Controlling

Controlling means ensuring that activities in an organization are performed as

per the plans.
Nature/features of controlling PG LC
1. Controlling is a pervasive function
1.1.As it is required in all types of organizations and at all levels of
management – top, middle and lower.
2. Controlling is a goal-oriented function –
2.1.As it ensures that an organization’s resources are being used effectively
and efficiently for the achievement of pre-determined goals.
3. Controlling is both looking back and forward looking.
4. Controlling is a continuous function –
4.1.As it involves a constant review of actual performance to ensure that
activities in an organization are performed as per the plans.
Importance of controlling MSC ROG
1. Improves employee motivation
1.1.Employees know well in advance what they are expected to do and the
standards of performance on the basis of which they will be appraised.
1.2.This motivates them and helps them to give better performance.
2. Judging accuracy of standards
2.1.A good control system keeps a careful check on the changes taking
place in the organization and the environment and helps to review and
revise the standards in the light of such changes.
3. Facilitates coordination in action
3.1.Each department and employee are governed by pre-determined
standards which facilitates coordination in action.
4. Making efficient use of resources
4.1.Controlling seeks to reduce wastage and spoilage of resources as each
activity is performed in accordance with pre-determined standards and
norms.
5. Ensuring order and discipline
5.1.Controlling helps to minimize dishonest behavior on the part of the
employees by keeping a close check on their activities.
6. Accomplishing organizational goals
6.1.Controlling function measures the progress towards the organizational
goals by bringing to light, deviations if any and indicating corrective
action.
Relationship between planning and controlling
1. Controlling is blind without planning
1.1.Controlling takes place on the basis of standards developed by planning
because if the standards are not set in advance managers have nothing
to control. Thus, controlling is blind without planning
2. Planning without controlling is meaningless
2.1.Planning without controlling is meaningless because once a plan
becomes operational, controlling ensures that events conform to the
plans.
3. Planning is prescriptive whereas controlling is evaluative.
3.1.This is so, because, planning prescribes an appropriate course of action
for achieving objectives while controlling evaluates whether decisions
have been translated into desired actions.
4. Planning and controlling both are forward looking
4.1.because plans are prepared for the future and controlling seeks to
improve the future performance on the basis of past experience.
5. Planning and controlling are both looking back
5.1.Because planning is guided by past experience and controlling compares
the actual performance with the standards set in the pasts.
Steps in controlling process
1. Setting performance standards
1.1.Standards are the criterions against which actual performance would be
measured.
1.2.Standards can be set in both quantitative terms
1.2.1. Cost to be incurred
1.2.2. Revenue to be earned
1.2.3. Product units to be produced and sold
1.2.4. Time to be spent in performing a task.
1.3.As well as the qualitative terms
1.3.1. Improving goodwill
1.3.2. Motivation level of employees
1.4.Standards set should be flexible enough to be modified whenever
required.
2. Measurement of actual performance
2.1.Actual performance should be measured in an objective and reliable
manner.
2.2.Measurement is normally done after the task is completed but
wherever possible, it should be done during the performance.
2.3.There are several techniques for measurement of performance
2.3.1. Personal observation
2.3.2. Sample checking
2.3.3. Performance reports
2.4.As far as possible, performance should be measured in the same units in
which standards are set as this would make their comparison easier.
3. Comparing actual performance with standards
3.1.Actual performance is compared with standards to find out the
deviation between actual and desired result.
3.2.Comparison becomes easier when standards are set in quantitative
terms.
4. Analyzing deviations.
4.1.Some deviations in performance can be expected in all activities
4.2.It is therefore important to determine the acceptable range of
deviations.
4.3.Also, deviations in key areas of business need to be attended more
urgently as compared to deviations in certain insignificant areas.
5. Taking corrective action
5.1.Corrective action is taken if deviations go beyond the acceptable limits.
5.2.However, no corrective action is required when the deviation is within
the acceptable limits.
5.3.If the deviations cannot be corrected by managerial action, the
standards may have to be revised.
S no. Cause of deviation Corrective action to be taken
1. Defective material Change the quality specification for the
material used.
2. Defective machinery Repair the existing machine. Replace the
machinery if it cannot be repaired
3. Obsolete machinery Undertake technological upgradation of
machinery
4. Defective process Modify the existing process
5. Defective physical Improve the physical condition of work.
conditions of work