CONTROLLING

CONTROLLING:
“Controlling means ensuring that activities in an organisation are performed as per the plans.”

Controlling should not be misunderstood as the last function of management. It is a function that brings
the management cycle back to the planning function.

FEATURES OF CONTROLLING

1. Controlling is a pervasive function:

Controlling is required everywhere at all levels of management and in all forms of

organisations. Whether it is a profit-making organisation or not for profit business organisation. At every
level manager need to ensure that actual performance is in conformity with the plans.

2. Controlling is a continuous process:

It involves continuous measurement and review of performance and revision of standards.

It is not a one-time job.

3. Controlling is a fundamental management function:

If controlling is excluded, all other functions of management (planning, organizing, directing,

staffing) will be meaningless. No deviations will be located and no efforts to overcome them will be made.

4. Controlling is forward looking as well as backward looking function:

Controlling, by analyzing past performance and locating past mistakes, helps in improving
future performance. It also measures and compares actual performance with standards fixed in the past,
that is why, it is said to be backward looking.

5. Controlling is a goal-oriented function:

By monitoring all the events, controlling ensures that all the resources are utilised effectively
and efficiently, thus, ensuring achievement of organizational goals.

IMPORTANCE OF CONTROLLING:

1. Accomplishing Organizational Goals:

Once the plans are made and implemented, with the help of controlling, deviations are
located and corrective action is taken, to bring back the activities on the track and ensures that
objectives are achieved.

2. Judging Accuracy of Standards:

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 While performing the function of controlling, manager compares the actual work
performance with the standards. He tries to find out whether the laid down standards are appropriate
or not. In case of need, they are redefined. Thus, controlling helps in judging the accuracy of the standards.

3. Making Efficient use of Resources:

Controlling guides and ensures that each activity is performed according to predetermined
standards. It leads to reduced wastage and spoilage i.e., ensures that all the resources are used
efficiently.

4. Improving Employee Motivation:

Controlling communicates the role of employees well in advance. Employees also know
the standards against which their performance will be appraised. It motivates them to give better
performance.

5. Ensuring Order and Discipline:

Effective controlling system keeps the subordinates under check and makes sure that
they perform their functions efficiently. Sharp control can have a check over dishonesty and fraud of
employees.

STEPS IN THE PROCESS OF CONTROLLING:

1. Setting Performance Standards:

The first step in the control process is to establish standards of performance. These
standards provide the basis against which actual performance is measured.
Standards can be measured in quantitative as well as qualitative terms. But as far as
possible they should be expressed in quantitative terms. They should be flexible so that they can be
modified according to business environment. Standards set should be reasonable.

2. Measurement of Actual Performance:

Once the standards of performance have been established, the next step is to
measure the actual performance. Actual performance should be measured in the same units in
which standards are set.
Performance can be measured after the task or even during the performance.

3. Comparing Actual Performance with Standards:

After measuring performance, the third step is to compare actual performance with
the standards established earlier. Such comparison reveals as to what extent the performance
deviates from the standard.
If actual performance matches the standards, then everything is in control and process of
controlling ends.
Minor or normal deviations need not be reported to top management because they are
bound to arise but major deviations must be reported to senior management to enable it to take corrective
action. Deviations can be positive or negative.

4. Analyzing Deviation:

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 When the deviation between the planned and actual performance is significant, a
detailed analysis is made to identify the causes of such deviations.
The deviations may arise due to errors in planning, defective implementation of plans,
careless performance by employees or lack of proper supervision. Critical point control and
management by exception should be used by a manager in this regard.

5. Taking Corrective Actions:

A soon as variations are reported, corrective or remedial actions are needed to be

taken to prevent reoccurrence of deviations. There is no need for corrective actions, when deviations
are within acceptable limits.
The process of control is incomplete until corrective actions are taken to prevent
deviations in future. These involve training of employees, change in working methods, materials,
machine, policies and procedures. In case deviation cannot be corrected through managerial action,
the standards may have to be revised.

Short Note

1. Critical Point Control (CPC):

It means keeping focus on some specific key areas (KRAs) and if there is any
deviation in these key areas, then it must be attended urgently. Key areas are those which
have impact on whole organisation. For example, if there is increase in production cost by Rs.5 per
unit and there is increase in postal cost by Rs.20, then more focus should be to find out reasons of
increase in production cost.

2. Management by Exception (MBE):

This principle implies that only major or significant deviations should be given attention.
Normal deviations should be ignored for they can be corrected at lower levels. Established
standards cannot always be achieved and some deviations are bound to arise. Thus, only
exceptional deviations which go beyond the permissible limit, should be brought to the notice of
management. It is based on the fact.
“If you try to control everything, you may end up controlling nothing’.

LIMITATIONS OF CONTROLLING

1. Difficulty in setting quantitative standards:

There are certain aspects which are highly important for a firm but cannot be defined &
measured in quantitative terms. For example: for human behaviour, employee morale, loyalty, job
satisfaction etc.

2. Little control on external factors:

Even if company adopts effective control system, it is difficult to control certain aspects like it is difficult to
predict changes in the external factors like government policies, technological changes, competitor’s
strategies etc.

3. Resistance from employees:

Employees may resist controlling because they may feel that it restricts their freedom. Ex.
Employees might object when they are kept under a strict watch with the help of CCTVs.
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4. Costly affair:

Controlling involves lot of time, efforts, expenditure, which makes it an expensive affair for
small organizations.

Q. There is a close and reciprocal relationship between Planning and Controlling. Explain.

There is a deep relationship between the controlling and planning function of management
showing the importance of their relationship, it is generally said that

I Planning is meaningless without Controlling:

Making plans is not sufficient for success of a firm; it should also be ensured that how much
they have been achieved.
Under the controlling system the actual work performance is evaluated with
standards, and if evaluation of performance is not done, then planning function becomes
meaningless, as deviations will not be detected and no efforts will be made to improve them. In
this reference it is said planning is meaningless without controlling.

II Controlling is Blind without Planning:

Under the system of controlling actual work performance is compared with the
standards. Standards are set during planning function. Hence, if the standards are not determined
there will be no basis left for comparison i.e., controlling.
It is therefore, said that controlling is blind without planning or is without any base.
In conclusion, we can say that both planning and controlling are very intimately connected and both
are incomplete without each other.

III Planning is looking ahead and controlling is looking back:

Planning is a future oriented function as it involves looking in advance and making policies
for maximum utilization of resources in future. In Planning, plans are made for future that is why it is
considered as “forward looking” function.
In controlling we look back to the performance of the employees and compare it with
previously prepared plans. That is why it is considered as “looking back,” function of management.

IV Controlling is looking backward as well as looking ahead function of management:

In controlling past performance of employees is compared with plans, that is why it

is known as looking backward, but at the same time it involves findings the reasons for deviations and
suggesting preventive measures to bring back the actual performance in relation to planned performance
and makes sure that deviations does not occur in the coming performance of employees, therefore
controlling is a forward-looking function like planning.

V Planning is Prescriptive and Controlling is Evaluative:

Planning is a prescriptive process as it prescribes the most appropriate course of action

to achieve the objectives. On the other hand, controlling is an evaluative process as it evaluates whether
desired course of action is followed or not. So, controlling process starts where the planning leaves
off.
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