CONTROLLING

All organisations, business or non-business, face the necessity of coping

with problems of control. Like other managerial functions, the need for
control arises to maximise the use of scarce resources and to achieve
purposeful behaviour of organisation members. In the planning stage,
managers decide how, the resources would be utilised to achieve
organisational objectives; at the controlling stage; managers try to visualise
whether resources are utilised in the same way as planned. Thus control
completes the whole sequence of management process.

Thus control can be applied in any field such as price control,

distribution control, pollution control, production, quality etc. However,
control as an element of management process can be defined as the process
of analysing whether actions are being taken as planned and taking
corrective actions to make these to conform to planning. Thus control
process tries to find out deviations between planned performance and
actual performance and to suggest corrective actions whenever these
are needed.

For example, Terry has defined “Controlling is determining what is being

accomplished, that is evaluating the performance and, if necessary, applying
corrected measures so that the performance takes place according to plan.”
It sees to it that the right things happen, in the right ways, and at the
right time.

Controlling ensures that the performance and the behaviour of individual

employees, groups and teams as well as rules and procedures of the
organisation meet the set standards. Control therefore helps managers to
deal with theft, unnecessary wasting, and poor use of allocation of
resources as well as mistakes and low productivity.
Therefore the focus of control is to check and improve organisation’s
activities.

IMPORTANCE OF CONTROL

The benefits of controlling

 Standardization – to ensure that customers are satisfied,

standardisation (making things fit the same standard) of goods and
services is useful e.g Steers its everywhere by standardising their
recipes, ingredients and processes the expectations of a customer are
met no matter which branch of chicken is bought.

 Judge employee performance – with effective control process in

place it becomes easier to judge the performance levels of employees
in the organisation. (for example a performance standard stating
how many calls a telesales employee should handle in an hour
makes it possible for a manager to work out whether the
consultant is performing well or poorly, even the insurance
people.)

 Prevent problems and crisis – by having controls in place managers

and employees can be proactive (act before a problem not after it) in
their daily tasks. For example a financial manager will use quarterly
financial statements to think about the organisation’s performance in
order to see if there is likely to be a cash flow problem coming.

 Protect the organisation – controls ensure that all assets such as

equipment and buildings are protected from malfunctioning. For
example installing a fire alarm in the restaurant to ensure that
patrons and employees get the warning if there may be a fire danger

 Adjustments in Operations - Control provides this clue whether

objectives are being achieved by finding out whether plans are being
observed and suitable progress towards the objectives is being made,
 and acting, if necessary, to correct any-deviation. This may result into
taking actions more suitable for the achievement of organisational
objectives.

 Psychological Pressure: Control process puts a psychological pressure

on the individuals for better performance. The performance of the
individuals is evaluated in the light of targets set for them. A
person is likely to put better performance if he is aware that his
performance will be evaluated.

 Organisational Efficiency and Effectiveness: Proper control ensures

organisational efficiency and effectiveness. The organisation is
effective if it is able to achieve its objectives and efficient if it produces
at a minimum cost.

 It helps maintain compliance with essential organizational rules and

policies.

Types of control

When resources (input factors) are transformed into final goods and services
(outputs) this is called the transformation process. Managers can choose the
type of control to use according to the stage of the transformation process
they are in. They basically three types of control which are: pre-control,
concurrent, and post control.

Pre-control / feed-forward control

This type of control focuses on the inputs of the transformation process. It is

a process that anticipates and prevents input factors from negatively
influencing their transformation. It focuses on inputs such as:

- HR – skilled, experienced and qualified employees who will be able to

provide the required service or manufacture the goods

- Materials for production – good quality, affordable material e.g

chicken in
 - Objectives are clear

- Capital- sufficient funding should be available

Therefore, management should try and anticipate problems before hand

rather than solving problems once they occur. They make sure that proper
directions are set and that the right resources are available to
accomplish them.

- These controls are evident in the selection and hiring of new

employees. For example, organizations attempt to improve the
likelihood that employees will perform up to standards by
identifying the necessary job skills and by using tests and other
screening devices to hire people with those skills.

Concurrent control

It is action taken to ensure that standards are met as inputs are

transformed into outputs. The focus of concurrent control is dealing with
problems while they are developing. Therefore, it ensures that standards are
being met and correct before they become too costly.

e.g service industry – when an employee provides service to a customer

or when a sales person sells a product to a customer. Managers should
monitor these activities.

As an example, many manufacturing operations include devices that

measure whether the items being produced meet quality standards.
Employees monitor the measurements; if they see that standards are not
being met in some area, they make a correction themselves

It is more economical to reduce faulty input parts than wait for the finished
product. Can reduce waste in unacceptable finished products or services.

POST CONTROL
It focuses on output factors such as final goods provided and the services
given. In the manufacturing industry, the final goods of the transformation
must be checked before they are delivered to other retailers or used a parts
or material in the next transformation process. In the service industry, it is
important to check the feedback (comments from clients) on the services
given.

-post control is particularly necessary in cases where pre-control and

concurrent control have failed. Post control focuses on fixing the a problem
that has already occurred, ie the damage has already been done but the aim
is to make sure that this mistake will not happen again.

-post mortem, most popular

THE CONTROL PROCES

The control process consists of four major steps namely:

- Establishment of control standards

- Measuring actual performance

- Comparing actual performance with set standards

- Evaluate outcomes and take action

Establishment of control standards

The control process begins with planning and the establishment of

performance objectives. Performance objectives are defined and the
standards for measuring them are set. Therefore, all standards must be
linked to the set objectives or goals of the organisation, department.
Standards cannot be developed away from the planning process.

Standards can be measureable e.g quantity standards – printing logos on

100 tshirts per print run
 -cost standards- standards given as a number in terms of currency-
medical consultation fee $50 per consultation

-time standards – standards that are give as number in terms of time

– delivering one truck load of cement per hour

- Quality standards – standards that are given as a number in terms

of mistakes – having less that two faulty pens in a manufacture run of
1000 pens

Standards can also correct level of behaviour e.g behaviour standards-

providing good and friendly service to customers.

Therefore effective control standards need to be complete standards. The

more detail such a standard has the better it can be put into action. It is
important that standards are clear and in order to be clear they must
state who must do what how and when.

Measuring actual performance

Performance measurement reflects whether an organisation is successful

and how successful it is or if it is not, at what level of performance the
organisation is and what it must improve. This can be done through
Personal observation, statistical reports, oral reports, and written reports
Management by walking around (MBWA) which is a phrase used to describe
when a manager is out in the work area interacting with employees can also
be used.

Management needs to consider what to measure and how often to measure

it. It is very important that measurement is done objectively. (without being
emotionally involved). Subjective (with emotional involvement) measurement
results in incorrect or biased (one sided) information. Therefore,
measurement but be reliable, valid (justifiable) and linked to the objectives.
It must focus on the critical performance areas of the job and it must result
in the reinforcement of good performance or else the taking of corrective
action.

Measurements must be accurate enough to spot deviations or variances

between what really occurs and what is most desired.

Comparing actual performance with set standard

It involves comparing the actual performance results (which were

determined during the second step) with the standard ( which was laid down
in the first step). This information tells the manager if performance is up to
standard and whether the objective has been or will be achieved. Range of
variation which is the acceptable parameters of variance between actual
performance and the standard should be stated.

Evaluate outcomes and take action

The final step in the control process can take two directions. Depending on
the outcome of the third step, two possible actions can be taken.
Reinforcement (encouragement) is needed if performance matches or
exceeds (goes beyond) the set standards and corrective action is needed if
performance does not meet the set standards.

Corrective action must focus on defining the actual problem, based on the
results in the third step. Once the reason for the problem is understood,
corrective action can be taken to correct the source of deviation. Sometimes
it might call revising the standard that is adjusting the performance
standard to reflect current and predicted future performance capabilities
(skills)

Where the problem is small, reinforcement can still be used to

encourage improvement.

Qualities of effective control systems

  Accuracy -Effective controls generate accurate data and information.
Accurate information is essential for effective managerial decisions.
Inaccurate controls would divert management efforts and energies on
problems that do not exist or have a low priority and would fail to alert
managers to serious problems that do require attention.

 Timeliness -Information must be collected, routed, and evaluated

quickly if action is to be taken in time to produce improvements.

 Economically realistic - The cost of implementing a control system

should be less than, or at most equal to, the benefits derived from the
control system.

 Flexibility- controls must have flexibility built into them so that the
organizations can react quickly to overcome adverse changes or to
take advantage of new opportunities. managers must make
modifications in controlling methods, techniques and systems as they
become necessary. An effective control system is one that can be
updated quickly as the need arises.

 Understandability/clarity

 Reasonable criteria

 strategic control points - The control system should be focused on

those areas where deviations from the standards are most likely to
take place or where deviations would lead to the greatest harm.

 Multiple criteria

 Corrective action - an effective control system not only checks for and
identifies deviation but also is programmed to suggest solutions to
correct such a deviation

What Contingency Factors Affect the Design of A Control System?

• Size of the organization:

Small – informal, personal, MBWA

Large – formal, impersonal, extensive rules and regulations

• The job/function’s position in the organization’s hierarchy

high

• Degree of organizational decentralization

• Type of organizational culture

• Importance of the activity to the organization’s success