The document covers the concept of controlling in business, highlighting its importance in decentralizing authority among managers, enhancing their abilities, using resources effectively, improving coordination, regulating human behavior, and achieving efficiency and effectiveness. It outlines the steps in the controlling process, including setting performance standards, measuring performance, comparing actual performance against standards, analyzing deviations, and taking corrective actions. Overall, effective controlling is essential for organizations to meet goals and optimize performance.

1. BUSINESS
STUDIES
PROF RAMAN
DHIMAN
chapter
controlling

2. Topics covered in this
slideshare
■:Understanding the concept of
controlling
■: explain the importance of
Controlling
■: discuss the steps in the process
of controlling

7. a) Decentralization of authority
Since managers at every level of
an organization have to
exercise control, the controlling
process leads to
decentralization. This, in turn,
enables middle and lower level
managers to have some
autonomy in making decisions.
An organization that distributes
authority at every level always
works smoothly and efficiently.

8. b) Increasing managerial abilities
By enabling all managers to
possess the autonomy to make
decisions, controlling enhances
their managerial abilities. With
these skills, managers can further
their organization’s goals by
adapting to diverse situations and
problems. Furthermore, this also
helps managers grow and develop
at an individual level by giving
them new experiences.

9. c) Using resources effectively
The most important function of
controlling is to compare actual
performances with expected
results. This, in turn, helps
managers understand where they
are lacking and how they can
improve their performances.
Using this knowledge, managers
can use all available resources
optimally and prevent their
wastage.

10. d) Facilitating coordination
In every business organization,
managers and employees always
have to coordinate and work with
each other collectively. Controlling
improves this coordination by
basically demarcating all activities
and efforts into fixed boundaries. It
brings together all the resources of
an organization and enables its
personnel to work together with
unified efforts.

11. e) Structuring human behaviour
Since all organizations have to
depend on humans for functioning,
they need to regulate human
behaviour of their employees.
Controlling rationalizes this human
behaviour and prevents employees
from behaving arbitrarily and badly.
It basically does so by providing for
sanctions in case employees do not
prescribe to expected standards of
behaviour. For example, managers
often take disciplinary action against
employees who take unauthorized
leaves.

12. f) Achieving efficiency and
effectiveness
A good control system can always
greatly boost an organization’s
efficiency and effectiveness. It
generally does this by identifying
deficiencies in an organization’s
functioning and suggesting
improvement measures. Managers
use control to achieve their targets in
this manner.

13. Solved Questions on Importance of
Controlling
(1) Controlling creates a __________
impact on an organization as well as
its employees.
(2) By distributing autonomy at all
levels, controlling facilitates
__________ of authority.
(3) Controlling bridges the gap
between an organization’s actual
performances and __________.
Answers: (1) positive (2)
decentralization (3) expected
results

15. 1. Set Performance Standards
You need a goal for your business, but you
also need guidance for your team to keep
them working towards that goal. Without
such standards, it’s possible that they’ll
move away from the plan, whether
intentionally or not.
Standards are like goals that are tasked to a
specific department or team member. They
must achieve these standards through
cooperation, teamwork and a collaborative
effort. To ensure these standards are being
met, though, you must have criteria to
measure them by.

16. 2. Measure Performance
Setting a standard makes it
possible to measure
performance using a control
function. Through this
measurement of performance,
you can quickly catch and
correct any deviation from the
plan before it goes off-track and
runs production into the ground

17. 3. Compare Actual Performance
Against Performance Standards
Once you have a baseline for how
your teams are performing when
manufacturing, packaging,
delivering, etc., you can compare
the actual to the planned
performance and determine the
extent of the deviation. This is
called variance, or the difference
between actual performance and
goals. Schedules can be
immensely helpful when it comes
to analyzing variance.

18. 4. Analyze Deviations
This brings us to the next step:
where you analyze data using the
acceptable limits. If standards
weren’t met, the manager must
then figure out whether more
control is required—or if maybe,
the standard itself should be
changed.

19. 5. Take Corrective Actions
Once you have analyzed the
deviation and determined its
cause, the manager will have to
set up a plan in which corrective
measures, critical point control
and other means are used to
resolve the issue. This is to reduce
the deviation and ensure the
standard is met. This might
involve changes to processes
and/or behaviors.