What is Controlling?

Controlling consists of verifying whether everything occurs in conformities with the plans
adopted, instructions issued and principles established. Controlling ensures that there is effective
and efficient utilization of organizational resources so as to achieve the planned goals.
Controlling measures the deviation of actual performance from the standard performance,
discovers the causes of such deviations and helps in taking corrective actions

According to Brech, “Controlling is a systematic exercise which is called as a process of

checking actual performance against the standards or plans with a view to ensure adequate
progress and also recording such experience as is gained as a contribution to possible future
needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he is

relative to a planned action, so should a business manager continually take reading to assure
himself that his enterprise is on right course.”

Controlling has got two basic purposes

1. It facilitates co-ordination
2. It helps in planning

Characteristics of Control:

1. Pervasive Function
2. Review of Past Events
3. Forward Looking
4. Action-Oriented
5. Continuous Process
6. Dynamic Process
7. Control does not curtail the rights of individuals

Features of Controlling Function

Following are the characteristics of controlling function of management-

• Controlling is an end function- A function which comes once the performances are
made in conformities with plans.
• Controlling is a pervasive function- which means it is performed by managers at all
levels and in all type of concerns.
 • 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.
• Controlling is a dynamic process- since controlling requires taking reviewal methods,
changes have to be made wherever possible.
• 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.

Controlling Process

Controlling as a management function involves following steps:

1. Establishment of standards- Standards are the plans or the targets which have to be
achieved in the course of business function. They can also be called as the criterions for
judging the performance. Standards generally are classified into two-
a. Measurable or tangible – Those standards which can be measured and expressed
are called as measurable standards. They can be in form of cost, output,
expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured
monetarily. For example- performance of a manager, deviation of workers, their
attitudes towards a concern. These are called as intangible standards.

Controlling becomes easy through establishment of these standards because controlling is

exercised on the basis of these standards.

2. Measurement of performance- The second major step in controlling is to measure the

performance. Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and sometimes difficult.
Measurement of tangible standards is easy as it can be expressed in units, cost, money
terms, etc. Quantitative measurement becomes difficult when performance of manager
has to be measured. Performance of a manager cannot be measured in quantities. It can
be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly
reports.

3. Comparison of actual and standard performance- Comparison of actual performance

with the planned targets is very important. Deviation can be defined as the gap between
actual performance and the planned targets. The manager has to find out two things here-
extent of deviation and cause of deviation. Extent of deviation means that the manager
 has to find out whether the deviation is positive or negative or whether the actual
performance is in conformity with the planned performance. The managers have to
exercise control by exception. He has to find out those deviations which are critical and
important for business. Minor deviations have to be ignored. Major deviations like
replacement of machinery, appointment of workers, quality of raw material, rate of
profits, etc. should be looked upon consciously. Therefore it is said, “ If a manager
controls everything, he ends up controlling nothing.” For example, if stationery charges
increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if
monthly production decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led
to deviation. The causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures for it. There are two
alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in
conformity with plans, the manager can revise the targets. It is here the
controlling process comes to an end. Follow up is an important step because it is
only through taking corrective measures, a manager can exercise controlling.

Meets
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Setting Operatio Measurem Does Not

Standar ns ent of Meets
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Correctiv
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 Relationship between Planning and Controlling

Planning and controlling are two separate fuctions of management, yet they are closely related.
The scope of activities if both are overlapping to each other. Without the basis of planning,
controlling activities becomes baseless and without controlling, planning becomes a meaningless
exercise. In absense of controlling, no purpose can be served by. Therefore, planning and
controlling reinforce each other. According to Billy Goetz, " Relationship between the two can
be summarized in the following points

1. Planning preceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseperable functions of management.
3. Activities are put on rails by planning and they are kept at right place through controlling.
4. The process of planning and controlling works on Systems Approach which is as
follows :

Planning → Results → Corrective Action

Planning Perform Control

ance

Planning and controlling are integral parts of an organization as both are important for
smooth running of an enterprise.

5. Planning and controlling reinforce each other. Each drives the other function of
management.

In the present dynamic environment which affects the organization, the strong relationship
between the two is very critical and important. In the present day environment, it is quite likely
that planning fails due to some unforeseen events. There controlling comes to the rescue. Once
controlling is done effectively, it give us stimulus to make better plans. Therfore, planning and
controlling are inseperate functions of a business enterprise.

Significance of Controlling:

1. Coordination
2. Corrective Action
3. Decision Making
4. Better Planning
5. Decentralization of Authority
6. Effective Supervision

Principles of Requirements of a good Control System

  Emphasis on Objectives

 Efficiency of Control Techniques

 Responsibility for Control

 Direct Control

 Suitability

 Flexibility

 Self-control

 Control by Exception

 Strategic Point Control

 Corrective Action

 Forward Looking Control

 Human Factor

 Economical

 Objective Standards

Problems of Control Process

 Dynamism of Environment

 Information Overload

 Defective Standards

 Employee Resistance

Requirement of Effective Control

 Design Controls to Plans and Strategies
  Design Controls to Individual Managers

 Control to pointing up Exceptions at Critical Points

 Objectivity of Controls

 Flexibility of Controls

 Compatibility of the Control System and Organizational Culture

 Economy of Controls

Overall Control Techniques:

Management Audit:

 Evaluation of company’s Mission, Vision, Objectives, Strategies, Organizational

Structure, Policies, Programs.

 Done with the help of scanning of environment and evaluation of facts.

Self Audit:

 Audit can be undertaken by the outsiders or by the manager himself/herself.

 Human Resource Accounting in self audit.

Strategic Audit:

 A strategic audit is an execution and evaluation of organization’s operations affected by

the strategy implementation.

 Process of Strategic Audit:

Diagnosis Focused Recommendati

Analysis ons

Standard that Need to be set and Control:

 Profitability Standards

 Market Position Standards

 Productivity Standards

 Product Leadership Standards

 Human Resource Standards

 Employee Attitude Standards

 Social Responsibility Standards

 Standards reflecting balance between short-range and long-range goals

Total Quality Management (TQM)

 Five main ideas provide the context for these approaches and seems to apply to any TQM
method.

 The Five ideas are:

o A system approach

o The tools of TQM

o The role of Management

o Employee Participation

o The focus on Customer