1

CONTROLLING
Contents covered
2
UNIT 5: CONTROLLING

 Types and Strategies for Control

 Steps in Control Process
 Methods of Budgetary and Non- Budgetary Controls
 Characteristics of Effective Controls
 Establishing control systems
 3

The pervasive

function
 DEFINTION
4
CONTROLLING
 "Control is checking performance against predetermined
standards contained in the plans with a view to ensure
adequate progress and satisfactory performance."

                                                                         - G.F.L.Breach

 "Controlling is determining what is being accomplished, that

is evaluating the performance and if necessary, applying
corrective measures so that the performance takes place
according to the plans."                              - George .R.Terry
 Features
5
CONTROLLING  Is a positive force

 Is a continuous process

 Is Universal

 Is Goal oriented

 Is based on Planning

 Delegation is key to Control

 Is Forward looking
 6
CONTROLLING
 Importance
7
CONTROLLING

 Achievement of Goals

 Execution and revision of Plans

 Brings Order and Discipline

 Facilitates Decentralization of Authority

 Promotes Coordination

 Cope with Uncertainty and Change

 8
CONTROL PROCESS
 Establishment of Standards for effective
control system 9
CONTROLLING  Standards serve as Benchmarks
 Control Standards
v Quantitative Standards
v Time Standards
v Cost Standards
v Productivity Standards
v Revenue Standards
v Qualitative Standards
v Goodwill
v Employee Morale
v Industrial Relations
 Setting Standards
 Study characteristics of the Work
 Should consider ordinarily flexible and Generally acceptable levels of
performance with respect to work characteristics
 Set different standards for different works as each work is unique
 Measurement of Actual  Performance
10
CONTROLLING  Actual performance is measured against Standards fixed for the job
 Measurement should be done in Objective Manner
 Standards may be Quantitative or Non- Quantitative
 Key three aspects of Measurement
 Completeness
 Objectivity
 Responsiveness
 When to Measure
 Comparision of
Actual performance 11
CONTROLLING
with standards
 Determines the Degree of Variation
between Actual Performance and
Standard

 Only major or Exceptional

Deviations are communicated to top
level management 

 The Management by Exception

Principle is followed(MBE)
 Taking Corrective Action
 12
Are initiated by managers to rectify the actual performance
CONTROLLING  Corrective action may include 
v Methods
v Rules
v Procedures
v Change in Strategy
v Change in Structure
v Compensation Practices
v Training Programmes
v Redesign of Jobs
v Replacement of Personnel
v Re- establishment of Budgets or Standards
 Characteristics of Effective Control
System 13
CONTROLLING  Suitable
 Simple
 Selective
 Sound and Economical
 Flexible
 Forward Looking
 Reasonable
 Objective
 Responsibility for Failures
 Acceptable
Types of Control 14
 CONTROLLING
v Feedforward Control 15
v Is also known as Proactivity Control
v can be defined as the monitoring of problems in a way that provides their timely prevention, rather than after the fact reaction. 
v addresses what can we do ahead of time to help our plan succeed. The essence of feedforward control is to see the problems coming in
time to do something about them. 
v include preventive maintenance on machinery and equipment and due diligence on investments.
v Concurrent Control
v Is the process of monitoring and adjusting ongoing activities and processes 
v Such controls are not necessarily proactive, but they can prevent problems from becoming worse. 
v Is described as real-time control because it deals with the present.
v adjusting the water temperature of the water while taking a shower
v Feedback Control
v involves gathering information about a completed activity, evaluating that information, and taking steps to improve the similar
activities in the future.
v  is the least proactive of controls and is generally a basis for reactions.
v  Permits managers to use information on past performance to bring future performance in line with planned objectives.
 Dimensions of Control
 Critical or Strategic Point Control 16
CONTROLLING  Management by Exception (MBE)

 Critical or Strategic Point Control

 Control, to be ef­fective, should be focused on key result areas which are critical to
the success of an enterprise.
 Management while reviewing standards must pick some strategic points that reflect
the entire organization. 
 Important Features of Strategic Points:
i. A central point is established for every key operation or event. 
ii. Central points must be comprehensive and economical. They are com­prehensive
in the sense they include all sub-operations in the operation. Economy is also
sought because each and every item produced need not be checked or verified.
Checking at strategic points brings economy also.
iii. Strategic points are generally balanced in the sense equal importance is given to
both qualitative and quantitative factors. 
iv. Managers as a rule, should focus attention on deviations at strategic points only. 
 Types  of strategic control
  Premise Control- (Based on Assumptions)
17
 Every organization creates a strategy based on certain assumptions, or
CONTROLLING premises.
 Premise control is designed to continually and systematically verify whether
those assumptions, which are foundational to your strategy, are still true. 
 Implementation Control
 This type of control is a step-by-step assessment of implementation activities.
  It focuses on the incremental actions and phases of strategic implementation,
and monitors events and results as they unfold. 
 18
 Special Alert Control- (extreme event that impacts an organization. )
 This is a reactive process, designed to execute a fast and thorough strategy
assessment in the wake of an extreme event that impacts an organization. 
 In some cases, a special alert control calls for the formation of a crisis team
 Strategic Surveillance Control –(identify overlooked factors both
inside and outside the company )
 Strategic surveillance is a broader information scan.
  Its purpose is to identify overlooked factors both inside and outside the
company that might impact your strategy. 
 This process ideally covers any “ground” that might be missed by the more
focused tactics of premise and implementation control.
 Surveillance could encompass industry publications, online or social
mentions, industry trends, conference activities, etc.
 Dimentions of Controlling
 Management by Exception (MBE) 19
 More  attention is given to unusual or exceptional items.

 Only important deviations from established standards should be brought to the notice of management.

 In case of a major deviation from the standard, the matter has to receive the immediate attention of management on
a priority basis. 

 Top level is expected to  focus on key deviations and leave the minor ones to be taken care of at lower levels.
20
 Controlling Techniques 21

Budgetary Techniques Non- Budgetary Techniques

1. Cash Budget
1.Cost Accounting
2. Production Budget
2.Standard Costing
3. Sales Budget
3.Statistical Reports
4. Capital Budget
4.Special Reports
5. Material Budget
5.Break Even Point Analysis
6. Labour Budget
6.Internal Audit
7. Factory Over Head Budget
7.External Audit
8. Master Budget
8.Management Audit
9. Selling and Distribution Expenses Budget
9.PERT (Project Evaluation Review
10. Fixed and Flexible Budget
Technique)
11. Zero Based Budget Performance
10.CPM
11.TQM
12.Bench Marking
13.HR Accounting
14.MIS
22