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18 views3 pages

Esigned Kyc Stock PDF

Everything you need to know

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jaijaigs05
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© © All Rights Reserved
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8.

CONTROLLING
Meaning

Controlling means ensuring that activities in an organization are performed as per the plans.
Controlling also ensures that an organization's resources are being used effectively
and efficiently for the achievement of pre-determined goals. Controlling is thus a goal
oriented function.

Controlling function of a manager is a pervasive function. It is a primary function of


every manager. In every type of organization controlling is required. Controlling is a function
that brings back the management cycle to the planning function. The controlling function
finds out how far actual performance deviates from standards, analyses the causes of
such deviations and attempts to take corrective actions based on the same. This process
helps in formulation of future plans in the light of the problems that were identified and thus
helps in better planning in the future periods.

Importance of controlling

1. Accomplishing organisational goals - The controlling function measures the


progress towards the organizational goals and brings to light the deviations of any and
indicates corrective action.

2. Accuracy of standards - good control system enables management to verify whether


the standards set are accurate and objective.

3. Making efficient use of resources - by exercising control a manager seeks to


reduce wastage and spoilage of resources. Each activity is performed in accordance with
pre-determined standards and norms.
4. Improving employee motivation - a good control system ensures that employees
know well in advance what they are expected to do and what are the standards of
performance on the basis of which they will be appraised. It thus motivates them and helps
them to give better performance
5. Ensuring order and discipline - controlling creates an atmosphere of order and
discipline in the organization. I t helps to minimize dishonest behaviour on the part of the
employees by keeping a close check on their activities.

6. Facilitating coordination in action - controlling provides direction to all activities


and efforts for achieving organisational goals. Each department and employee is governed
by predetermined standards which are well coordinated with one another.

Limitations of controlling

1. Difficulty in setting quantitative standards - control system loses some of its


effectiveness when standards cannot be defined in quantitative terms. This makes
measurement of performance and their comparison with standards a difficult .

2. Little control on external factors - generally an enterprise cannot control external


factors such as government policies, technological changes, competition etc.
3. Resistance from employees - Control is often resisted by employees. They see it as
a restriction on their freedom.

4. Costly affair - Control is a costly affair as it involves a lot of expenditure, time


and effort. A small enterprise cannot afford to install an expensive control system.

Relationship between Planning and Controlling


Planning and controlling are inseparable twins of management. A system of control
presupposes the existence of certain standards .These standards of performance which
serve as the basis of controlling are provided by planning. If the standards are not set in
advance managers have nothing to control .When there is no plan there is no basis
of controlling.
Planning is basically an intellectual process involving thinking, articulation and nalysis to
discover and prescribe an appropriate course of action for achieving objectives. Controlling
on the other hand checks whether decisions have been translated into desired action.
Planning is thus prescriptive whereas controlling is evaluative. Planning involves looking
ahead and is called a forward looking function. On the contrary controlling is like a post-
mortem of past activities to find out deviations from the standards. Planning and controlling
are both backward looking as well as forward looking function. Planning and controlling are
interrelated and in fact reinforce each other in the sense that:
1: Planning is based on facts makes controlling easier and effective and
2. Controlling improves future planning by providing information derived from past
experience.

Controlling Process
1. Setting performance standards – standards are the criteria against which actual
performance would be measured. It serves as benchmarks towards which an organization
strives to work. Standards can be set both in quantitative as well as qualitative terms. It is
important that standards should be flexible enough to be modified whenever required.
Example-Quantitative standards—Standards set in terms of cost to be incurred, product
units to be produced and sold. Qualitative Standards—improving motivation level of
employees.
2. Measurement of actual performance - Once performance standards are set, the
next step is measurement of actual performance. Performance should be measured in an
objective and reliable manner. There are several techniques for measurement of
performance. These include personal observation, sample checking, performance reports,
etc. Performance should be measured in the same units in which standards are set as it
would make their comparison easier.
3. Comparing actual performance with standards -This comparison will reveal the
deviation between actual and desired results. Comparison becomes easier when standards
are set in quantitative terms.
4. Analysing deviations - Some deviation in performance can be expected in all
activities. It is therefore, important to determine the acceptable range of deviations.
Deviations in key areas of business need to be attended more urgently as compared to
deviations in certain insignificant areas. Critical point control and management by exception
should be used by a manager in this regard.
(a)Critical point control: Control should focus on Key Result Areas (KRAs) which are critical to
the success of an organization. These KRAS are set as the critical points and gives
maximum concentration and control.
(b) Management by Exception/Control by exception: It is believed that an attempt to control
everything results in controlling nothing. Thus, only significant deviations which go beyond
the permissible limit should be brought to the notice of management. In case of major
deviations immediate action is needed from management.
Advantages of Critical Point Control and Management by Exception.
 It saves the time and efforts of managers as they deal with only significant
deviations.
 It focuses managerial attention on important areas.
 The routine problems are left to the subordinates.
 It identifies critical problems which need timely action to keep the organization in
right track.

5. Taking corrective action - The final step in the controlling process is taking
corrective action. No corrective action is required when the deviations are within the
acceptable limits. If the deviations go beyond the acceptable range particularly in the critical
areas, immediate managerial action is required so that deviations can be rectified and
prevented. Sometimes deviations cannot be changed through managerial action, and then
standards may have to be revised.
Some examples of corrective Action
Defective material —Change the quality specification for the material used.
Defective Process—Modify the existing process.
Defective physical work conditions – improve the physical conditions of work

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