people from the same organizational area who meet
regularly to solve problems they experience at work.

65. • Total Quality Management: (TQM) involves the organization’s
Long-term commitment to continuous quality improvement,
throughout the organization and with the active participation of
all members at all levels, to meet and exceed customer
expectations
• Computer-aided Techniques:
• Computer-Aided Design (CAD) and Computer-Aided
Manufacturing (CAM) are part of the cornerstones of the factory
of the future.
• CAD/CAM helps engineers design products much more quickly
than they could with traditional paper and pencil approach

66. SUPPLY CHAIN AND VALUE CHAIN
MANAGEMENT
• Supply Chain Management (SCM) focuses on the sequence of
getting raw materials and subassemblies through the manufacturing
process economically
• Value Chain Management (VCM), on the other hand, has a broader
meaning and involves analyzing every step in the process, ranging
from the handling of raw materials to servicing end users, providing
them with the greatest value at the lowest cost.
• Therefore, some suggest that supply chain management focuses
more on the internal process with an emphasis on efficient flow of
resources, such as materials, while value chain management has
similar aim with an additional concern for the external environment,
such as the customer