Controlling 1

Controlling is one of the important functions of management. This function ensures whether all the
work decided under the first four functions of management i.e. planning, organising, staffing and
directing are being performed in accordance to the plans or not. If not, then the remedial actions may be
taken to avoid adverse consequences. Controlling also ensures efficient and effective use of
organizational resources for achieving the goals. Hence controlling is also called as goal oriented
process. Controlling is not the last function of management but it is the function which brings back the
management cycle to the planning.
Controlling function can be defined as comparison of actual performance with the planned
performance. If there is any difference or deviation then finding the reasons for such difference and
taking corrective measures or action to stop those reasons so that in future there is match between
actual and planned performance.
"Controlling is measurement and correction of the performance of the subordinates to make sure that
the enterprise objectives and plans devised to attain them are being accomplished”.
---Koontz and O'Donnell
NATURE OF CONTROLLING:
 Controlling is goal oriented function.
 Controlling is an all pervasive function.
 Controlling is both backward looking as well as forward looking function.
 Controlling is a continuous function.

IMPORTANCE OF CONTROLLING:

1. Accomplishing Organisational Goals: Controlling helps in comparing the actual performance

with the predetermined standards, finding out deviations and taking corrective measures to
ensure that the activities are performed according to the plans. Thus, it helps in achieving the
organisational goals.
2. Judging Accuracy of Standards: An efficient control system helps in judging the accuracy of
standards. It further helps in reviewing and revising the standards according to the changes in
the organisation and the environment.
3. Making efficient use of resources: Controlling checks the working of employees at each and
every stage of the operation. Hence, it ensures effective and efficient use of all resources in an
organisation with minimum wastage or spoilage.
4. Improving Employee motivation: Employees know the standards against which their
performance will be judged. Systematic evaluation of performance and consequent rewards in
the form of increment, bonus, promotion etc. motivate the employees to put in their best
efforts.
5. Ensuring order and discipline: Controlling ensures a close check on the activities of the
employees. Hence, it helps in reducing the dishonest behaviour of the employees and in creating
order and discipline in an organisation.
6. Facilitating Coordination in Action: Controlling helps in providing a common direction to
all the activities of different departments and efforts of individuals for attaining the
organisational objectives.
LIMITATIONS OF CONTROLLING:

1. Difficulty in setting Quantitative Standards: It becomes very difficult to compare the actual
Sarita Sarkar Trivedi | DPS Rourkela
 Controlling 2

performance with the predetermined standards, if these standards are not expressed in
quantitative terms.
2. No control on external factors: An organisation fails to have control an external factors like
technological changes, competition, government policies and changes in the taste of consumers
etc.
3. Resistance from employees: Often employees resist the control systems since they consider
them as curbs on their freedom. E.g. - Surveillance through closed circuit television (CCTV).
4. Costly affairs: Controlling involves a lot of expenditure, time and effort thus it is a costly affairs.
Managers are required to ensure that the cost involved in installing and operating a control
system should not be more than the benefits expected from it.

RELATIONSHIP BETWEEN PLANNING AND CONTROLLING: Planning and controlling are interrelated and
interdependent functions of management.
 Planning is concerned with laying down the standards while controlling is concerned with
comparing the actual performance with the planned standards, finding deviation and taking
corrective measures to ensure that activities are performed according to plans. Thus, planning
provides the basis for the controlling Planning without controlling is meaningless while controlling
is blind without planning.

ACTION

PLANNING CONTROLLING

 Planning is essential for controlling. Planning provides consistent and integrated programmes and
controlling makes sure that activities are performed according to the plans.

 Planning is intellectual and prescriptive process concerned with thinking and analysing to find out
the most appropriate course of action for achieving organisational objectives. Controlling, on the
other hand, is an evaluative process concerned with checking whether the plans have been
properly implemented or not.

 Planning involves forecasting and preparing futuristic plans. Thus it is a forward looking function.
Controlling however, involves post-mortem of past activities, hence is considered as backward
looking function. As a matter of fact, since planning makes use of past experiences and corrective
actions and controlling too aims at improving future performance, both are known as forward as
well as backward looking function.

Conclusion:
1. Planning makes controlling easier and effective since it is based on facts.

2. Controlling helps in future planning by providing essential inputs derived from past experiences.

Sarita Sarkar Trivedi | DPS Rourkela

 Controlling 3

PROCESS OF CONTROLLING:

SETTING PERFORMANCE
STANDARDS

MEASUREMENT OF ACTUAL
PERFORMANCE

COMPARISON OF ACTUAL
PERFORMANCE WITH STANDARDS

ANALYSING DEVIATIONS

TAKING CORRECTIVE ACTION

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. Standards
are the bench marks towards which efforts of the entire organisation are directed. These standards can
be expressed both in quantitative and qualitative terms.
 Examples of quantitative standards: Revenue to be earned, units to be produced and sold,
cost to be incurred etc.
 Examples of qualitative standards: Improving motivation level of the employees,
improving qualities of products, 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. Moreover, the standard should be flexible
enough so that necessary changes can be made according to varying situations.
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 observations etc. However, in order to facilitate easy comparison, the
performance should be measured on the same basis that the standards have.
Comparison of actual performance: This step involves comparing the actual performance with standards
laid down in order to find the deviation.
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.

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 Controlling 4

Analysing Deviation: 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 significant
areas. Management should use CRITICAL POINT CONTROL and MANAGEMENT BY EXCEPTION in such areas.
CRITICAL POINT METHOD: Since it’s neither easy nor economical to check each and every activity in an
organisation, the control should focus on Key Result Areas (KRAs) which acts 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
10% increase in stationery expenses.
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 plan provides for 3% increase in labour cost, deviation
beyond 3% alone should be brought to the notice of management.
Taking corrective action: The last step in the controlling process is taking corrective action. If the
deviations are within acceptable limits, no corrective measure is required. However, if the deviation
exceeds acceptable limits, they should be immediately brought to the notice of management for taking
corrective measures, especially in the important areas.
Example:
Causes of Deviation Corrective Action To Be Taken
Obsolete machinery Technological up gradation of machinery
Defective material used Change the quality standards for material

Sarita Sarkar Trivedi | DPS Rourkela