Controlling, The Basic Control Process

● Controlling: The measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are being accomplished is called as
controlling.
● The Basic Control Process: Control techniques and systems are essentially the same for
controlling cash, office procedures, morale, product quality, and anything else. The basic control
process, wherever it is found and whatever is being controlled, involves three steps:
• Establishing standards
• Measuring performance against these standards, and
• Correcting variations from standards and plans.
• Establishment of Standards: Because plans are the yardsticks against which managers devise
controls, the first step in the control process logically would be to establish plans. However,
since plans vary in detail and complexity, and since managers cannot usually watch everything,
special standards are established. Standards are simply criteria of performance. They are the
selected points in an entire planning program at which measures of performance are made 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.
There are many kinds of standards. Among the best are verifiable goals or objectives, as
suggested in the discussion of managing by objectives. You will learn more about standards
later, especially those that point out deviations at critical points.
• Measurement of Performance: Although such measurement is not always practicable, the
measurement of performance against standards should ideally be done on a forward-looking
basis so that deviations may be detected in advance of their occurrence and avoided by
appropriate actions. The alert, forward-looking manager can sometimes predict departures from
standards. In the absence of such ability, however, deviations should be disclosed as early as
possible.
• Correction of Deviations: Standards should reflect the various positions in an organization
structure. If performance is measured accordingly, it is easier to correct deviations. Managers
know exactly where, in the assignment of individual or groups duties, the corrective measures
must be applied.
Correction of deviations is the point at which control can be seen as a part of whole system of
management and can be related to the other managerial functions. Managers may correct
deviations by redrawing their plans or by modifying their goals. (This is an exercise of the
principle of navigational change.) Or they may correct deviations by exercising their organzing
function through reassignment or clarification of duties. They may correct, also, by additional
staffing, by better selection and training of subordinates, or by that ultimate restaffing measure-
firing. Another way is to correct through better leading-fuller explanation of the job or more
effective leadership.

Features of Controlling Function

Following are the characteristics of controlling function of management-

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 1. Controlling is an end function- A function which comes once the performances are
made in confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all
levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past
being controlled. Controlling always look to future so that follow-up can be made
whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal methods,
changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable
functions of management. Without planning, controlling is a meaningless exercise and
without controlling, planning is useless. Planning presupposes controlling and
controlling succeeds planning.

Types of management control:

There are five ways of controlling plans which are:

1. Strategic control: it deals with resource maximization,the company checks the overall performance to
see whether it is utilizing its opportunities and resources to the fullest.some of these opportunities may
include the skills,experience and the abilities of the personnel involved in the organisation,the market
demand of the products and the cost of production.this is normally done by the top management.

2. Operational control management control: it is assessing the efficiency of the plans and methods used
in order to ensure hat the various individual tasks are carried out effectively and efficiently

3. Profitability control: this is when the company assesses its profit or losses and it is very important for a
company since the aim of every company is profit maximization.It seeks to know if the company is loosing
money so as to knoew the companies loop holes and how to fix it.Profitability control is normally the
responsibility of the marketing department

4. Annual-plan control: it is the process whereby top management examines the actual outcomes of its
company's effort annually in order to know if the companies efforts have been productive or not.

5. Management control: it is concerned with the human effort of plan implementation.it entails ensuring
that relevant resources are well utilized andd workers are well motivated

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William Travers Jerome III has classified the different types of control under the following
heads:
1. Controls used to standardise performance for increasing efficiency and reducing costs by way
of time and motion studies, inspections, written procedures of work schedules.
2. Controls used to conserve company assets through allocation of responsibilities, separation of
operational custodial and accounting activities and adoption of proper authorities and record
keeping.
3. Controls used to standardise quality by way of inspection, statistical quality control and
product specifications.
4. Controls used for providing free limits to the use of delegated authority without further top
management approval. Instruments for these controls include organisation and procedure
manuals, policy directives and internal audits.
5. Controls used to measure on the job performance by way of special reports, internal audits
budgets, standard costs and output per hour or per employee.
6. Controls used for planning future operations through sales and production forecasts, budgets,
cost standards and other standards for measurement.
7. Controls used to permit top management for keeping various plans and programmes in balance
through master budget, policy manuals organisation manual- and the use of co ordaining
committees and management consultants.
8. Controls designed to motivate personnel through promotions, reward for suggestions, profit
sharing and other methods of recognising achievements.

5 Steps In Control Process

1. Fixing the Control Standards / Objectives / Targets

A standard is a criterion (base) which is used to measure the performance of the subordinates.
Standards may be of two types, i.e. Quantitative Standards and Qualitative Standards.
Quantitative Standard can be easily defined and measured. For e.g. number of products,
number of customers, cost, net profit, time limits, etc.
Qualitative Standard cannot be easily defined and measured. For e.g. measurement of morale,
measurement of job satisfaction, measurement of effect of a training programme, advertisement
programme, etc. It is better to have quantitative standards because they are measurable.
However, today there are many new techniques for measuring qualitative standards.
The standards should be as clear as possible. It should be easily understood by both superiors and
subordinates. The responsibility of each individual should also be clearly defined i.e. everyone
should be responsible for achieving a particular goal, objective, target, etc. For e.g. The
marketing department fixes a standard - "We will sell 2,000 units of product X in one month". So
here the standard is 2,000 units.

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2. Measuring the Actual Performances

After establishing the standards, the subordinates should be provided with all the resources for
performing the job. They should be properly directed and motivated to perform the job.
Similarly, they should be properly supervised. If the subordinated come under Theory X they
require maximum supervision. However, if they come, under Theory Y then they require
minimum supervision. After they complete the job their performance should be carefully
measured. There are many traditional and modern techniques for measuring the performances of
subordinates.
For e.g. After one month, the marketing department sold only 10,000 units of product X. So,
their actual performance is only 10,000 units.

3. Comparision

The actual performances of the subordinates are compared with established standards, and then
the deviations are found out. The deviations which are found out may be positive or negative.
Positive Deviation means that the actual performances are better than the established standards.
Positive deviations should be appreciated.
Negative Deviation means that the actual performance is less than the established standards. The
management should pay special attention to the negative deviation. They should find out the
causes of negative deviations.
Generally, minor (small) deviations are ignored. However, major deviations should be
immediately addressed and reported to the top management. PERT, Budgetary Control,
Observation, Inspection, Reports, etc. are some of the methods used for comparison.
For e.g. 10,000 units (Standard) - 9,000 units (Actual Performance) = 1,000 units (Negative
Deviation).

4. Corrective Action

After finding out the negative deviations and their causes, the managers should take steps to
correct these deviations. Corrective actions should be taken promptly. Corrective action may
include, changing the standards, providing better motivation, giving better training, using better
machines, etc. The management should take essential steps to prevent these deviations in the
future.

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For e.g. The cause of the negative deviation was less advertising and untrained salesmen. So, the
company must spend reasonable money on advertising and training.

5. Follow-up

After taking corrective action, the management must do a follow-up. Follow-up is done to find
out whether the corrective actions are taken properly. It also finds out whether the deviations and
their causes are removed. If follow-up is done properly, then the actual performance will be
equal to or better than the established standards.

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