CELO 5 DIFFERENT TYPES OF CONTROLS

My discussion for today is the different types of controls or the top three
types of control in an organization. The types are: 1. Feed-Forward 2.
Concurrent (Preventive) 3. Feedback Controls.

Allow me to discuss further the three

types of control.

1. Feed-Forward Controls:

Feed forward controls are future-directed — at various points

throughout the processes,they attempt to detect and anticipate
problems or deviations from the standards in advance of their
occurrence. They are in-process controls and are much more active,
aggressive in nature, allowing corrective action to be taken in
advance of the problem.

Feed forward controls thus anticipate problems and permit action

to be taken before a problem actually arises.

Feed forward control devices are of two broad categories: diagnostic and
therapeutic.

Diagnostic controls seek to determine what deviation is taking (or has

taken) place. The sales manager, for instance, who receives the monthly
sales figures is virtually working with a diagnostic control device. It will
no doubt indicate deviations from the acceptable standard (i.e., what is
wrong) but not why. Discovering the ‘why’ is often the most difficult part
of the process.

Therapeutic controls tell us both what and why, and then proceed to take
corrective action. For example, engines having internal control system
such as an engine speed governor and automatic transmission are
designed to take necessary corrective actions when warranted by the
conditions.

An example of utilization of such control can be found in case of a

manager who conducts employee training using the coaching method.
When, for instance, the trainee is performing the task, the manager
observes him closely by standing on his side. The objective is to discover
if any deviations from the intended processes take place.

In case a deviation occurs, the manager observes it, diagnoses the reason
for the incorrect technique, and corrects the deviation immediately (i.e.,
without any loss of time). Thus the control and correction take place
during the process itself, not after a few days.
 2. Concurrent (Prevention) Control:

Concurrent control, also called steering control because it allows people

to act on a process or activity while it is proceeding, not after it is
proceeding, nor after it is completed. Corrections and adjustments can
be made as and when the need arises. Such controls focus on
establishing conditions that will make it difficult or impossible for
deviations from norms to occur.

An example of concurrent control is the development by companies of

job descriptions and job specifications. It may be recalled that job
description identifies the job that has to be done, thus clarifying working
relationships, responsibility areas, and authority relationships. It thus
assists in preventing unnecessary duplication of effort (work) and
potential organizational conflict.

In a like manner job specification identifies the abilities, training,

education and characteristics needed of an employee to do the work. It is
control device inasmuch as it works to prevent a person who is totally
unqualified and unfit from being selected for the job, thereby saving
money and time, and thus precluding potential poor performance.

3. Feedback Controls:

Feedback control is future-oriented. It is historical in nature and is also

known as post-action control. The implication is that the measured
activity has already occurred, and it is impossible to go back and correct
performance to bring it up to standard. Rather, corrections must occur
after the act.

Such post-action controls focus on the end results of the process. The
information derived is not utilized for corrective action on a project
because it has already been completed. Such control provides
information for a manager to examine and apply to future activities
which are similar to the present one. The basic objective is to help
prevent mistakes in the future.

For example, at the end of an accounting period, the manager should

carefully review the analysis of the budget control report.

The report will suggest clear-cut answers to the following questions:

(1) What accounts were overdrawn?

(2) Why?

(3) Were there any accounts with a surplus?

(4) Why?

(5) Could unutilized funds have been allocated to other accounts?

(6) Were all priorities met by the budget?

However, at the end of the financial year it is not possible for the
manager to modify budget expenditures or allocation for the past year.
But this type of information can be fruitfully utilized to develop more
realistic (fruitful) plans for the next financial year.

Fig.17.7 illustrates when each of the types of control is applied. Since

preventive controls make it difficult or impossible for deviations to
occur as they are normally placed at the start of the process (although
the ordering was slightly different in Fig.17.6).

An Evaluation:

All the forms of controls I made mentioned are useful. Feed forward
and prevention controls are sufficiently timely to permit management to
make corrective changes and still achieve objectives. So they have great
appeal to management.

But there are certain defects of these two forms of control. Firstly, they
are costly. Secondly, there are so many activities that do not lend
themselves to frequent or continuous monitoring. Thirdly, at some point
excessive control becomes unproductive, as in the case of sales
representatives who spend their time filling out control reports for the
regional office instead of meeting customers.

So it may be suggested that management must, therefore, use the control

system that is most appropriate for the given situations.

Let us learn more about Control Techniques in Management.

Traditional Types of Control Techniques

In management, Controlling is one of the most important functions in an
organization which is goal-oriented. Types of Control techniques in
management are Modern and Traditional control techniques. Feedforward,
feedback and concurrent controls are also types of management control
techniques.

Controlling helps the managers in eliminating the gap between organizations

actual performance and goals. Controlling is the process in which actual
performance is compared with the company standards. Comparing it gives the
visibility that activities are performed according to strategies or not. If it is not
performed then necessary corrective action should be taken. 

Types of Control Techniques in Management

Management theorists and experts have devised several techniques over the
years. They often divide these techniques into two categories: traditional and
modern. Traditional types of techniques generally focus on non-scientific
methods. On the other hand, modern techniques find their sources in scientific
methods which can be more accurate.

Traditional Types of Control Techniques in Management

 Budgetary Control
 Standard Costing
 Financial Ratio Analysis
 Internal Audit
 Break-Even Analysis
 Statistical Control
 Despite the emergence of modern techniques, traditional practices
are still widely in use these days. Let us discuss them one by one.

Budgetary Control
Budgeting simply means showcasing plans and expected results
using numerical information. As a corollary to this, budgetary
control means controlling regular operations of an organization for
executing budgets.

A budget basically helps in understanding and expressing expected

results of projects and tasks in numerical form. For example, the
amounts of sales, production output, machine hours, etc. can be
seen in budgets.

There can be several types of budgets depending on the kind of data

they aim to project. For example, a sale budget explains selling and
distribution targets. Similarly, there can also be budgets for
purchase, production, capital expenditure, cash, etc.
The main aim of budgetary control is to regulate the activity of an
organization using budgeting. This process firstly requires
managers to determine what objectives they wish to achieve from a
particular activity. After that, they have to lay down the exact
course of action that they will follow for weeks and months.

Next, they will translate these expected results into monetary and
numerical terms, i.e. under a budget. Finally, managers will
compare actual performances with their budgets and take
corrective measures if necessary. This is exactly how the process of
budgetary control works.

Standard Costing
Standard costing is similar to budgeting in the way that it relies on
numerical figures. The difference between the two, however, is that
standard costing relies on standard and regular/recurring costs.

Under this technique, managers record their costs and expenses for
every activity and compare them with standard costs. This
controlling technique basically helps in realizing which activity is
profitable and which one is not.

Financial Ratio Analysis

Every business organization has to depict its financial
performances using reports like balance sheets and profit & loss
statements. Financial ratio analysis basically compares these
financial reports to show the financial performance of a business in
numerical terms.

Comparative studies of financial statements showcase standards

like changes in assets, liabilities, capital, profits, etc. Financial ratio
analysis also helps in understanding the liquidity and solvency
status of a business.

Internal Audit
Another popular traditional type of control technique is internal
auditing. This process requires internal auditors to appraise
themselves of the operations of an organization.

Generally, the scope of an internal audit is narrow and it relates to

financial and accounting activities. In modern times, however,
managers use it to regulate several other tasks.
For example, it can also cover policies, procedures, methods, and
management of an organization. Results of such audits can,
consequently, help managers take corrective action for controlling.

Break-Even Analysis
Break-even analysis shows the point at which a business neither
earns profits nor incurs losses. This can be in the form of sale
output, production volume, the price of products, etc.

Managers often use break-even analysis to determine the minimum

level of results they must achieve for an activity. Any number that
goes below the break-even point triggers corrective measures for
control.

Statistical Control
The use of statistical tools is a great way to understand an
organization’s tasks effectively and efficiently. They help in
showing averages, percentages, and ratios using
comprehensible graphs and charts.

Managers often use pie charts and graphs to depict their sales,
production, profits, productivity, etc. Such tools have always been
popular traditional control techniques.