CHAPTER 12

CONTROLLING

DURATION: 3 Hours

INTRODUCTION

The long term existence of many companies is placed in jeopardy because of difficulties
caused by problems, which could have been avoided:

1. Transmission of confidential information to competitors – For instance, if the

introduction of a new product by the company is known in advance by the competitor,
much of the advantage of such introduction is negated

2. The Hiring of Personnel Way above the requirement – unnecessary hiring to the
existing workforce mean waste of manpower and scarcity of resources.

3. Unethical conduct of an employee – example a loan officer of a bank for

consideration connives with a borrower for the loan to be approved in spite of defective
collaterals and incomplete documents. The bank suffers in the end when it forecloses
on the mortgages

In this Chapter, we will be discussing the following topics:

1. What is Controlling?
2. Importance of Controlling
3. Steps in the Control Process
4. Types of Control

OBJECTIVES

1. Define the meaning of controlling

2. Describe the purpose and importance of controlling
3. identify the steps in the control process
4. differentiate the various types of control
 LESSON PROPER

WHAT IS CONTOROLLING?

The process of establishing whether organizational objectives have been attained; if

not, to determine why not; and determining what activities should be taken to achieve
objectives better in the future. Controlling completes the cycle of management
functions. Objectives and goals are verified as to achievement and completion. When
the expectations have not been met at scheduled dates, corrective actions are applied.

IMPORTANCE OF CONTROLLING

When controlling is properly implement, it will help the company attain its goals and
objectives in the most effective and efficient manner possible.

In any organization, deviations, shortcomings and mistakes happen once in a while.

When these happened, the contribute to additional costs and in the long run add to the
cost of producing the goods and services. An effective control measure minimizes the
negative effects of the said occurrences. Together with an effective control system, this
assists in minimizing if not totally eliminating the losses in inventory.

STEPS IN THE CONTROL PROCESS

1. Establish Performance objectives and Standards – For effective controlling

a. Sales Targets – expressed in quantity and monetary terms

b. Production targets – expressed in quantity and quality
c. Employee Attendance – expressed in terms of rate of absenteeism
d. Safety Records – the number of accidents for given periods
e. Supplies used – quantity and monetary terms for given specific periods

2. Measure actual performance – there is always a need to measure actual

performance so that when shortcomings occur, adjustments could be made. The
adjustments is dependent on the findings

3. Comparing actual performance to objectives and standards – once actual

performance is established; this will be compared to what the organization seeks to
achieve. Actual output will be compare to the target output.

4. Taking Necessary Actions – the main reason for comparing actual performance with
the desire result is to provide the management with the chance to take the corrective
action necessary.
TYPES OF CONTROL

1. Feedforward Control – when the company anticipates the issues and challenges and
prevent it from happening. This provides the assurance that the required human and
nonhuman resources are in place before the operation begins.

2. Concurrent Control – Operations are already ongoing and measures to detect the
variances are made. It is possible to make deviations from standards during the
production process. When these adjustments are made to ensure compliance to the
requirements.

3. Feedback Control – When information is gathered about a completed activity for the
purposes of evaluating and deriving the required methods to improve the activity.
Corrective actions aimed at improving future activities are features of this type of
control.