Controlling: Control, or Controlling, Is One of The Managerial Functions

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CONTROLLING

Control, or controlling, 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.
According to modern concepts, control is a foreseeing action whereas earlier
concept of control was used only when errors were detected. Control in
management means setting standards, measuring actual performance and taking
corrective action.

DEFINITIONS
In 1916, Henri Fayol formulated one of the first definitions of control as it
pertains to management:
Control of an undertaking consists of seeing that everything is being carried out
in accordance with the plan which has been adopted, the orders which have
been given, and the principles which have been laid down. Its object is to point
out mistakes in order that they may be rectified and prevented from recurring.
According to EFL Brech:
Control is checking current performance against pre-determined standards
contained in the plans, with a view to ensure adequate progress and
satisfactory performance.
According to Harold Koontz:
Controlling is the measurement and correction of performance in order to make
sure that enterprise objectives and the plans devised to attain them are
accomplished.
According to Stafford Beer:
Management is the profession of control.
Robert J. Mockler presented a more comprehensive definition of managerial
control:
Management control can be defined as a systematic effort by business
management to compare performance to predetermined standards, plans, or
objectives in order to determine whether performance is in line with these
standards and presumably in order to take any remedial action required to see
that human and other corporate resources are being used in the most effective
and efficient way possible in achieving corporate objectives.
Also control can be defined as "that function of the system that adjusts
operations as needed to achieve the plan, or to maintain variations from system
objectives within allowable limits". The control subsystem functions in close
harmony with the operating system. The degree to which they interact depends
on the nature of the operating system and its objectives. Stability concerns a
system's ability to maintain a pattern of output without wide fluctuations.
Rapidity of response pertains to the speed with which a system can correct
variations and return to expected output.
A political election can illustrate the concept of control and the importance of
feedback. Each party organizes a campaign to get its candidate selected and
outlines a plan to inform the public about both the candidate's credentials and
the party's platform. As the election nears, opinion polls furnish feedback about
the effectiveness of the campaign and about each candidate's chances to win.
Depending on the nature of this feedback, certain adjustments in strategy and/or
tactics can be made in an attempt to achieve the desired result.
From these definitions it can be stated that there is close link between planning
and controlling. Planning is a process by which an organization's objectives and
the methods to achieve the objectives are established, and controlling is a
process which measures and directs the actual performance against the planned
goals of the organization. Thus, goals and objectives are often referred to
as siamese twins of management. the managerial function of management and
correction of performance in order to make sure that enterprise objectives and
the goals devised to attain them being accomplished.
CHARACTERISTICS
 Control is a continuous process
 Control is a management process
 Control is embedded in each level of organizational hierarchy
 Control is forward looking
 Control is closely linked with planning
 Control is a tool for achieving organizational activities
 Control is an end process
 Control compares actual performance with planned performance*
 Control point out the error in the execution process
 Control helps in minimizing cost
 Control helps in achieving standard
 Control saves the time
 Control helps management for monitoring performance
ELEMENTS
The four basic elements in a control system:

1. the characteristic or condition to be controlled


2. the sensor
3. the comparator
4. the activator

occur in the same sequence and maintain a consistent relationship to each other
in every system.[3]

The first element is the characteristic or condition of the operating system


which is to be measured. We select a specific characteristic because a
correlation exists between it and how the system is performing. The
characteristic can be the output of the system during any stage of processing or
it may be a condition that is the result of the system. For example, it may be the
heat energy produced by the furnace or the temperature in the room which has
changed because of the heat generated by the furnace. In an elementary school
system, the hours a teacher works or the gain in knowledge demonstrated by the
students on a national examination are examples of characteristics that may be
selected for measurement, or control.

The second element of control, the sensor, is a means for measuring the


characteristic or condition. For example, in a home heating system this device
would be the thermostat, and in a quality-control system this measurement
might be performed by a visual inspection of the product.

The third element of control, the comparator, determines the need for correction
by comparing what is occurring with what has been planned. Some deviation
from the plan is usual and expected, but when variations are beyond those
considered acceptable, corrective action is required. It involves a sort of
preventative action which indicates that good control is being achieved.
The fourth element of control, the activator, is the corrective action taken to
return the system to its expected output. The actual person, device, or method
used to direct corrective inputs into the operating system may take a variety of
forms. It may be a hydraulic controller positioned by a solenoid or electric
motor in response to an electronic error signal, an employee directed to rework
the parts that failed to pass quality inspection, or a school principal who decides
to buy additional books to provide for an increased number of students. As long
as a plan is performed within allowable limits, corrective action is not
necessary; however, this seldom occurs in practice.

Information is the medium of control, because the flow of sensory data and later
the flow of corrective information allow a characteristic or condition of the
system to be controlled. To illustrate how information flow facilitates control,
let us review the elements of control in the context of information.
Relationship between the elements of control and real time
information

Controlled characteristic or condition

The primary requirement of a control system is that it maintains the level and
kind of output necessary to achieve the system's objectives. [5] It is usually
impractical to control every feature and condition associated with the system's
output. Therefore, the choice of the controlled item (and appropriate
information about it) is extremely important. There should be a direct
correlation between the controlled item and the system's operation. In other
words, control of the selected characteristic should have a direct relationship to
the goal or objective of the system.

Sensor

After the characteristic is sensed, or measured, information pertinent to control


is fed back. Exactly what information needs to be transmitted and also the
language that will best facilitate the communication process and reduce the
possibility of distortion in transmission must be carefully considered.
Information that is to be compared with the standard, or plan, should be
expressed in the same terms or language as in the original plan to facilitate
decision making. Using machine methods (computers) may require extensive
translation of the information. Since optimal languages for computation and for
human review are not always the same, the relative ease of translation may be a
significant factor in selecting the units of measurement or the language unit in
the sensing element.
In many instances, the measurement may be sampled rather than providing a
complete and continuous feedback of information about the operation. A
sampling procedure suggests measuring some segment or portion of the
operation that will represent the total.

Comparison with standard

In a social system, the norms of acceptable behaviour become the standard


against which so-called deviant behavior may be judged. Regulations and laws
provide a more formal collection of information for society. Social norms
change, but very slowly. In contrast, the standards outlined by a formal law can
be changed from one day to the next through revision, discontinuation, or
replacement by another. Information about deviant behavior becomes the basis
for controlling social activity. Output information is compared with the standard
or norm and significant deviations are noted. In an industrial example,
frequency distribution (a tabulation of the number of times a given
characteristic occurs within the sample of products being checked) may be used
to show the average quality, the spread, and the comparison of output with a
standard.
If there is a significant and uncorrectable difference between output and plan,
the system is "out of control." This means that the objectives of the system are
not feasible in relation to the capabilities of the present design. Either the
objectives must be re-evaluated or the system redesigned to add new capacity or
capability. For example, the traffic in drugs has been increasing in some cities at
an alarming rate. The citizens must decide whether to revise the police system
so as to regain control, or whether to modify the law to reflect a different norm
of acceptable behaviour.
Implementor

The activator unit responds to the information received from the comparator and


initiates corrective action. If the system is a machine-to-machine system, the
corrective inputs (decision rules) are designed into the network. When the
control relates to a man-to-machine or man-to-man system, however, the
individual(s) in charge must evaluate (1) the accuracy of the feedback
information, (2) the significance of the variation, and (3) what corrective inputs
will restore the system to a reasonable degree of stability. Once the decision has
been made to direct new inputs into the system, the actual process may be
relatively easy. A small amount of energy can change the operation of jet
airplanes, automatic steel mills, and hydroelectric power plants. The pilot
presses a button, and the landing gear of the airplane goes up or down; the
operator of a steel mill pushes a lever, and a ribbon of white-hot steel races
through the plant; a worker at a control board directs the flow of electrical
energy throughout a regional network of stations and substations. It takes but a
small amount of control energy to release or stop large quantities of input.
The comparator may be located far from the operating system, although at least
some of the elements must be in close proximity to operations. For example, the
measurement (the sensory element) is usually at the point of operations. The
measurement information can be transmitted to a distant point for comparison
with the standard (comparator), and when deviations occur, the correcting input
can be released from the distant point. However, the input (activator) will be
located at the operating system. This ability to control from afar means that
aircraft can be flown by remote control, dangerous manufacturing processes can
be operated from a safe distance, and national organizations can be directed
from centralized headquarters.
PROCESS OF CONTROLLING

1. Setting Performance Standards:

The first step in the process of controlling is concerned with setting


performance standards. These standards are the basis for measuring the actual
performance.

Thus, standards act as a lighthouse that warns & guides the ships at sea.
Standards are the benchmarks towards which efforts of entire organisation are
directed. These standards can be expressed both in quantitative and qualitative
terms.

Examples of Quantitative Standards:

(a) Revenue to be earned.


(b) Units to be produced and sold.
(c) Cost to be incurred.
(d) Time to be spent in performing a task.
(e) Amount of inventories to be maintained etc.

Examples of Qualitative Standards:

(a) Improving motivation level of employees.


(b) Improving labour relations.
(c) Improving quality of products.
(d) Improving goodwill etc.
In order to facilitate easy comparison of actual performance with the standards,
a manager should try to set these standards in quantitative terms as far as
possible. However, in case of qualitative standards, effort should be made to
define these standards in such a way that comparison becomes easily
understandable.
For example, for improving customer satisfaction in a restaurant having self
service, standard can be set in terms of time taken to get a table, place the order
and collect the order. Moreover, the standards set should be flexible enough so
that necessary changes can be made according to varying situations.

2. Measurement of Actual Performance:

Once the standards have been determined, the next step is to measure the actual
performance. The various techniques for measuring are sample checking,
performance reports, personal observation etc. However, in order to facilitate
easy comparison, the performance should be measured on same basis that the
standards have.

Following are some of the ways for measuring performance:


(a) Superior prepares a report regarding the performance of an employee.

(b) Various ratios like gross profit ratio, debtor turnover ratio, return on
investment, current ratio etc. are calculated at periodic intervals to measure
company’s performance.

(c) Progress made in areas like marketing can be measured by considering the
number of units, increase in market share etc.

(d) In small organisations, each unit produced can be checked personally to


ensure the quality standards.

(e) In large organisation, the technique of sample checking is used. Under this
technique, some pieces are checked at random for quality specifications.

3. Comparing Actual Performance with Standards:


This step involves comparing the actual performance with standards laid down
in order to find the deviations. For example, performance of a salesman in terms
of unit sold in a week can be easily measured against the standard output for the
week.
4. Analysing Deviations:

Some deviations are possible in all the activities. However, the deviation in the
important areas of business needs to be corrected more urgently as compared to
deviation in insignificant areas. Management should use critical point control
and management by exception in such areas.

(a) Critical Point Control:

Since it is neither easy nor economical to check each and every activity in an
organisation, the control should focus on Key Result Areas (KRAs) which act
as the critical points. The KRAs are very essential for the success of an
organisation. Therefore, the entire organisation has to suffer if anything goes
wrong at these points. For example, in a manufacturing organisation, an
increase of 7% in labour cost is more troublesome than an 18% increase in
stationary expenses.

(b) Management by Exception:

Management by exception or control by exception is an important principle of


management control. According to this principle, an attempt to control
everything results in controlling nothing. Thus only the important deviations
which exceed the prescribed limit should be brought to the notice of
management. Thus, if plans provide for 3% increase in labour cost, deviations
beyond 3% alone should be brought to the notice of the management.

Advantages of Critical Point Control and Management by Exception are as


follows:
(i) Since managers deal only with important deviations, it results in saving time
and efforts.
(ii) It helps in identifying important deviations which need timely action to keep
the organisation at the correct path.

(iii) By handing over the routine problems to the subordinates, management by


exception facilitates delegation of authority and helps in increasing morale of
employees.

(iv) It ensures better utilization of managerial expertise by focusing managerial


attention only on important areas.

After identifying the deviations, various causes for these deviations are
analyzed. The main causes can be structural drawbacks, shortage of resources,
environmental factors beyond organisational control, unrealistic standards,
defective process etc. Exact cause or causes of deviation must be identified
correctly in order to take effective corrective measures.

5. Taking Corrective Action:

The last step in the process of controlling involves taking corrective action. If
the deviations are within acceptable limits, no corrective measure is required.
However, if the deviations exceed acceptable limits, they should be immediately
brought to the notice of the management for taking corrective measures,
especially in the important areas.
KINDS OF CONTROLLING
Control may be grouped according to three general classifications:

1. the nature of the information flow designed into the system (open- or
closed-loop control)
2. the kind of components included in the design (man or machine control
systems)
3. the relationship of control to the decision process (organizational or
operational control).
Open- and closed-loop control
A street-lighting system controlled by a timing device is an example of an open-
loop system. At a certain time each evening, a mechanical device closes the
circuit and energy flows through the electric lines to light the lamps. Note,
however, that the timing mechanism is an independent unit and is not measuring
the objective function of the lighting system. If the lights should be needed on a
dark, stormy day the timing device would not recognize this need and therefore
would not activate energy inputs. Corrective properties may sometimes be built
into the controller (for example, to modify the time the lights are turned on as
the days grow shorter or longer), but this would not close the loop. In another
instance, the sensing, comparison, or adjustment may be made through action
taken by an individual who is not part of the system. For example, the lights
may be turned on by someone who happens to pass by and recognizes the need
for additional light.
If control is exercised as a result of the operation rather than because of outside
or predetermined arrangements, it is a closed-loop system. The home thermostat
is the classic example of a control device in a closed-loop system. When the
room temperature drops below the desired point, the control mechanism closes
the circuit to start the furnace and the temperature rises. The furnace-activating
circuit is turned off as the temperature reaches the preselected level. The
significant difference between this type of system and an open-loop system is
that the control device is an element of the system it serves and measures the
performance of the system. In other words, all four control elements are integral
to the specific system.
An essential part of a closed-loop system is feedback; that is, the output of the
system is measured continually through the item controlled, and the input is
modified to reduce any difference or error toward zero. Many of the patterns of
information flow in organizations are found to have the nature of closed loops,
which use feedback. The reason for such a condition is apparent when one
recognizes that any system, if it is to achieve a predetermined goal, must have
available to it at all times an indication of its degree of attainment. In general,
every goal-seeking system employs feedback.

Human and machine control

The elements of control are easy to identify in machine systems. For example,
the characteristic to be controlled might be some variable like speed or
temperature, and the sensing device could be a speedometer or a thermometer.
An expectation of precision exists because the characteristic is quantifiable and
the standard and the normal variation to be expected can be described in exact
terms. In automatic machine systems, inputs of information are used in a
process of continual adjustment to achieve output specifications. When even a
small variation from the standard occurs, the correction process begins. The
automatic system is highly structured, designed to accept certain kinds of input
and produce specific output, and programmed to regulate the transformation of
inputs within a narrow range of variation.
For an illustration of mechanical control: as the load on a steam engine
increases and the engine starts to slow down, the regulator reacts by opening a
valve that releases additional inputs of steam energy. This new input returns the
engine to the desired number of revolutions per minute. This type of mechanical
control is crude in comparison to the more sophisticated electronic control
systems in everyday use. Consider the complex missile-guidance systems that
measure the actual course according to predetermined mathematical calculations
and make almost instantaneous corrections to direct the missile to its target.

Machine systems can be complex because of the sophisticated technology,


whereas control of people is complex because the elements of control are
difficult to determine. In human control systems, the relationship between
objectives and associated characteristics is often vague; the measurement of the
characteristic may be extremely subjective; the expected standard is difficult to
define; and the amount of new inputs required is impossible to quantify. To
illustrate, let us refer once more to a formalized social system in which deviant
behavior is controlled through a process of observed violation of the existing
law (sensing), court hearings and trials (comparison with standard),
incarceration when the accused is found guilty (correction), and release from
custody after rehabilitation of the individual has occurred.
The speed limit established for freeway driving is one standard of performance
that is quantifiable, but even in this instance, the degree of permissible variation
and the amount of the actual variation are often a subject of disagreement
between the patrolman and the suspected violator. The complexity of our
society is reflected in many of our laws and regulations, which establish the
general standards for economic, political, and social operations. A citizen may
not know or understand the law and consequently would not know whether or
not he was guilty of a violation.
Most organized systems are some combination of man and machine; some
elements of control may be performed by machine whereas others are
accomplished by man. In addition, some standards may be precisely structured
whereas others may be little more than general guidelines with wide variations
expected in output. Man must act as the controller when measurement is
subjective and judgment is required. Machines such as computers are incapable
of making exceptions from the specified control criteria regardless of how much
a particular case might warrant special consideration. A pilot acts in conjunction
with computers and automatic pilots to fly large jets. In the event of unexpected
weather changes, or possible collision with another plane, he must intercede and
assume direct control.
Organizational and operational control

The concept of organizational control is implicit in the bureaucratic theory


of Max Weber. Associated with this theory are such concepts as "span of
control", "closeness of supervision", and "hierarchical authority". Weber's view
tends to include all levels or types of organizational control as being the same.
More recently, writers have tended to differentiate the control process between
that which emphasizes the nature of the organizational or systems design and
that which deals with daily operations. To illustrate the difference, we
"evaluate" the performance of a system to see how effective and efficient the
design proved to be or to discover why it failed. In contrast, we operate and
"control" the system with respect to the daily inputs of material, information,
and energy. In both instances, the elements of feedback are present, but
organizational control tends to review and evaluate the nature and arrangement
of components in the system, whereas operational control tends to adjust the
daily inputs.
The direction for organizational control comes from the goals and strategic
plans of the organization. General plans are translated into specific performance
measures such as share of the market, earnings, return on investment,
and budgets. The process of organizational control is to review and evaluate the
performance of the system against these established norms. Rewards for
meeting or exceeding standards may range from special recognition
to salary increases or promotions. On the other hand, a failure to meet
expectations may signal the need to reorganize or redesign.
In organizational control, the approach used in the program of review and
evaluation depends on the reason for the evaluation — that is, is it because the
system is not effective (accomplishing its objectives)? Is the system failing to
achieve an expected standard of efficiency? Is the evaluation being conducted
because of a breakdown or failure in operations? Is it merely a periodic audit-
and-review process?
When a system has failed or is in great difficulty, special diagnostic techniques
may be required to isolate the trouble areas and to identify the causes of the
difficulty. It is appropriate to investigate areas that have been troublesome
before or areas where some measure of performance can be quickly identified.
For example, if an organization's output backlog builds rapidly, it is logical to
check first to see if the problem is due to such readily obtainable measures as
increased demand or to a drop in available man hours. When a more detailed
analysis is necessary, a systematic procedure should be followed.
In contrast to organizational control, operational control serves to regulate the
day-to-day output relative to schedules, specifications, and costs. Is the output
of product or service the proper quality and is it available as scheduled? Are
inventories of raw materials, goods-in-process, and finished products being
purchased and produced in the desired quantities? Are the costs associated with
the transformation process in line with cost estimates? Is the information needed
in the transformation process available in the right form and at the right time? Is
the energy resource being utilized efficiently?
The most difficult task of management concerns monitoring the behavior of
individuals, comparing performance to some standard, and providing rewards or
punishment as indicated. Sometimes this control over people relates entirely to
their output. For example, a manager might not be concerned with the behavior
of a salesman as long as sales were as high as expected. In other instances, close
supervision of the salesman might be appropriate if
achieving customer satisfaction were one of the sales organization's
main objectives.
The larger the unit, the more likely that the control characteristic will be related
to some output goal. It also follows that if it is difficult or impossible to identify
the actual output of individuals, it is better to measure the performance of the
entire group. This means that individuals' levels of motivation and the
measurement of their performance become subjective judgments made by
the supervisor. Controlling output also suggests the difficulty of controlling
individuals' performance and relating this to the total system's objectives.

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