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Lesson 10 Functions of Management Controlling

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9 views

Lesson 10 Functions of Management Controlling

Uploaded by

gaelamico22
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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FUNCTION OF MANAGEMENT

CONTROLLING

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What is Controlling?
 Controlling refers to the process of ascertaining whether
organizational objectives have been achieved; if not, why not; and
determining activities should then be taken to achieve objectives
better in the future.

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Controlling is comparing work accomplishments with target
plans.

Controlling is a management tool used by top management


personnel to measure actual work accomplishment in an
organization.
Objectives defined and goals that are set at the planning
stage are verified as to achievement or completion at
any given point in the organizing and implementing
stages. When expectations are not met at scheduled
dates, corrective measures are usually undertaken.

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Importance of Controlling
 When controlling is properly implemented, it will help the organization achieve its
goal in the most efficient and effective manner possible.

 Deviations, mistakes, and shortcomings happen inevitably. When they occur in


the daily operations, they contribute to unnecessary expenditures which increase
the cost of producing goods and services.

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If no such control is made, the company will be faced with
escalating production costs, which will place the viability of the
firm in jeopardy.
Steps in the Control Process

1. Establishing performance objectives and standards.


2. Measuring actual performance.
3. Comparing actual performance to objectives and standards.
4. Taking necessary action based on the results of the comparisons.

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Step 1 – Establishing performance Objectives and standards

 In controlling, what has to be achieved must first be determined.


 Examples:
 Sales Targets – expressed in monetary terms or quantity
 Production Targets – expressed in quantity or quality
 Worker Attendance – expressed in terms of rate of absences
 Safety Record – expressed in number of accidents for given periods
 Supplies Used – expressed in terms of quantity or monetary terms for given
periods

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Once objectives and standards are established, the
measurement of performance will be facilitated.

Standards differ among various organization.

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2. Measuring actual performance

There is a need to measure actual performance so that when


shortcomings occur, adjustments could be made. The
adjustments will depend on the actual findings.

The measuring tool will differ from organization to


organization, as each have their own unique objectives.

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Some firms, for instance, will use annual growth rate as
standards basis, while other firms will use some other tools like
the market share approach and position in the industry.
3. Comparing actual performance to objectives and standards

Once actual performance has been determined, this will


be compared with what the organization seeks to achieve.

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4. Taking necessary action
The purpose of comparing actual performance with the
desired result is to provide management with the
opportunity to take corrective action when necessary.
Examples of corrective action:
• Hire additional personnel
• Use more equipment
• Require overtime

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Types of Control
1. Feedforward control
2. Concurrent control
3. Feedback control

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1. Feedforward Control

When management anticipates programs and prevents their


occurrence, the type of measure undertaken is called
feedforward control.

This type of control provides the assurance that the required


human and nonhuman resources are in place before operations
begin.

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2. Concurrent Control
When operations are already ongoing and activities to detect
variances are made, concurrent control is said to be
undertaken.
It is always possible that deviations from standards will
happen in the production process. When such deviations
occur, adjustment are made to ensure compliance with
requirements. Information on the adjustments are also
necessary inputs in the pre-operation phase.

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3. Feedback Control

When information is gathered about a completed activity, and


in order that evaluation and steps for improvement are
derived, feedback control is undertaken.
Corrective actions aimed at improving future activities are
features of feedback control.
Feedback control validates objectives and standards. If
accomplishments consist only of a percentage of standard
requirements, the standard may be too high or inappropriate.

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Components of Organizational Control Systems

1. Strategic Plan
2. Long-Range Financial Planning
3. Operating Budget
4. Performance Appraisal
5. Statistical Reports
6. Policies and Procedures

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1. Strategic Plans
A strategic plan provides the basic control mechanism for the
organization.
When there are indications that activities do not facilitate the
accomplishment of strategic goals, these activities are either
set aside, or modified or expanded. These corrective measures
are made possible with the adoption of strategic plans.

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2. Long-Range Financial Plan
The planning horizon differs from company to company.
Most firms will be satisfied with one year.
The financial plan recommends a direction for financial
activities. If the goal does not appear to be where the firm is
headed, the control mechanism should be made to work.

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3. Operating Budget
An operating budget indicates the expenditures,
revenues, or profits planned for some future period
regarding operations.
The figures appearing in the budget are used as
standard measurements for performance.

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4. Performance Appraisals
Performance appraisal measures employee performance.
As such, it provides employees with a guide on how to do their
jobs better in the future.
Performance appraisals also function as effective checks on
new policies and programs.

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 5. Statistical Reports
 Statistical reports pertain to those that contain data on various
developments within the firm.
 Among the information which may be found in the report:
 1. Labor efficiency rates
 2. Quality control rejects
 3. Accounts receivable
 4. Accounts payable
 5. Sales reports
 6. Accident reports
 7. Power consumption report

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6. Policies and Procedures
Policies refer to the framework within which the
objectives must be pursued.
A procedure is a plan that describes the exact of
actions to be taken in a given situation.series

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