Controlling - Meaning, Definition, Natural of Control

Meaning

It is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in a desired manner.

Definition

According to Koontz and D Donnell– controlling is the measuring and correcting of activities of subordinates to ensure that events conform to plans. Actual activities conform to the planned activities.

“Managerial control implies measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans.”

Characteristic/ Nature of control

Control is a continuous process
Control is a management process
Control is forward looking
Control compares actual performance with planned performance
Control point out the error in the execution process
Control helps in achieving standard
Pervasive function
Leads to post-mortem of past events
Action oriented
Involves measurement and universal
Control involves measurement
The essence of control is action
Control is an integrated system

Objectives of controlling

To make effective plans
To make sure that organizational activities are consistent
To make organization efficient
To provide feedback on project status
To aid in decision making

Importance of controlling

Helps in achieving objectives
Efficient use of resources
Facilitates decision making
Improves employee morale
Helps in achieving better conditions
Helps in better planning

Control process in management

Set objectives and Establishing standards
Measuring performance
Comparison of actual performance with standards’
Feedback and Correcting deviations

(a) Set objectives and The Establishment of Standards

(b) Measurement of Performance

(d) Feedback and Taking Corrective Action

1.Set objectives and establishing standards

Standards are criteria against which results are measured. They are norms to achieve the goals. Standards are usually measured in terms of output.

Time standards
Cost standards
Income standards
Market share
Productivity
Profitability

Product leadership standards: These indicate what must be done to attain such a position.

Employee attitude standards: These standards indicate what types of attitudes the company managers should strive to indicate in the company’s employees.

Social responsibility standards: Such as making contribution to the society.

Standards reflecting the relative balance between short and long range goals.

2. Measuring performance

Measurement involves comparison between what is accomplished and what was intended to be accomplished. The performance can be measured by the following steps:

(a) Strategic control points
(i) Income
(ii) Expenses
(iii) Inventory
(iv) Quality of the product
(v) Absenteeism
(vi) Ratio analysis.

The measurement of performance against standards should be on a forward looking basis so that deviations may be detected in advance by appropriate actions.

3. Comparing the actual performance with standard performance

This is the active principle of the process. The previous two, setting the goals and the measurement format are the preparatory parts of the process. It is the responsibility of the management to compare the actual performance against the standards established.

The performance evaluated can be for the organization as a whole or for some individuals working within the organization. In essence, standards are the yardsticks that determine whether organizational performance is adequate or inadequate

4. Feed back and Correcting Deviations

The final element in the process is the taking corrective action. Measuring and comparing performance, detecting shortcomings, failures or deviations, from plans will be of no avail if it does point to the needed corrective action.

Corrective action is managerial activity aimed at bringing organizational performance up to the level of performance standards.

Types of control system

Based on element
a. Strategic Control
b. Operational control
c. Feed back control
Based on the stages
a. Feed forward control
b. Concurrent control

1. Based on Element:

a. Strategic control:

⇒ Strategic control is the process of taking into accounts the changing planning premises, both external and internal to the organization, on which the strategy is based; continuously evaluating the strategy as it is being implemented; and taking corrective actions to adjust the strategy to the new requirements.

⇒ This process is necessary because strategy formulation is based on certain assumptions. There is a time lag between strategy formulation and its implementation, some of these assumptions may not hold good, either fully or partially.

b. Operational control:

⇒ Operational control is concerned with action or performance and is aimed at evaluating the performance of the organization as a whole or its different components- strategic business units, divisions, and departments.

⇒ Operational control is used by almost every organization in some form or the other. This control can be exercised at different stages of work performance.

c) Feedback controls:

⇒ They measure activities that have already been completed. Thus corrections can take place after performance is over.

⇒ Example – feedback from facilities engineers regarding the completed job .

2. Based on the stages

a) Feed forward controls:

⇒ They are preventive controls that try to anticipate problems and take corrective action before they occur.

⇒ Example – a team leader checks the quality, completeness and reliability of their tools prior to going to the site.

b) Concurrent controls:

⇒ They (sometimes called screening controls) occur while an activity is taking place.

⇒ Example-the team leader checks the quality or performance of his members while performing.

Methods of controlling

A. Traditional Methods

Personal observation
Statistical analysis
Special reports and analysis
Operational audit
Control through costing
Break even analysis
Budget and budgetary control

B. Modern Methods:

PERT
CPM
ROI
Responsibility accounting
Human asset accounting
MIS
Management audit
TQM
Six sigma

Barriers for controlling

⇒ Control activities can create an undesirable overemphasis on short-term production as opposed to long- term production.

⇒ Control activities can increase employees’ frustration with their jobs and thereby reduce morale. This reaction tends to occur primarily where management exerts too much control.

⇒ Control activities can encourage the falsification of reports.

⇒ Control activities can cause the perspectives of organization members to be too narrow for the good of the organization.

⇒ Control activities can be perceived as the goals of the control process rather than the means by which corrective action is taken.