LECTURE SEVEN

INSTITUTE OF ACCOUNTANCY ARUSHA

DEPARTMENT OF ACCOUNTING AND FINANCE

COURSE CODE: AFT 06209

COURSE TITLE: FUNDAMENTALS OF MANAGEMENT

LECTURE 7: CONTROLLING AS A MANAGEMENT FUNCTION

Controlling is one of the managerial functions and it is an important element of the management

process. After the planning, organizing, staffing and directing have been carried out, the final

managerial function of controlling assures that the activities planned are being accomplished or

not.

Control can be defined as the process of analyzing whether actions are being taken as planned and

taking corrective actions to make these to confirm to planning.

According to E.F.L. Brech “controlling is checking performance against predetermined standards

contained in the plans with a view to ensuring adequate progress and satisfactory performance.”

Nature of Controlling

Based on the definitions the following natures or characteristics/features of controlling can be

presented below:

i. Control is a Function of Management: Actually, control is a follow-up action to the

other functions of management performed by managers to control the activities

assigned to them in the organization.

ii. Control is Based on Planning: Control is designed to evaluate actual performance

against predetermined standards set-up in the organization. Plans serve as the standards
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of desired performance. Planning sets the course in the organization and control ensures

action according to the chosen course of action in the organization.

iii. Control is a Dynamic Process: It involves continuous review of standards of

performance and results in corrective action, which may lead to changes in other

functions of management.

iv. Information is the Guide to Control: Control depends upon the information regarding

actual performance. Accurate and timely availability of feedback is essential for

effective control action.

v. The Essence of Control is Action: The performance of control is achieved only when

corrective action is taken on the basis of feedback information. It is only action, which

adjust performance to predetermined standards whenever deviations occur.

vi. It is a Continuous Activity: Control is not a one-step process but a continuous process.

It involves constant revision and analysis of standards resulting from the deviations

between actual and planned performance.

vii. Delegation is the key to Control: An executive can take corrective action only when he

has been delegated necessary authority for it. A person has authority to control these

functions for which he is directly accountable.

viii. Control Aims at Future: Control involves the comparison between actual and standards.

So corrective action is designed to improve performance in future.

ix. Control is a Universal Function of Management: Control is a basic or primary function

of management. Every manager has to exercise control over the subordinates’

performance, no manager can get things done without the process of controlling.
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x. Controlling is Positive: The function of controlling is positive. It is to make things

happen i.e., to achieve the goal with instead constraints, or by means of the planned

activities. Controlling should never be viewed as being negative in character.

Purposes of controlling:

a. To find out the progress of the work; the work already completed and the work in progress.

b. To compare the actual performance of the work at different stages with the particulars

indicated in the plans and policies.

c. To ascertain the time within which the work is completed.

d. To verify quantity and testing quality of the products.

e. To know the delays or interruptions, if any, in the performance of work and trace the cause

of such delay or breakdown.

f. To see that causes of delay are eradicated and operations are suitably re-scheduled.

g. To ensure that variations in the contents and methodology of work are remedied by

appropriate adjustments.

h. To assess the cost of materials and labor used and ensure that direct costs and indirect costs

do not exceed the budget provisions.

i. To pinpoint the responsibility on individuals at different levels for slackness, indifference,

or negligence, if any in the expected levels of performance.

j. To evaluate the value of the work performed and recognize the contributions of the staff

towards realization of the goals of the enterprise.

k. To maintain discipline and morale in the organization.

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Types of controls in management

Controlling helps managers eliminate gaps between actual performance and goals. Control is the

process in which actual performance is compared to company standards. If this is not performed

then necessary corrective action should be taken.

Below are some of the types of control with explanation;

i. Feedback control:

Feedback control involves gathering information about a past activity or action, and evaluating

that information, and taking steps to improve similar activities or action in the future. Feedback

control is historical in nature and is also known as post-action control. The implication is that the

measured activity has already occurred, and it is impossible to go back and perform correctly to

bring it up to standard. It is the least active of the controls and is generally a basis for reactions.

Feedback allows managers to use past performance information to inform future performance in

line with planned objectives.

ii. Concurrent control:

The process of monitoring and adjusting ongoing activities and processes is known as concurrent

control. Concurrent controls are dynamic engagement in a current process where observations are

made in real-time. Such controls are not necessarily proactive, but they can prevent problems from

getting worse. For this reason, we often describe concurrent control as real-time control as it relates

to current. A set of procedures are implemented to monitor project execution in order to find and

solve problems or potential problems in a timely manner.

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iii. Feedforward control:

Feedforward is a management and communication term that alludes to a representative or an

association to give a controlled impact from which you are expecting output. Feedforward controls

are future-directed, they attempt to detect and anticipate problems or deviations from the standards

in advance of their occurrence. They are in-process control and are very active, aggressive in

nature, allowing corrective action to be taken in advance of the problem.

iv. Behavioral control:

Behavioral control involves direct evaluation of managerial and employee decision making, not

the results of managerial decisions. Behavioral control identified rewards for a wide range of

criteria, such as in a balanced scorecard. When there are many external and internal factors,

behavioral control and appreciative rewards are more appropriate that may affect the relationship

between manager’s decisions and organizational performance. They are also suitable when

managers must coordinate resources and capabilities across different business units.

V. Financial and non-financial controls:

Financial controls involve the management of a firm’s costs and expenses so that they can be

controlled in relation to budgetary amounts. Thus, in this way management determines which

aspects of its financial position, such as profitability, sales or assets, are most important for the

organization, tries to forecast them through budgets, and then compares actual performance to

budgetary performance.