Controlling as a Management Function

Controlling
 The process of ascertaining whether organizational objectives have been achieved; if not,
why not; and
determining what activities should then be taken to achieve objectives better in the future.
 A process of monitoring performance and taking action to ensure desired results.
 It sees to it that the right things happen, in the right ways, and at the right time.
Controlling: If done well
 It ensures that the overall directions of individuals and groups are consistent with short and
long range
plans.
 It helps ensure that objectives and accomplishments are consistent with one another
throughout an
organization.
 It helps maintain compliance with essential organizational rules and policies.

The Control Process

Four steps in the control process:
1. Establish objectives and standards.
2. Measure actual performance.
3. Compare results with objectives and standards.
4.Take necessary action.
1. Establishing Objectives and Standards
- In controlling, what has to be achieved must first be determined. Example: sales targets,
production targets,
worker attendance, health and safety, resources needed, etc
 The control process begins with planning and the establishment of performance objectives.
 Performance objectives are defined and the standards for measuring them are set.
 Establish Objectives and Standards
 The methods for measuring performance is designed
There are two types of standards:

 Output Standards - measures performance results in terms of quantity, quality, cost, or time.

 Input Standards - measures work efforts that go into a performance task.

2. Measuring Actual Performance

- must be done so that when shortcomings occur adjustments could be made. The adjustments
will depend on the
actual findings.
 Measurements must be accurate enough to spot deviations or variances between what really
occurs and what is
most desired.
 Without measurement, effective control is not possible.
3. Comparing Results with Objectives and Standards
- once actual performance has been determined this will be compared with what the
organization seeks to achieve.
If performance is not measured, it cannot be ascertained whether standards have been met.
Comparing actual performance
with standards or goals: Accept or reject the product or outcome. Analyzing deviations:
Managers must determine why
standards were not met.
 The comparison of actual performance with desired performance establishes the need for
action.
 Accept or reject the product or outcome.
4. Taking Corrective Action
-the purpose of comparing actual performance with the desired result is to provide management
with the
opportunity to take corrective action when necessary.
 Taking any action necessary to correct or improve things.
 Management-by-Exception focuses managerial attention on substantial differences between
actual and desired
performance. Management by exception (MBE) is a practice where only significant deviations
from a budget or plan
are brought to the attention of management. The idea behind it is that management's
attention will be focused only
on those areas in need of action.
 Management-by Exception can save the managers time, energy, and other resources, and
concentrates
efforts on areas showing the greatest need.
 There are two types of exceptions:
• Problems - below standard
• Opportunities - above standard

Effective Controls
The best controls in organizations are:
1. Strategic and results oriented
2. Understandable
3. Encourage self-control
4. Timely and exception oriented
5. Positive in nature
6. Fair and objective
7.Flexible
Types of Control
1. Feedforward Control
- sometimes called the preliminary control, 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. This type of
control provides the assurance
that the required human and non-human resources are in place before operations begin.
#when management anticipates problems and prevents their occurrence, the type of control is
feedforward control

2. Concurrent Control
- focuses on what happens during the work process. Sometimes called steering controls, they
monitor ongoing operations
and activities to make sure that things are being done correctly.
#when operations are already ongoing and activities to detect variances are made, concurrent
control is undertaken. When
such deviations occur, adjustments are made to ensure compliance with what is required

3. Feedback Control
- sometimes called post action control, they take place after an action is completed. They focus
on end results, as opposed
to inputs and activities. It validates objectives and standards.
#when information is gathered about a completed activity, and in order that evaluation and steps
for improvement are
derived, feedback control is undertaken.

Managers have two broad options with respect to control.

They can rely on people to exercise self-control (internal) over their own behavior.
Alternatively, managers can take direct action (external) to control the behavior of others.
Internal Controls
 Allows motivated individuals to exercise self-control in fulfilling job expectations.
 The potential for self-control is enhanced when capable people have clear performance
objectives and proper
resource support.
External Controls
 It occurs through personal supervision and the use of formal administrative systems.
 Performance appraisal systems, compensation and benefit systems, employee discipline
systems, and
management-by-objectives.

Organizational Control Systems

a. Management Processes
 Strategy and objectives
 Policies and procedures
 Selection and training
 Performance appraisal
 Job design and work structures
 Performance modeling, norms, and organization culture
b. Compensation and Benefits
 Attract talented people and retain them.
 Motivate people to exert maximum effort in their work.
 Recognize the value of their performance contributions.
c. Employee Discipline
 Discipline is defined as influencing behavior through reprimand.
 Progressive Discipline ties reprimand to the severity and frequency of the employee’s
infractions.

 Positive Discipline tries to involve people more positively and directly in making decisions to
improve their
behavior.
The “Hot Stove Rule”
Immediate
Focus on activity not personality
Consistent
Informative
Occur in a supportive setting
Support realistic rules
d. Information and Financial

 Activity-based costing - the true cost of all products and services.

 Economic value added - examine the value added by all activities.
 Understand the implication of key financial measures of (ratios) organizational performance

e. Purchasing
 Economic Order Quantity - automatic reorder points
 Just-In-Time Scheduling

f.Project Management

 Program Evaluation and Review Technique (PERT) - Identifies and controls the many
separate events in
complex projects.
g. Statistical Quality Control

 Based on the establishment of upper and lower control limits, that can be graphically and
statistically
monitored to ensure that products meet standards.

Identifying Control Problems

- recognizing the need for control is one thing, actually implementing it is another.
1.Executive Reality Checks: Top managers periodically work at lower-level jobs to become
more aware of operations.
2. Internal Audits: Independent appraisals of organizational operations and systems are
conducted to assess effectiveness
and efficiency.
3. Symptoms of Inadequate Control
 An unexplained decline in revenues or profits
 A degradation of service (customer complaints)
 Employee dissatisfaction (complaints, grievances, turnover)
 Cash shortages caused by bloated inventories or delinquent accounts receivable
 Idle facilities or personnel
 Disorganized operations (workflow bottlenecks, excessive paperwork)
 Excessive costs
 Evidence of waste and inefficiency (scrap, rework)
# It must be noted that behind every symptom is a problem waiting to be solved. Unless the
problem is clearly identified, no
effective solution may be derived. Nevertheless, problems are easily recognized if adequate
control measures are in place.
Controlling is an important function of management. Its importance becomes apparent when we
find that it is needed in all
the functions of management. Controlling checks mistakes and tells us how new challenges can
be met or faced. The
success of the organization thus hinges on the effective controlling.