Definition: Control is a primary goal-oriented function of management in an organisation. It is a process of comparing the actual performance with the set standards of the company to ensure that activities are performed according to the plans and if not then taking corrective action. Show
Every manager needs to monitor and evaluate the activities of his subordinates. It helps in taking corrective actions by the manager in the given timeline to avoid contingency or company’s loss. Controlling is performed at the lower, middle and upper levels of the management. Features of Controlling
Controlling and planning are interrelated for controlling gives an important input into the next planning cycle. Controlling is a backwards-looking function which brings the management cycle back to the planning function. Planning is a forward-looking process as it deals with the forecasts about the future conditions. Process of ControllingControl process involves the following steps as shown in the figure:
Controlling process thus regulates companies’ activities so that actual performance conforms to the standard plan. An effective control system enables managers to avoid circumstances which cause the company’s loss. Types of controlThere are three types of control viz.,
In an ever-changing and complex environment, controlling forms an integral part of the organization. Advantages of controlling
On the contrary, controlling suffers from the constraint that the organization has no control over external factors. It can turn out to be a costly affair, especially for small companies. Controlling is an essential part of management process. In fact; without the control process entire management is obsolete. Because you will not be able to know how your plan is working, is it fully implemented. Also without control, you will not be able to actionable lead the workforce. The control process is the functional process for organizational control that arises from the goals and strategic plans of the organization. 4 Steps of Control Process are;
These steps are described below; 1. Establishing Standards and Methods for Measuring PerformanceStandards are, by definition, simply the criteria of performance. They are the selected points in an entire planning program at which performance is measured so that managers can receive signals about how things are going and thus do not have to watch every step in the execution of plans. Standard elements form precisely worded, measurable objectives and are especially important for control. In an industrial enterprise, standards could include sales and production targets, work attendance goals, safety records, etc. In service industries, on the other hand, standards might include several time customers have to wait in the queue at a bank or the number of new clients attracted by a revamped advertising campaign. 2. Measuring the PerformanceThe measurement of performance against standards should be done on a forward-looking basis so that deviations may be detected in advance of their occurrence and avoided by appropriate actions. Several methods are used for measuring the performance of the organization. If standards are appropriately drawn and if means are available for determining exactly what subordinates are doing, appraisal of actual or expected performance is fairly easy. But there are many activities for which it is difficult to develop accurate standards, and there are many activities that are hard to measure. It may be quite simple, for example, to establish labor-hour standards for the production of a mass-produced item and it may be equally simple to measure performance against these standards, but in the less technical kinds of work. For example, controlling the work of the industrial relations manager is not easy because definite standards cannot be easily developed. The superior of this type of manager often rely on vague standards, such as the attitude of labor unions, the enthusiasm, and loyalty of subordinates, the index of labor turnover and/or industrial disputes, etc. In such cases, the superior’s measurements are often equally vague. 3. Determining whether Performance Matches the StandardDetermining whether performance matches the standard is an easy but important step in the control process. It involves comparing the measured results with the standards already set. If performance matches the standard, managers may assume that “everything is under control”. In such a case the managers do not have to intervene in the organization’s operations. 4. Taking Corrective ActionThis step becomes essential if performance falls short of standards and the analysis indicates that corrective action is required. The corrective action could involve a change in one or more activities of the organization’s operations. For example, the branch manager of a bank might discover that more counter clerks are needed to meet the five-minute customer-waiting standard set earlier. Control can also reveal inappropriate standards and in that case, the corrective action could involve a change in the original standards rather than a change in performance. It needs to be mentioned that, unless managers see the control process through to its conclusion, they are merely monitoring performance rather than exercising control. The emphasis should always be on devising constructive ways to bring performance up to a standard rather than merely identifying a past failure. Every organisation aims at achieving some goals from its business activities and it is essential to ensure whether or not the firm is performing activities according to the pre-determined goals. The controlling function of management helps an organisation in ensuring the same. Hence, Controlling means comparing the actual performance of an organisation with the planned performance and taking corrective actions if the actual performance does not match the planned performance. Controlling cannot prevent the deviation in actual and planned performance; however, it can minimise the deviations by taking corrective actions and decisions that can reduce their recurrence.
Different steps involved in the process of controlling areas follows: 1. Setting Performance StandardsThe first step of the process of controlling is to establish standards of performance against which the actual performance of the organisation is measured. An organisation should clearly define its standards to the employees and must establish attainable, understandable, and realistic standards to be achieved. Standards can be set in quantitative terms as well as qualitative terms. Under quantitative terms, the standards of an organisation are expressed in quantitative terms like units of the product to be produced and sold, revenue to be earned, the cost to be incurred, etc. While setting the quantitative standards an organisation should keep them precise so as to easily compare the actual performance with the standards. However, under qualitative terms, the standards of an organisation are expressed in qualitative terms like time taken to serve a customer, motivation level of employees, etc. The qualitative standards should also be set in a way that makes the measurement easy. Besides, the business environment in which an organisation works is dynamic and keeps on changing. Therefore, the established standards should be flexible so that they have a scope of change whenever the business environment changes. 2. Measurement of Actual PerformanceOnce the organisation has established the standards, the second step of the process of controlling is to measure the actual performance in a reliable and objective manner. The actual performance of an organisation can be measured through different techniques such as sample checking, personal observation, etc., and should be measured in the same units in which the standards are fixed to make the comparison easy. Usually, the actual performance is measured at the end of the performance. However, in some cases, organisations measure performance throughout the performance. For example, an electrical appliance organisation can check the parts before assembling them together to ensure the final product is not defective. Also, while measuring the actual performance of an organisation, it should be kept in mind that both quantitative and qualitative aspects are being considered. Sometimes organisations focus more on the quantitative aspects and less on the qualitative aspects, which can be harmful to them. For example, the quantitative standard of lowering the cost of a product can be achieved by degrading its quality. This can for sure lower the cost of the product, but can also lose the customers of the organisation. Different departments of an organisation can measure its actual performance differently (like the production department by the number of units produced, the sales department by the number of units sold or customer satisfaction level, etc.). 3. Comparison of Actual Performance with StandardsThe third step of the process of controlling is to compare the actual performance of the organisation with the established standards (in the first step). By comparing the actual performance with the standards, an organisation can determine the deviation between them. When the standards are expressed in quantitative terms, it becomes easy for the organisation to make comparisons as there is no subjective evaluation required. For example, it is easy for an organisation to compare the number of units sold in a month against the set standard. However, the comparison between the set standard for the motivation of employees with its actual performance is difficult.
4. Analysing DeviationsThe actual performance and set standards of an organisation rarely match with each other. Usually, there is always some variation between the expected and actual performance. Therefore, the fourth step of the process of controlling is to analyse the deviations. To do so, an organisation must fix an acceptable range of deviation in performance. Besides, an organisation should focus more on the significant deviation and less on the minor deviations. For this, managers of an organisation usually take the help of Critical Point Control and Management by Exception. A) Critical Point ControlCritical Point Control states that the control system of an organisation should focus more on the Key Result Areas (KRAs), which are critical to its overall performance. It is not easy and economical for an organisation to keep a check on every activity with the same attention level. Therefore, it should pay more attention to the key areas on which the performance of the whole organisation depends. For example, if there is a 2% deviation in the production cost and a 15% deviation in the stationery expenses of an organisation, then it should focus on the deviation in its production cost, as it is a key area and can affect the profitability of the organisation. B) Management by ExceptionManagement by Exception is based on “If you try to control everything, you may end up controlling nothing”, and states that the manager of an organisation should focus on the significant deviations which go beyond the set deviation limit. For this, the managers should establish a range of deviations for the performances and any deviation that goes beyond the set range must be given attention. For example, the manager of an organisation has set the deviation limit in the production cost of 5%. Now, if the production cost of the firm deviates by 2%, then the managers can ignore such deviation. However, if the deviation is 10%, then it needs immediate attention.
Once the organisation has identified the major deviations, it has to analyse its cause. A deviation in the performance of an organisation can be because of many reasons, such as faulty processes, unrealistic standards, business environment, etc. Therefore, it is essential for the organisation to identify the exact cause of the deviation so that proper and corrective measures can be taken for the same. 5. Taking Corrective ActionThe last and final step of the process of controlling is to take corrective action. If the deviations are within the acceptable limits set by the managers, then there is no need to take corrective action. However, if the deviations go beyond the set acceptable limit in the key areas, then proper and immediate managerial actions are required. An organisation can easily rectify the defects in the actual performance through the corrective steps. For example, If the actual performance of the organisation deviates because of the lack of resources, then the managers try to procure them to meet the standards. However, if the actual performance deviates because of the lack of skills in the employees, then the managers might give proper and required training to the employees. It shows that every deviation does not need the same corrective action. The rule, process, or method of corrective action changes with the requirement of deviation.
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