I.

OBJECTIVES

At the end of discussions, the students will be able to:

A. Define what is controlling;

B. Enumerate the functions of controlling;
C. State the characteristics of good control;
D.

Functions of Management

Management has been described as a social process involving responsibility for

economical and effective planning & regulation of operation of an enterprise in the
fulfillment of given purposes. It is a dynamic process consisting of various elements and
activities. These activities are different from operative functions like marketing, finance,
purchase etc. Rather these activities are common to each and every manger
irrespective of his level or status.

Different experts have classified functions of management. According to George &

Jerry, “There are four fundamental functions of management i.e. planning, organizing,
actuating and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to

command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’
where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-
ordination, R for reporting & B for Budgeting. But the most widely accepted are
functions of management given by KOONTZ and O’DONNEL i.e. Planning,

CONTROLLING

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.
According to Theo Haimann, “Controlling is the process of checking whether or not
proper progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the
measurement & correction of performance activities of subordinates in order to make
sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:
 a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if
any.
d. Corrective action.

II. DEFINITION OF 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

III. STEPS OF CONTROLLING

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.

IV. FUNCTIONS OF CONTROLLING

Following are the characteristics of controlling function of management.

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.

V. CHARACTERISTICS OF GOOD CONTROL

a) Control is the function of every manager.
Managers at all levels have to perform controlling to contribute to the
achievement of organizational objectives.
b) Control leads to appraisal of past activities.
The deviations in the past are revealed by the control process. Corrective
actions can be initiated accordingly.
c) Control is linked with future, as past cannot be controlled.
It should anticipate possible deviations and to think of corrective action for
the control of such deviations in the future. It is usually preventive as
presence of control system tends to minimize wastages, losses and
deviations from standards.
d) Control is concerned with setting standards, measurement of actual
performance, comparison of actual performance with predetermined
standards and bringing to light the variations between the actual
performance and the standard performance.
e) Control implies taking corrective measures.
The object in checking the variations or deviations is to rectify them and
prevent their recurrence. It is only action which adjusts performance to
predetermined standards whenever deviation occur.
f) Control can be exercised only with reference to and or the basis of plans.
 To quote Mary Cushing Niles- "Whereas planning sets the course, control
observes deviations from the course or to an appropriately changed one."
g) To some people, control is opposite of freedom.
This is not true. Control is based on facts and figures. Its purpose is to
achieve and maintain acceptable productivity from all resources of an
enterprise. Therefore, control aims at results and not at persons. It is for
correcting a situation and not for reprimanding persons.
h) Information or feedback is the guide to control.
The feedback is helpful to the manager to determine how far the
operations are proceeding in conformity with plans and standards, and
where remedial action is called for.
i) Control involves continuous review of standards of [performance and
results in corrective action which may lead to change in the performance
of other functions of management. this makes control a dynamic and
flexible process.
j) Control is continuous activity.
It involves constant analysis of validity of standards, policies, procedures,
etc.

Henri Fayols 14 Principles of Management

A principle refers to a fundamental truth. It establishes cause and effect relationship

between two or more variables under given situation. They serve as a guide to thought
& actions. Therefore, management principles are the statements of fundamental truth
based on logic which provides guidelines for managerial decision making and actions.
These principles are derived: -

a. On the basis of observation and analysis i.e. practical experience of managers.

b. By conducting experimental studies.

There are 14 Principles of Management described by Henri Fayol.

1. Division of Labor
a. Henri Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and
allotted to various persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his
performance.
e. Specialization leads to efficiency & economy in spheres of business.
2. Party of Authority & Responsibility
a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also
have concerned authority.
 d. Authority refers to the right of superiors to get exactness from their sub-
ordinates whereas responsibility means obligation for the performance of
the job assigned.
e. There should be a balance between the two i.e. they must go hand in
hand.
f. Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.
3. Principle of One Boss
a. A sub-ordinate should receive orders and be accountable to one and only
one boss at a time.
b. In other words, a sub-ordinate should not receive instructions from more
than one person because -

- It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts

c. Therefore, dual sub-ordination should be avoided unless and until it is

absolutely essential.
d. Unity of command provides the enterprise a disciplined, stable & orderly
existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction
a. Fayol advocates one head one plan which means that there should be
one plan for a group of activities having similar objectives.
b. Related activities should be grouped together. There should be one plan
of action for them and they should be under the charge of a particular
manager.
c. According to this principle, efforts of all the members of the organization
should be directed towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.

Basis Unity of command Unity of direction

Meaning It implies that a sub-ordinate should It means one head, one plan for a
receive orders & instructions from group of activities having similar
only one boss. objectives.

Nature It is related to the functioning of It is related to the functioning of

 personnel’s. departments, or organization as a
whole.

Necessity It is necessary for fixing It is necessary for sound

responsibility of each subordinates. organization.

Advantage It avoids conflicts, confusion & It avoids duplication of efforts and

chaos. wastage of resources.

Result It leads to better superior sub- It leads to smooth running of the

ordinate relationship. enterprise.
Therefore it is obvious that they are different from each other but they are dependent on
each other i.e. unity of direction is a pre-requisite for unity of command. But it does not
automatically comes from the unity of direction.

5. Equity
a. Equity means combination of fairness, kindness & justice.
b. The employees should be treated with kindness & equity if devotion is
expected of them.
c. It implies that managers should be fair and impartial while dealing with the
subordinates.
d. They should give similar treatment to people of similar position.
e. They should not discriminate with respect to age, caste, sex, religion,
relation etc.
f. Equity is essential to create and maintain cordial relations between the
managers and sub-ordinate.
g. But equity does not mean total absence of harshness.
h. Fayol was of opinion that, “at times force and harshness might become
necessary for the sake of equity”.
6. Order
a. This principle is concerned with proper & systematic arrangement of
things and people.
b. Arrangement of things is called material order and placement of people is
called social order.
c. Material order- There should be safe, appropriate and specific place for
every article and every place to be effectively used for specific activity and
commodity.
d. Social order- Selection and appointment of most suitable person on the
suitable job. There should be a specific place for every one and everyone
should have a specific place so that they can easily be contacted
whenever need arises.
7. Discipline
a. According to Fayol, “Discipline means sincerity, obedience, respect of
authority & observance of rules and regulations of the enterprise”.
 b. This principle applies that subordinate should respect their superiors and
obey their order.
c. It is an important requisite for smooth running of the enterprise.
d. Discipline is not only required on path of subordinates but also on the part
of management.
e. Discipline can be enforced if -

- There are good superiors at all levels.

- There are clear & fair agreements with workers.
- Sanctions (punishments) are judiciously applied.

8. Initiative
a. Workers should be encouraged to take initiative in the work assigned to
them.
b. It means eagerness to initiate actions without being asked to do so.
c. Fayol advised that management should provide opportunity to its
employees to suggest ideas, experiences& new method of work.
d. It helps in developing an atmosphere of trust and understanding.
e. People then enjoy working in the organization because it adds to their zeal
and energy.
f. To suggest improvement in formulation & implementation of place.
g. They can be encouraged with the help of monetary & non-monetary
incentives.
9. Fair Remuneration
a. The quantum and method of remuneration to be paid to the workers
should be fair, reasonable, satisfactory & rewarding of the efforts.
b. As far as possible it should accord satisfaction to both employer and the
employees.
c. Wages should be determined on the basis of cost of living, work assigned,
financial position of the business, wage rate prevailing etc.
d. Logical & appropriate wage rates and methods of their payment reduce
tension & differences between workers & management creates
harmonious relationship and pleasing atmosphere of work.
e. Fayol also recommended provision of other benefits such as free
education, medical & residential facilities to workers.
10. Stability of Tenure
a. Fayol emphasized that employees should not be moved frequently from
one job position to another i.e. the period of service in a job should be
fixed.
b. Therefore employees should be appointed after keeping in view principles
of recruitment & selection but once they are appointed their services
should be served.
c. According to Fayol. “Time is required for an employee to get used to a
new work & succeed to doing it well but if he is removed before that he will
not be able to render worthwhile services”.
d. As a result, the time, effort and money spent on training the worker will go
waste.
 e. Stability of job creates team spirit and a sense of belongingness among
workers which ultimately increase the quality as well as quantity of work.
11. Scalar Chain
a. Fayol defines scalar chain as ’The chain of superiors ranging from the
ultimate authority to the lowest”.
b. Every orders, instructions, messages, requests, explanation etc. has to
pass through Scalar chain.
c. But, for the sake of convenience & urgency, this path can be cut shirt and
this short cut is known as Gang Plank.
d. A Gang Plank is a temporary arrangement between two different points to
facilitate quick & easy communication as explained below:

In the figure given, if D has to communicate with G he will first send the
communication upwards with the help of C, B to A and then downwards
with the help of E and F to G which will take quite some time and by that
time, it may not be worth therefore a gang plank has been developed
between the two.

e. Gang Plank clarifies that management principles are not rigid rather they
are very flexible. They can be moulded and modified as per the
requirements of situations
12. Sub-Ordination of Individual Interest to General Interest
a. An organization is much bigger than the individual it constitutes therefore
interest of the undertaking should prevail in all circumstances.
b. As far as possible, reconciliation should be achieved between individual
and group interests.
c. But in case of conflict, individual must sacrifice for bigger interests.
d. In order to achieve this attitude, it is essential that -

- Employees should be honest & sincere.

- Proper & regular supervision of work.
- Reconciliation of mutual differences and clashes by mutual
 agreement. For example, for change of location of plant, for change
of profit sharing ratio, etc.

13. Espirit De’ Corps (can be achieved through unity of command)

a. It refers to team spirit i.e. harmony in the work groups and mutual
understanding among the members.
b. Spirit De’ Corps inspires workers to work harder.
c. Fayol cautioned the managers against dividing the employees into
competing groups because it might damage the moral of the workers and
interest of the undertaking in the long run.
d. To inculcate Espirit De’ Corps following steps should be undertaken -
 There should be proper co-ordination of work at all levels
 Subordinates should be encouraged to develop informal relations
among themselves.
 Efforts should be made to create enthusiasm and keenness among
subordinates so that they can work to the maximum ability.
 Efficient employees should be rewarded and those who are not up
to the mark should be given a chance to improve their performance.
 Subordinates should be made conscious of that whatever they are
doing is of great importance to the business & society.
e. He also cautioned against the more use of Britain communication to the
subordinates i.e. face to face communication should be developed. The
managers should infuse team spirit & belongingness. There should be no
place for misunderstanding. People then enjoy working in the organization
& offer their best towards the organization.
14. Centralization & De-Centralization
a. Centralization means concentration of authority at the top level. In other
words, centralization is a situation in which top management retains most
of the decision making authority.
b. Decentralization means disposal of decision making authority to all the
levels of the organization. In other words, sharing authority downwards is
decentralization.
c. According to Fayol, “Degree of centralization or decentralization depends
on no. of factors like size of business, experience of superiors,
dependability & ability of subordinates etc.
d. Anything which increases the role of subordinate is decentralization &
anything which decreases it is centralization.
e. Fayol suggested that absolute centralization or decentralization is not
feasible. An organization should strike to achieve a lot between the two.

Importance of Management

1. It helps in Achieving Group Goals - It arranges the factors of production,

assembles and organizes the resources, integrates the resources in effective
manner to achieve goals. It directs group efforts towards achievement of pre-
determined goals. By defining objective of organization clearly there would be no
 wastage of time, money and effort. Management converts disorganized
resources of men, machines, money etc. into useful enterprise. These resources
are coordinated, directed and controlled in such a manner that enterprise work
towards attainment of goals.
2. Optimum Utilization of Resources - Management utilizes all the physical &
human resources productively. This leads to efficacy in management.
Management provides maximum utilization of scarce resources by selecting its
best possible alternate use in industry from out of various uses. It makes use of
experts, professional and these services leads to use of their skills, knowledge,
and proper utilization and avoids wastage. If employees and machines are
producing its maximum there is no under employment of any resources.
3. Reduces Costs - It gets maximum results through minimum input by proper
planning and by using minimum input & getting maximum output. Management
uses physical, human and financial resources in such a manner which results in
best combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and
coordinated functions). To establish sound organizational structure is one of the
objective of management which is in tune with objective of organization and for
fulfillment of this, it establishes effective authority & responsibility relationship i.e.
who is accountable to whom, who can give instructions to whom, who are
superiors & who are subordinates. Management fills up various positions with
right persons, having right skills, training and qualification. All jobs should be
cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing
environment. It keeps in touch with the changing environment. With the change is
external environment, the initial co-ordination of organization must be changed.
So it adapts organization to changing demand of market / changing needs of
societies. It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better
economical production which helps in turn to increase the welfare of people.
Good management makes a difficult task easier by avoiding wastage of scarce
resource. It improves standard of living. It increases the profit which is beneficial
to business and society will get maximum output at minimum cost by creating
employment opportunities which generate income in hands. Organization comes
with new products and researches beneficial for society.