EVALUATION AND CONTROL

AN OVERVIEW AND NATURE OF STRATEGIC EVALUATION AND CONTROL

The last part of the strategic management process is concerned with the evaluation of the strategy for
its effectiveness. At this stage, the organisation evaluates whether the implemented strategy has been
successful in meeting the desired goals and objectives of the organisation or not. In other
words, strategic evaluation can be defined as a process of measuring. if the implemented strategy has
successfully met the objectives of the organisation and what kind of remedial actions need to be taken
by the organisation to address any shortcomings.

The role of strategists in an organisation is to design a strategy that will help the organisation to achieve
its stated goals and objectives. There needs to be a mechanism of checking if the strategy is successful in
meeting the objectives laid down by the organisation. This is done by strategic evaluation. Strategic
evaluation thus plays a very critical role in the organisation. In the absence of strategic evaluation, the
organisation will be totally clueless in evaluating the effectiveness of the implemented strategy.

Strategic evaluation tends to overlook short-term factors which may impact the operational
effectiveness of the organisation but rather focuses on trends which will determine the success or
failure of the organisation. The process of strategic evaluation needs a great deal of co-ordination
between managers, groups and departments in an organisation. Strategic evaluation is important
because it can be the basis for the future strategy definition, framing of reward and incentive systems,
the whole strategic management exercise, etc., in the organisation.

Nature / Framework of Strategic Evaluation Effective evaluation systems tend to have certain qualities in
common, which are as follows:  

1) Suitable : 

The strategic evaluation needs to be tailored to the needs of the organisation. 

Strategic Evaluation Example, the evaluation process needs to be different for the marketing and the HR
functions in the organisation.

2) Simple : 

The strategic evaluation process needs to be simple to understand and follow. It should be easy to
execute. If the strategic evaluation process is complex then people will not be able to understand the
process. This will cause frustration and

conflict in the organisation and people will make errors in the implementation of the process. On the
other hand, when the process is well-defined and understood by all the employees, the level of
motivation in the organisation is very high and employees are able to execute the evaluation system.

3) Selective : 
The evaluation process cannot be all encompassing. It needs to be selective in its approach. It needs to
select the key and critical factors in the organisation which are absolutely essential for the survival of the
organisation. By doing so, the time of the managers is optimally spent and they can focus on the core
activities of the organisation.

4) Flexible : 

An organisation needs to constantly examine its strategies and plans in the face of changes in the
external activities. These changes can be political, technological, competition and other factors.
Therefore the strategic evaluation process cannot make the mistake of being rigid. It needs to change
according to the demands of the environment and and take advantage of opportunities that are on
offer.

5) Forward-Looking : 

The strategic evaluation process should take the future into account and have the capability of
predicting events before they become problematic for the organisation. It is only then that they can be
helpful to the organisation. It needs to be able to point out deviations to the managers so that they can
take the necessary corrective action.

6) Reasonable : 

According to Robbins, strategic evaluation processes should be reasonable. They need to be fair to the
employees. If they set unrealistic goals then they will end up de-motivating employees. On the other
hand, they should also not be too easy and give the employees no challenge. The strategic evaluation
process therefore needs to be reasonable. They should involve the right amount of stretch so that
employees are challenged and at the same time should not be daunting.

7) Objective : 

There can be no room for vagueness in the strategic evaluation control systems. They should be seen as
being objective by the employees. It should apply equally to all. This will help in getting employees to
accept the evaluation parameters. On the other hand, if the standards are vague and arbitrary then it
will cause mistrust in the eyes of the employees and they will not have faith in the evaluation and
control process.
8) Responsibility for Failures : 

The strategic evaluation process must fix responsibility for failures. It is not enough, just to know about
deviation in the organisation but also the reasons for its occurrence. The strategic control system needs
to point out the remedial action that the organisation needs to take to overtake the weaknesses that
have been identified.

9) Acceptable : 

It is very important that the strategic evaluation and control system has the cooperation and the trust of
the employees. It must be accepted by all. This is only possible if the standards are well-defined,
objective, free from bias and reasonable.
STRATEGIC CONTROL

Strategic controlling is the process of monitoring and checking the performance of strategic decisions,
ensuring the effective implementation of strategic plans and polices, identifying the problems and to
take corrective actions whenever required for achieving the desired organizational objectives. In other
words it describes the controlling system for the effective implementation. Some of the definition of
strategic control are stated below:

Schreyogg and Steinmann (1987) have described Strategic Control as “the critical evaluation of plans,
activities, and results, thereby providing information for the future action”.

According to Robert J Mockler, “Management control implies systematic efforts to set standards to
compare actual performance with the predetermined standards, to determine whether there are any
deviations and to measure their significance so as to take any action required to assure that all
corporate resources are being used in the most effective and efficient way”.

The above definition of Robert J Mockler has divided the controlling process in various steps as follows.

 To establish performance standards

 To measure organizational performance
 To measure the techniques
 To compare the performance with standards
 To evaluate of deviations
 To take corrective actions

Importance of Strategic Control

Strategic control is process monitoring and evaluating of strategies to achieve the desired objectives and
make sure about the smooth functioning of management strategies. If the desired objectives are not
achieved then the corrective steps or actions are taken into consideration.

It helps the Manager to obtain quality, innovation, consistency in the strategies, and complete the target
within stipulated time. The following are the importance of controlling process

Control and quality: Quality of the products or Services indicates the success and progress path of the
organization in the competitive environment. The feedback mechanism under the evaluation systems
played crucial role for the improvement of quality of the product

Control and Efficiency: Efficiency indicates the output and input ratio of production which includes all
resources of the organization. It is involved the production and the efforts of human resources. The
controlling system makes sure about everything goes as per the strategy if not the corrective actions
should take for the efficiency under the production process.
Control and innovations: Strategic control leads towards innovative and creativity through continues
monitoring and implementing the effective actions to acheve desired results.Strategic decision and
policies ensure the appropriate controlling system and evaluation increased the risk taking abilities and
improved the skills of management.

Control and customers satisfaction: The success of the strategic evaluation process is to measure the
satisfaction level of customers. An evaluation controlling system monitors and interacted with
employees through proper system and boosts the employees’ morale to provide better quality and
services to the customers.

Customers are the backbone of the organization and if they satisfied then our business also survived and
progress therefore it is essential to maintain satisfaction level among the employee.

Importance of Strategic Evaluation

Strategic evaluation is an important tool for assessing how well your business has performed, relative to
its goals. It's an important way to reflect on achievements and shortcomings, and is also useful for
reexamining the goals themselves, which may have been set at a different time, under different
circumstances.

Although the actual evaluation step takes place at the end of the process, after goals have been reached
or not, the process of strategic evaluation starts at the beginning of the process, with the step of setting
the goals themselves. Goals are important because they give your company direction, and a way to
measure success.

Effective goals should be tangible steps that move your company toward achieving its longer term
mission and vision, such as improving the environment, alleviating suffering or simply making money.
Unlike your company's mission and vision, its goals should be specific and quantifiable, such as
increasing sales by a certain percentage during a specific period of time.

Benchmarking your Performance

Your goals provide you with criteria and benchmarks, and the process of measuring your performance
involves taking a step back and assessing how effectively your company has achieved its goals.
Measuring performance is an important step in the strategic evaluation process because it provides a
snapshot of the outcomes you have achieved relative to the milestones you created. When you've set
clear and quantifiable goals at the outset, its easy to see and measure how well you have performed
relative to these objectives.

Succeeding or Falling Short?

Although goals are milestones, the process of reaching them isn't an all or nothing endeavor. In addition
to simply measuring your outcomes relative to your goals, it's important as part of the strategic
evaluation process to analyze how close you've come. It's unlikely that you will achieve a preset goal
precisely – and if you're one percent short – you've clearly been more successful than if you'd only made
it half-way.
Similarly, you may exceed your goal by just a fraction of a percent, or you can succeed so wildly that
your goal seems irrelevant. It's important to analyze variance both quantitatively and qualitatively.
Calculate the degree of variance, and also look at why you've exceeded your goals or have fallen short.

Steering a Better Course

If your business falls far short of meeting its goals, the strategic evaluation process is an opportunity to
reflect on why this has occurred and to then take corrective action. If your company has blown its goals
out of the water, the strategic evaluation process is an important opportunity for you to create a new
set of goals that will reflect your progress and challenge you in new ways.

Performance Measurement

Strategic evaluations start by defining a performance ideal according to business objectives. This
performance ideal includes both qualitative and quantitative performance benchmarks to which actual
performance of the business as a whole and the performance of individual employees can be compared.
Qualitative benchmarks are subjective factors such as skills, competencies and flexibility. Quantitative
benchmarks include “hard facts” such as net profit, earnings per share of stock or staff turnover rates.

Ongoing Analysis

Strategic evaluations work under the assumption that because the business environment is fluid and
constantly changing, variances will commonly exist between ideal and actual performance. Regular
strategic evaluations provide an objective, effective way for a business to evaluate, analyze and modify
performance expectations. A positive variance can tell a business what it’s doing right and confirm it’s
on the right track while a negative variance can be a signal that the performance of management and
staff needs to change.

Corrective Actions

When strategic evaluations pinpoint areas where the business is not meeting strategic objectives,
corrective actions can attempt to solve the problem. For example, if a business discovers strategic
technical objectives are not being met because employees do not have up-to-date qualifications, the
business can design training programs that bring skillsets in line with technical objectives. If a business
discovers the business objective itself is out of line – such as overly aggressive sales expectations – it can
take steps to modify the objective and bring it line with real-life potential.

BARRIERS IN EVALUTION

Strategic evaluation and control can be defined as the process of determining the effectiveness of a
given strategy in achieving the organizational objectives and taking corrective action wherever required.
Actually, it is a system of monitoring, supervision, and follow-up. The fundamental strategy evaluation
and control activities are: reviewing internal and external factors that are the bases for
current strategies, measuring performance, and taking corrective actions.

There are some reasons or barriers for which strategic evaluation and control (SEC) system fails. These
are as follows:

Limits of control: It is never an easy task for ‘strategists to decide the limits of control. Too much control
may damage the ability of managers; on the other hand, too less control may make the strategic
evaluation process ineffective.

Difficulties in measurement: The process of strategic evaluation is fraught with the danger of difficulties
in measurement. The control system may measure element which is not intended to be evaluated.

Resistance: The evaluation process involves controlling the behavior of individuals. It is likely to be

resisted by managers.

Short-termism: Managers often tend to measure the immediate results. As a result, the extended effect
of strategy on performance is ignored.

Relying on efficiency Vs effectiveness: Efficiency is “doing things right” and effectiveness is “doing the
right thing”. There is often a genuine confusion among managers as to what constitutes effective
performance.

So, these are the various reasons or barriers for which strategic evaluation and control (SEC) system
fails.

Strategic Control and Operational Control

Strategic Control is all about following the trail or movements of the strategy as it is implemented in
order to identify the areas of issue or potential areas of the issue so that necessary adjustments can be
made. On the other hand, operational control is a subset of management control whose aim is to
regularly monitor and check the routine business operations so as to confirm the consistency and quality
in business activities.

Strategic Control focuses on attaining future goals and not past performance. The main idea behind that
is to look for room for improvements and corrections so as to lead the organization in the desired
direction, rather than pointing out mistakes or errors that took place in the past.

In contrast, an operational control system is designed in a manner that confirms – the day-to-day
activities of the business are directed towards the achievement of predetermined goals and objectives.

Concept of Control

In an organization, there are three stages of action in which control is being exercised:

Feedforward Control: In feedforward control, inputs are evaluated and necessary corrective steps are
taken prior to the completion of a particular sequence of operation.
Steering Control: In steering control, action is evaluated and corrective actions are put in force, while the
operation is undertaken. This is also called concurrent, or real-time control.

Feedback control: In feedback control, the results of the action as assessed and corrective steps are
taken after the operation is complete so that desired results are produced in the future.

Strategic Control is a type of organizational control, which ensures that the organization is functioning in
the right direction. It is better known as steering control. Its objective is to attain the results which are
established at the time of formulation of the strategy. Thus, it helps the top management to analyze
whether the strategic management process is appropriate, compatible, and performing as desired.

It ascertains whether the opted strategy is proceeding in the intended direction and bringing out the
desired results and taking necessary steps to avoid deviations whenever required. It evaluates the
extent to which the firm concentrates on the need to implement strategies.

At the time of formulation of strategy, assumptions are made by the strategists about the company’s
internal and external environment. So, the lag in time exists between strategy formulation and its
implementation and due to this time lag, the assumptions made by the strategists would come out as
invalid or no longer relevant.

Strategic Control implies a process of controlling the formulation and implementation of an

organization's plan and strategy.

Feedforward and Steering Control

Top-level executives

Guiding the future direction of the company

Is the company moving in the right direction?

External environment

Effectiveness

Long Term

Monitoring and evaluation of the strategic management process

Operational Control

The process of ensuring that there is an effective and efficient performance of the task is called
operational control. It imposes post-action evaluation and control, for a short period, which
encompasses evaluation of performance against the objectives set by the firm.

Its aim is to ensure optimum allocation and utilization of the organization’s resources by way of
performance evaluation of the organizational units like divisions, departments, or SBUs in order to
ascertain their contribution to the achievement of organizational objectives. That is why the evaluation
techniques depend on internal analysis and not on environmental monitoring.

The focus of operational control is on the result of the strategic action, that assesses the overall
organization’s performance, different SBU’s and other divisions and units.

Techniques used for Operational Control

Financial Techniques

Network Techniques

Management by Objectives

Memorandum of Understanding

Operational Control systems are framed to make certain that the routine operations are in line with the
company's plans and objectives

Feedback Control

Functional level executives

Action control

How efficiently the company is performing?

Internal Environment

Efficiency

Short Term

Individual tasks and operations

Differences Between Strategic Control and Operational Control

As we have discussed the basic concept of the two forms of organizational control, we will talk about the
difference between strategic control and operational control, in points:

Strategic Control is a tool to keep a check on the execution of the strategic plan just like an early warning
system, which ensures that the necessary steps for the achievement of the organizational goals are
performed effectively. On the contrary, Operational Control keeps a check on the allocation and
utilization of resources, which is a post-action control, which determines the contribution of various
units in the attainment of the organization’s objectives.

Strategic Control is based on feedforward and steering control, whereas Operational Control relies on
feedback control.

The power of exercising strategic control is in the hands of top-level executives. As against, operational
control is exercised by functional-level executives as directed by top-level management.
The primary concern of strategic control is to guide the future direction of the company. In contrast, the
primary concern of operational control is to control the activities,

Strategic Control ascertains whether the company is progressing in the right direction. On the contrary,
operational control ascertains how efficiently the company is performing?

Strategic Control takes into account external factors, as the relevancy of the strategy is primarily
dependent on the external business environment. Conversely, operational control takes into account
internal factors.

Strategic Control strives for effectiveness, whereas Operational Control strives for efficiency.

Strategic Control is a long-term process as it attempts to steer the company over a long period of time
typically five years or more. In contrast, operational control is a short-term process that attempts to take
necessary steps to correct the deviations from the set standards and so it ranges from one month to one
year.

Strategic Control stresses the changing assumptions which determine a strategy, evaluate it on a
continuous basis, as it is executed, and take those steps which are essential so as to adjust the strategy
to prevalent needs and conditions. Oppositely, operational control focuses on the events that occurred
recently for the uninterrupted functioning of business operations.

Techniques Of Strategic Evaluation And Control

Strategic management is the process of developing an organization's mission and goals, and then
outlining the steps and processes necessary to reach the company goals. Techniques for evaluating the
effectiveness of a company's strategy include evaluating internal and external forces that influence
strategy execution, measuring company performance and determining appropriate corrective measures.

Assessing Internal Forces

Strategy evaluation should begin with an examination of the internal forces that will influence you
company's ability to follow the strategic plan. Your evaluation should consider the value of company
resources such as physical assets, proprietary information, access to capital, your labor force, and your
management.

This evaluation will help you understand how these assets can be developed to expand the company's
capabilities. All of these internal forces are what set your company apart from your competitors.
Physical assets can be improved through maintenance, upgrades or replacements. Human assets can be
improved with training, employee guidelines and effective management.

Assessing External Forces

The next technique for strategy evaluation is to consider the external forces that will influence your
company's ability to complete its mission. The primary external force your company must face are you
customers. Customers purchasing the products and services your company produces will determine the
success of your company. Is your company meeting the expectations of your customer base?
Along with the consideration of your customers, you must evaluate the strengths and weaknesses of
your competitors. Do your competitors have differentiating capabilities that will pull your customers
away?

Is your industry changing because of disruptions, because you are in an aging marketplace or because of
an economic upswing or downturn? If so, you'll need to confront changes by being proactive, not
reactive; hence the need for strategic planning.

Measuring Performance Results

The strategy evaluation process will help you determine if the objectives you have developed are
leading the company to meet its mission and goals. Begin this evaluation technique reviewing the
company's mission statement and annual plan. Look to see if the results the company has achieved
match these.

Evaluate if the sales force has been successful in meeting all of the sales goals. If you have a
manufacturing facility, are production targets being met? Also evaluate if your company has been able
to garner a greater share of the market.

Review the strategy evaluation tools you have in place to make sure you will be able to perform your
reviews of the different areas of the business. If necessary, create new benchmarks, key performance
indicators and goals and the means to evaluate them.

Correcting Performance Problems

After your evaluation has considered all of the company's performance data, the next step is determine
what corrective measures should be taken to insure company operations are correctly aligned with the
strategic plan. Many times, making corrections to strategic operations will requires changes, according
to Westwood College. You must ensure the company will be able to meet all of its short and long term
strategic goals.

This might require re-assessing goals or looking for reasons why they are not being met. You should also
try to understand why certain objectives are being met. This might require you to create new strategy
evaluation techniques, such as a SWOT analysis. A SWOT analysis consists of looking at your company's
strengths, weaknesses, opportunities and threats, explains strategic planning services
provider OnStrategy.