CONTROLLING DEFINED

Controlling is the management process of measuring and correcting the activities of the organization.
This process determines the corrective measures that should be done to direct the efforts and activities
towards the desired goals and objectives. It is a managerial activity for knowing and instituting
important measures to correct deviations in the process of planning, organizing, and directing. It
involves judgment for the success of meeting the established goals, programs, schedules, budgets and
the company's policies and procedures.

Controlling in management is setting the directional guide towards the overall accomplishment of
planned objectives. It is used to determine where you want to go by making sure that the courses of
action are properly implemented. The manager should be in control of the organizational wheels where
resources are properly utilized towards the desired direction. The establishment of control procedures
would set the direction in place towards where it is intended.

There exists a never-ending process of planning, organizing, directing, and controlling. Planning is
setting the directional plans and objectives, organizing is putting organizational resources into its proper
perspective, directing is putting action on the resources towards the planned goals and objectives and
controlling is determining deviations and imposing corrective actions. Any corrective action should go
back to the drawing board of planning and so on.

CHARACTERISTICS OF CONTROL

The function of control is to keep the plan moving on schedule towards the established goals and
objectives of the organization. To effectively meet these targets control must have the following
characteristics:

1. It must be accurate and attuned to the activity. Control should reflect the needs of people using
them. Control measures in marketing are different from those of the manufacturing department.
Manufacturing control deals with quality and quantity of output; while marketing control deals with
quantity and quality of sales.

2. It must identify quickly deviation from the set of standards. Immediate actions must, be done when
performance standards are not followed. It must provide immediate signals to avoid further crises to
develop.

3. It must be forward looking. The manager must be proactive by developing forward looking indicators
using reliable historical data. Forecasting probable problem areas should be looked into and corrective
actions must be done before the problem occurs.

4. It must be strategically oriented. This involves selecting the crucial points at which control is applied.
The manager must exercise precautionary measures in selecting the critical points in the control system.
Control measures must be pinpointed and specifically defined.
5. It must be flexible and comprehensible. It must be flexible to permit some changes for unexpected
situations. Rigidity destroys effectiveness.

6. It must be economical in its implementation. The cost control measures should not exceed the
benefits that will be derived from its implementation. It must measure what it intends to measure.

7. It must be easily understood by people to whom it is intended. The people involved must
understand the purpose of the control measures given them. They must understand what the things
evaluated are and how the control system operates and its effects on them.

8. It must indicate corrective actions. The important aspect of control is to identify performance
variances. Corrective actions must be in place to institute immediate remedy for any deviation and to
keep the plan on to act towards the established criteria.

9. It must be organizationally realistic. The standards set by the management must be attainable by the
people who are supposed to do the tasks. Subordinates may distort data if the standards set are too
high.

10. It must be prescriptive and operational. When performance standards are not met, an effective
control system will indicate exactly what course of action is necessary.

THE CONTROLLING PROCESS

The failure of controlling would mean failure of planning and vice-versa. When plans are not realistic,
immediate actions must be done to correct it. The work of the manager in the controlling process
involves four basic activities:

1. Setting performance standards and accountability

These are performance yardstick that are measurable, specific, understandable and acceptable by all
concerned. These could be seen in the planning process as procedures, schedules, programs and
budgets. The expected impacts of these activities must be measured in terms of goal accomplishments.
The individuals who are given responsibility to do the task of managing is responsible to deliver the
desired results.

Standards are desired level of performance and constitute the foundation of control process. These
serve as the criteria against which the performance is evaluated by the manager. The commonly used
standards are:
a. Quantity. The output produced at a specific time, say in 8 hours, in a week or a month. These could
be daily or weekly report. Based on reasonable expectancy the quantity produced is measured against
established output. This is parallel to performance efficiency.

b. Quality. This refers to following standard product specifications with an acceptable rejects (for
example, of say underline 2 percent or no rejects at all). The result could be used to judge the
effectiveness of the group or the department.

c. Time. The period specified for which a task has to be completed. Time tables are based on schedule of
activities as stated in the plan. If actual performance deviates from scheduled time, corrective action
should be taken.

d. Cost. It must be based on estimated cost per product produced. Cost accounting system will
determine variances on cost per unit. This is a guide to actual production efforts and to keep the desired
time limits.

2. Performance Indicators

Performance indicators are the yardsticks to measure the degree of accomplishment. Records and
report must be kept comparing it against target in terms of peso investment and profit. These may be in
terms of product produced, customer calls, activities completed and many others. Reports must be
accurate and measurable.

Standards used should be known to the workers. Time and motion study is a technique to set standard
time for which a job can be completed. The manager has to check the level and quality of output.

Determine Performance Standards

Monitoring Stage Measurement of Actual Performance

Corrective Stage Take Corrective Action

Follow Up Stage Follow-Through Action

The concept of measuring the results of the accomplished activities will provide a real documented
information which is subsequently compared with established standards. The most common means of
measurement are personal observations and the use of statistical data such as reports. It is more the job
of the line supervisors.

3. Interpreting Results

The results must be interpreted against the performance indicators. These must be judged in
accordance with specific measurable criteria crafted during the planning process. These must identify
discrepancies and variations and the reasons why they occurred. Accountability for variances must be
explained to pinpoint responsibility and thereby, make corrective actions.
This phase of control involves checking actual performance against predetermined or planned
performance. This is done through the following:

a. Checks actual performance output.

b. Compares with production schedule and timetable

c. Conducts periodic performance appraisal system

d. Checks return on investment per peso value produced.

4. Responsibility for Corrective Action

Corrective action is going back to the desired objectives. through corrections and revisions. The
experience of deviation or failure must be studied on new developments and budgetary allocations.
Careful analysis of the organizational strengths, weaknesses, opportunities and threats must be the
guiding philosophy of the new action. Responsibility must be identified and managers must have for
corrective measures.

The manager should not assume that his responsibility is over after making recommendations for
corrective actions. The following specific actions should be taken:

a. Redesign new system and procedure that will bring out better results;

b. Train people on a new system and procedures;

c. Introduce new machines and equipment when necessary;

d. Conduct training programs for supervisors to improve supervisory practices; and

e. Develop or revise the performance appraisal system that reflects actual output.

OBJECTIVES OF CONTROLING

The appointment of managers to their position could be justified only if they perform the intricate
functions of management. This is the kind of work for which they are paid higher and given more
benefits. Managers should be trained to manage and control the operation of their respective
department.

Management controls alert manager to potential problems. At the Top Level, executives are concerned
when set organizational goals are not being met and when production targets become negative, and
timetables are not followed. At the Middle Management, the problem occurs when they fail to deliver
the desired objectives and targets for which they are responsible. These may be in production
standards, schedules, product quality, production rejects and exceeding budget. Any negative variance
in organization output is a major concern of all managers.
The management must be able to:

1. Prevent the development of problem and crises. Crises develop when managers are not aware of the
operational problems. When problems are not solved immediately, small problems turn into crises. They
must, therefore, be on hand to control and avoid major problems to arise.

2. Develop standards of product output. Products and services can be standardized in terms of quality
and quantity through the use of good control. These could be done through training and the use of
quality machines and equipment. Quality management must be at all levels in production operation.

3. Develop an effective employee appraisal system. An objective appraisal system is a management

tool to determine good performance. Indicators of good performance help management develop better
products and services. Appraisals should be done periodically for it to be valid and reliable.

4. Develop an updated plan. Planning and controlling are two interrelated processes. We must
remember that the final step in the planning process is to control its results. Control allows managers to
compare with what is happening. When variances occur, an updated plan has to be developed.

5. Develop corporate measures to protect its assets. Corporate assets are the very foundation of the
success of the organization. Human resources' inefficiency is waste of valuable manpower that could
turn better products. Production pilferage is a waste of materials. Improper handling of equipment and
production resources develop shutdown.

TYPES OF MANAGEMENT CONTROL

Management control systems are used for different purposes. Managers must have a clear
understanding of these types of control system. Skills in its effective use will develop better organization
management of resources towards its goals and objectives. It is classified according to use:

1. Control that standardizes employee performance. This type of control system is designed to increase
efficiency and productivity. Efficiency reduces operating cost due to savings in man-hours. Under this
category are:

a. Time and Motion Study.

b. Inspection of Work in Progress.

c. Written Policies and Procedures; and

d. Production Schedules.

2. Control that safeguards company assets. Company assets are vital components of the organization. It
must be protected from theft, vandalism, misuse, and wastage. This involves the following:

a. Inventory Records.

b. Assignment of Custodial Responsibility.

c. Proper Maintenance and Inspection; and

d. Records of Company Assets.

3. Control that standardizes product quality. Product quality is the company asset for customer
consumptions. Rejects are cost that need to be looked into by all Supervisors and Managers. Under this
control system are:

a. Product Blueprints.

b. Inspection Reports; and

c. Statistical Reports on Product Quality.

4. Control that limits delegated authority. This refers to policies that limit the authority exercised by
lower-level Managers. The authority specifies the extent of authority that lower level manager can
exercise without the approval of top management.

a. Job Description and Specifications.

b. Policy Manuals.

c. Work Systems and Procedures; and

d. Internal Management Audits.

5. Control that measures job performance. Job performance is on the hands of direct supervisors.
Performance control is the following:

a. Quarterly Performance Appraisal Report.

b. Employee Output Data; and

c. Internal Audit and Reports.

6. Control for planning and programming operations. This refers to the following aspects of company
operation.

a. Sales and Production Forecast.

b. Budgets and Cost Estimates.

c. Cost Standards per Product or Unit; and

d. Man-hour Cost and Administrative Overhead.

7. Control that keeps balance programs. A balance management programs keeps various plans in track
towards the direction it wants to accomplish. These are the following:

a. Prepare Master Budget.

b. Organization Policy Manuals.

c. Committee Studies and Reports; and d. Use of Outside Consultants.

8. Control designed to motivate employees

Motivated employees are productive. There are measures that will enhance motivation. These are the
following:

a. Recognition of Employee Achievements.

b. Promotion.

c. Service Awards; and

d. Benefits.

KEY AREAS IN CONTROLLING

Control is central to the effectiveness of managers and organization because of environmental

uncertainties and the growing complexities. It provides a means of checking people's mistakes.
Managers must identify key performance areas that must function effectively in order for the
organization to prosper in its operation. The key areas are as follows:

a. Profitability. Organization objective of increase profit is the primary concern of all managers.
Operation has to achieve a certain level of profitability. This is reflected at the planning process and
control measures have to be adapted.

b. Market position. This refers to the position of the product in its market niche. Marketing strategy
should be developed to increase market shares. These are determinants of profit and effective control
measures which must be instituted.

c. Productivity. This pertains to the delivery of required performance of employees in the organization.
Performance indicators determine the productive level of workers.

d. Personnel development. Workers who are properly motivated and trained develop better
performance. This may refer to skills development or motivational interventions that deliver better
results.

e. Employee attitudes and values. Organizational values and attitudes are reflected in the employees
concern for work. These are related to effective coordination in all activities.
f. Public and social responsibility. Public perceptions are the development of an image that the
company is concerned not only with its customers but also to its outside stakeholders. A good product
or service develops a better corporate image. It must also share its profit to the community projects by
paying the required taxes and fees.

g. Balance organizational goals. The organization has to balance its goal of expansion and profitability to
its capability to deliver the most effective system of operation. Balance of financial exposure and
personnel development should be looked into as over expansion could also be detrimental to corporate
goals in the long run.

PROBLEMS WITH CONTROL SYSTEM

The things we do every day are not the same things that will happen tomorrow. Likewise, control
systems seldom work exactly the way they were intended for these include rigid bureaucratic behavior,
strategic behavior, invalid data reporting and employee resistance.

1. Rigid Bureaucratic Behavior. It occurs when the policies are implemented even if they are not
consistent with organization's demand. Employees are made to "go by the book" when its contents are
already obsolete. The manager emphasizes reliability of actions based on existing policies that they can
count on that something can be done. This can lead to inflexibility in dealing with work problems as they
have to follow the rigid organizational policy. The employees' defense mechanism for not doing the
things perfectly right is that they have to follow a rigid set of procedures.

2. Strategic Behavior. It occurs when control systems create situations in which employees feel
compelled to take actions designed solely to influence their performance indicators for a certain period
of time. It results when people play the game" and manipulate their behavior to enhance the control
indicators. A clear example is when we specified quantity of unit per hour without specified quality
requirements, the employee's focus is on quantity without looking into the cost involved. Rigid control
systems result in short-term victories at the expense of long-term progress.

3. Invalid Data Feedback. This occurs when the time and motion study is conducted with the advanced
knowledge of the employee concerned. The tendency is to slow down work while the study is in
progress. These results invalid data feedbacks. Another factor is when there exists cooperative manager-
subordinate relationship of protecting each other's image. They must provide false data in order to
survive and prosper in the system. Management must, therefore, provide check valve to correct the
system.

4. Resistance of Employees. Rigid control system leads employees to take actions such as sabotage,
organized union protest, foot dragging, and total disregard of rules. There are five reasons WHY
resistance occurs:

a. Control system can automate expertise

The system leaves the employee with less responsibility and the task is completed without employee's
creative ability. The control system is mechanistic and destroys motivation factors.
b. Control systems can often measure performance accurately and completely

As the organization matures, tracking employee's performance becomes more precise and accurate. The
detailed procedures are specified and the results are predetermined. The emphasis is on results rather
than how it is achieved, leaving the employee dissatisfied and de-motivated.

c. Control systems can change the social structure of the organization

The introduction of a rigid control system changes the social landscape of the organization. When
emphasis is placed on the control valves, it destroys personal relation, interaction pattern, opportunities
to meet new people and to learn new techniques of doing things that may later be assets to the
company. Concern for people is lost.

d. Control systems create new experts and develop power blocks

The hiring of outside specialists like computer technology experts and new machine technologies
created demoralization among the ranks of employees in the job. These specialists gather considerable
power and status in the organization. To correct the situation, training employees to take new
responsibility should be made.

e. Control system can reduce opportunities for intrinsic need satisfaction

Rigid control systems in many ways represent the antithesis of efforts to design work processes more
effectively. When the process is poorly implemented, it results in the improper involvement of human
resources the important backbone of any organizational system, and, therefore, intrinsic motives must
be developed at all times.