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Controlling Notes

Class 12 BST ch 8 notes

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0% found this document useful (0 votes)
8 views

Controlling Notes

Class 12 BST ch 8 notes

Uploaded by

a99755217
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Meani

ng
Cont roll
ingmeansensur i
ngthatact i
vit
iesi
nanor gani
sati
onar eperfor
medasperpl ansand
resour cesar ebei ngusedef fectivelyandef f
icientl
yfort heachievementofor gani sati
onal
goals.Thuscont r
ol l
i
ngi sagoalor ientedfunction.I sapr
ti i
maryandper v
asiv
ef unct i
onof
everymanager .Manager satalllev elshavecont roloveracti
vit
iesi
nt hei
rrespect
ivear easand
i
tisr equi r
edinev erytypeofinst i
tution.
Cont r
oll
ingi snotthelastf unct i
onofmanagementasi tbr
ingsbackt hemanagement
cycle back t o planning funct i
on.The cont roll
ing functi
on fi
nds out s how f aract ual
performancedev i
atesfrom standar ds,anal
ysest hecausesofsuchdev iat
ionandat tempt st
o
takecor recti
veact ionsbasedont hesame.Thi spr ocesshelpsinformulati
onoffuturepl ansi
n
thelightofpr oblemsencount er ed.
I
mpor
tance
a)Accompl ishing or ganisationalgoal s:Cont rolli
ng measur es per for mance t owar ds
organisat i
onalgoal sandbr ingst othel i
ghtdev i
at i
ons.Itgui dest heor gani
sati
onand
keepsi tonr i
ghtt rack.
b)Judgi ngaccur acyofst andar ds:Standardssetunderpl anningmaynotseem obj ect
ive
underchangedci r cumstances.Agoodandef f
icientcont rolsy stem keepsacheckon
thechangeswi thinandout sidetheor ganisat ion,andhel pst or eviset hestandar dsin
theli
ghtofsuchchanges.
c)Maki ngef f
icientuseofr esour ces:Cont r
ollingt ri
est obringact iv
ityi naccor dancewi th
predeter mined st andards.Thi s ensures the r educt i
on i n wast age and spoi l
age of
resources.
d)I mprov ingempl oy eemot i
v ation:Empl oyeesknow i nadv ancet hest andardsagai nst
whicht heirper formancewi l
l bemeasur ed.I tmot i
v atesthem t ogiv ebet terperfor
mance.
e)Ensur ing or derand di scipl i
ne:Cont rolli
ng cr eates an at mospher e ofor derand
disci
plineandhel pstomi nimi zethedishonestbehav i
ouront hepar tofempl oyeesby
keepingacl osecheckont hem.
f) Facil
itationcoor dinati
oni nact i
on:Eachdepar tmentandempl oy eei sgovernedby
predeter minedst andardswhi charewel lcoor dinat edwi t
honeanot her .Thuscont roll
ing
provi
descoor dinat edeffortst oachieveor gani sational goals.
Li
mit
ati
ons(
noti
nsy
ll
abus)
a)Difficult
yinset ti
ngquant i
tati
vestandards:Ther earefewareasinwhi chst andardscan
notbedef inedi nquant it
ativetermse. g.empl oyeemor ale,j
obsat isf
act i
on,human
behav iouretc.Thi smakesmeasur ementofper formanceandt hei
rcompar isondi ff
icult.
b)Litt
lecont r
olonext ernalfactors:Gener all
yanent erpri
secannotcont rolext ernal
factorssuchasgov ernmentpol i
cies,t
echnol ogicaldevel
opment ,
compet i
tionet c.
c)Resi stancef rom empl oyee:Of t
enempl oy eesseet hecontrolasar estri
ctionont heir
freedom andhav eobjecti
on.e.g.CCTV
d)Cost lyaffairs:Controlinvolv
esexpendi t
ure,t i
meandef for
ts.Attimessmal lenterprise
cannotaf fordt oinstal
lanexpensi vecont r
olsy stem.Managershoul densur et hatcost
ofi nstall
ati
onandoper ati
ngacont r
olsy stem shoul dnotexceedt hebenef i
tsder i
ved
from it.

1
Rel
ati
onshi
pbet
weenPl
anni
ng&Cont
rol
li
ng(
Del
eted)
Planning and cont roll
ing ar ei nsepar ablet wins of management .Pl anning wi thout
controll
ing is meani ngless because once a pl an becomes oper ational,cont rolling i s
necessar yt omoni tort hepr ogr ess,f inddev iati
onsandi ni ti
atecor r
ectiv emeasur est o
ensur ethatact ualev entsconf or mst ot hepl ans.Si mi larly,cont r
ollingi sbl indwi thout
planningast hest andar dswhi chser v east hebasi sofcont rolli
ngar epr ov i
dedbypl anni ng.
Planning seeksconsi stent,ar ti
culat ed pr ogrammeswhi lecont roll
ing seekst o compel
event stoconf ormt oplans.
Planningi spr escripti
veasi tinv olvest hinkingandanal y sist odi scov erandpr escr ibet he
courseofact iont oachi ev eobj ectives.Cont rolli
ngi sev aluativeasi tcheckswhet her
decisionshav ebeent ranslatedi ntoact ion.
Planningandcont roll
ingar ebot hf orwar d&backwar dl ooki ngf unct i
ons.Pl ansar emade
aboutf utureandar ebasedonf or ecastoff uturecondi ti
ons, soi tisforwar dl ooking.Att he
samet imepl anningi sgui dedbypastexper i
enceandt hecor recti
v eact ioni niti
at edby
controlf unction,hence pl anni ng i s backwar dl ooking f unct i
on.Cont rolling isl ike a
postmor tem ofpastact i
vit
iest of indoutdev i
ationsf rom st andar ds,soi ti sbackwar d
l
ooki ng.Buti tisalsof orwar dlooki ngasi tai msatmaki ngbet terfuturepl ansont hebasi s
ofitsf i
ndings.
Thusbot harei nterrelatedandr einfor ceeachot herint wosenses:
1.Planningbasedonf actsmakescont roll
ingeasi erandef fect i
ve,
2.Cont rol
li
ng i mpr oves furtherpl anni ng by pr ov i
ding i nfor mat i
on der ived f rom past
exper i
ence
Cont
rol
li
ngPr
ocess
Step1-Set t
ingper formancest andar ds:St andar dsar et hecrit
eri
aagai nstwhi chact ual
performancewoul dbemeasur ed.St andar dscanbeseti nbot hquantit
at iveandqual i
tativ
e
ter
ms.Costt obei ncur red,r evenuet obeear ned,pr oductuni t
stobemade&sol dar e
quant i
tativestandar dswhi lei mpr ovinggoodwi l
l/customersat isf
acti
on/ mot i
vationlevelof
empl oyeesar equal i
tativestandar ds.
Managershoul dt rytosetst andar dsi npr ecisequanti
tati
v et ermsasi twould
maket heircompar i
sonwi t
hact ualmucheasi er,e.g.reduct i
onindefect eduni ts.Incaseof
qualit
ativest andards,ef fortshoul dbet odef i
net hem i namannert hatwoul dmaket heir
measur ementeasi er,e.g.cust omersat isfaction.
Standardsshoul dbef lexibleenough, sot hattheymaybemodi fiedincaseof
changest aki
ngpl acei ninter nal /external businessenv ironment .
Step2-Measur ementofact ualper formance:Per for manceshoul dbemeasur edinan
objecti
v eandr eliabl
emanner .Ther ear esev er altechni quesofmeasur ingt heper for
mance
such as per sonalobser vation,sampl e checki ng,per f
ormance repor ts et c.As f aras
possibleper formanceshoul dbemeasur edi nt hesameuni t
sinwhichst andar dsar esetto
makecompar i
soneasy .Itisgener all
ybel ievedt hatmeasur ementshoul dbedoneaf t
erthe
compl et i
on oft ask,butpr act i
cal l
yas f aras possi blei tshould be done dur i
ng the
performancee. g.assembl i
ngpar ts,levelofgaspar t
iclesi nair.
Measur
ementof
:
Employeeperf
or mance–Preparationofper f
ormancerepor
tsbysuper i
or
Company ’
sperformance–Calculatingrati
os(G.P.
,N.P.
,ROIetc.)
,cashfl
owstat
ement
Marketi
ng–No.ofuni tssol
d,mar ketshareetc.
Ef
fi
ciencyofproducti
on–No.ofuni tsproduced/def
ecti
vepiecesinabatch

2
Ifquant ityissmal l,eachpi ecepr oducedcanbecheckedf orqual i
ty,i
nl ar ge
organisationscer tainno.ofpi ecesar echeckedatr andom.
Step3-Compar i
ngact ualper formancewi thst andar ds:Suchcompar i
sonwi llrev eal
deviationbet weenact ualanddesi redr esults.Compar i
sonbecomeseasi erwhenst andar ds
areseti nquant i
tat i
vet erms, e.g.per for manceofwor kers.
Step4–Anal y singdev iations:Accept abl edegr eeofdev iationsshoul dbedet ermined.Al so
deviationsi nkeybusi nessar easshoul dbeat tendedur gent l
yascompar edt ootherar eas.
Twoconcept sar enot ewor thy:
1)Cr i
ticalPoi ntCont rol:Cont rolshoul df ocusonkeyr esul tareas( KRAs)whi char ecritical
tothesuccessofanor gani sation.KRAsar ecr iti
calpoi nts, ifanythi
nggoeswr ongi nthese
areas, whol ebusi nesssuf fers,e.g.i ncr easei n5%l abourcostv s.15%post alcost.
2)Managementbyexcept i
on:At tempt st ocont rolev erythingr esult
sincont rol
li
ngnot hi ng.
Onlysi gnifi
cantdev i
ationswhi chgobey ondt heper missi blelimitshouldbebr oughtt ot he
noticeofmanagement ,e.g.2%i ncr easei nlabourcost
Thedev i
ationsneedt obeanal ysedf orthei rcauses,whi chmaybemul tiple
such as unr ealistic st andar ds,def ect ive process,i nadequacyofr esour ces,st r
uct ur al
drawbacks, env i
ronment alconst raint s.Thedev iationsandt heircausesar ethenr eportedt o
themanagement .
Step5–Taki ngcor rect i
veact ion:Nocor recti
v eact ionisr equi r
edwhent hedev i
ationsar e
withinaccept abl el imi t
s.I fdev iationsgobey ondaccept abler angeespeci al l
yinKRAs,i t
demandsf ori mmedi atemanager ial attention.
Correct i
veact i
ons:
Product i
ont arget snotmet–Tr ainingt heempl oy ees
Projectrunni ngbehi ndschedul e–Assi gningaddi ti
onal wor kersandequi pment ,
over t
ime
Obsol etemachi ner y–Technol ogical upgr adation
Defect i
vemat erial–Changequal it
yspeci fi
cationf ormat erialused
Incasedev i
ationscannotbecor rectedbymanager i
alact i
ons,st andar ds
mayhav et ober ev i
sed.
Budget
arycont
rol(
noti
nsy
ll
abus)
I
tisat echniqueofcont roll
inginwhi challoper ati
onsarepl annedi nadv anceinthef or
m of
budgetsandact ualresul tsarecompar edwithbudget arystandar ds.
Abudgeti saquant it
ativestatementf oradef i
nitef utureper i
odoft imef or
obtai
ningagi vi
ngobj ecti
v e.Itcontainsfiguresandf orecastbot hi nt er
msoft i
meand
quantit
ies.Ty pesofbudget saresales/production/materi
al/cash/ capi t
al/R&Dbudget s.
Advantages:
a)Focusesonspeci f
icandt imeboundt argetsandhel psinachi evi
ngobj ecti
ves
b)Sour ceofmot iv ati
ont oempl oyeesast heyknow pr eciselyt hest andardsagai nst
whicht heirperfor mancewi l
lbemeasur ed
c)Hel psi n opti
mum ut il
izati
on ofr esour cesbyal locati
ng t hem accor ding tot he
requir
ement sofdi fferentdepar t
ment s.
d)Hel psi ncoor dinat i
onandhi ghlight
si nterdependenceofv ariousdepar tments,e.g.
salesbudgetandpr oductionbudget
e)Faci li
tates managementbyexcept ion byst r
essing on t hose oper ati
ons whi ch
dev i
atef r
om budget edst andardsinasi gnifi
cantway .
Theef fectivenessofbudget ingdependsonhow accur atel
yest i
mat esar e
madeaboutf uture.Fl exibl
ebudget sshouldbepr eparedsoast of aci
li
tatechangeas
pert he changi ng env i
ronment .Budget ing is notan end buta means t o achi
ev e
organisationalobject i
ves. Mob.9808056625

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