Controlling:

Controlling is the basic managerial function. It is the process of ensuring the actual activities
conform to planned activity. It is an essential function for all levels of management. It ensures
the right things are done in the right manner at right time.
Controlling is defined as a measurement of Actual performance and expected performance and
taking corrective action. Its purpose is to make sure that actual performance is consistent with
plans. In fact control helps managers to monitor the effectiveness of their planning, their
organizing and their directing activities.
Steps in the control process:
The basic control process involves in the following steps;
1. Establishing standards and methods for measuring performance
2. Measuring the performance
3. Determining whether performance matches the standard
4. Taking corrective action

Basic steps in the control Process

1. Establishing standards and methods for measuring performance

Standard are the criteria of performance. These are certain points in the planning program at
which the satisfactoriness of ongoing work can be checked. Standards help employees
realize what the organization expects from them and how organization will evaluate their
performance.

2. Measuring the performance

After the creation and establishment of controlling standards, it is essential to measure the
actual performance. This will help to use the proper counter solution to eliminate the
problem. Performance measurement should be accurate, reliable, simple and objective.

3. Determining whether performance matches the standard

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 This step is easy but important steps in the control process. It involves comparing measured
result with the standards already set. If performance matches the standard, manager may
assume that ‘everything is under control”

4. Taking corrective action

If performance fall short of standards corrective action becomes essential. The corrective
action could involve a change in one or more activities of the organization’s operations.

Different types of control

There are three types of control:
1. Feed forwarded control.
2. Concurrent control
3. Feedback control

1. Feed forwarded control.

A type of control that focuses on preventing anticipated problems since it take place in
advance of the actual work activities.
2. Concurrent control
A type of control that takes place while a work activities is in progress.
3. Feedback control;
A type of control that takes place after a work activity is done.

Budgetary and non-budgetary control techniques

Following are different method of control:

1. Budgetary Control

a) Financial budget
b) Operating budget
c) Nonmonetary budget
2. Non Budgetary control

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 a. Operational Audit
b. Milestone Budgeting
c. Program evaluation and review technique (PERT)
d. Management Information (Control) System

1. Budgetary Control:

Budgeting is the formulation of plans for a given future period in numerical terms. Organization
may establish budget for units, department, division or whole organization.

Types of budget

a) Financial budget
Financial budgets are concerned with planning future earnings and their expenditure.
It includes
 cash budget,
 capital expenditure budget
 Balance sheet budget.

b) Operating budget
This type of budget is an expansion of the Organization planned operation for a particular
period. They are usually
 The sales and revenue budget
 The expense budget
 The project budget

c) Nonmonetary budget
Budget of this types are express in non-financial sales or revenue and expenses,

2. Non Budgetary control:

Budget of this types are express in non-financial sales or revenue and expenses and others. It
is most commonly used by manager at lower level of an organization.

a. Operational Audit
It is the regular and independent appraisal of the accounting, financial, and other operation
of an enterprise by a staff of internal auditor.

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b. Milestone Budgeting
Milestone budgeting divides a project into segment and then monitor each segment closely.

c. Program evaluation and review technique (PERT)

In PERT analysis time can be accurately estimated. The program (or project) evaluation
and review technique, commonly abbreviated PERT, is a statistical tool, used in project
management, which was designed to analyze and represent the tasks involved in
completing a given project.

d. Management Information (Control) System:

A management control system facilities management with commanding control over all
information regarding both internal and external environment as well as other managerial
operation.
The us e of computer can help a lot in this system by processing data toward logical
conclusion, classifying them, and making them readily available for manager’s use in
control .

The requirements of a good control system

Following are the characteristics of good control/the following factors to be considered for a
good control:
1. Simplicity: The control system should be simple and should be easily understandable by
those who operate it.
2. Adaptability: The control system should suit to the kind operation it is intended to
serve.
3. Cost: There should be cost effectiveness in control system.
4. Versatile: The control system should be more dynamic in nature and versatile.
5. Quick action: The control system should be provided for quick action
6. Progressive feature: Control system should process progressive feature.
7. Need based system: the control system should be in accordance with the needs of the
organization.
8. Scope for corrective action: In control system there should hhave scope for taking
corrective action.

The importance of controlling in management.

Following are the important of controlling in business.

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1. Indicator for managerial Weakness: By controlling manager can find out their weakness.
2. Reduce Risk: Control help to reduce risk
3. Basis for future action: Control provides the information and fact for future action
4. Sound decision making: control helps o make sound decision.
5. Effective utilization of resources: Control helps effective utilization of resources.
6. Better coordination: Controlling helps better coordination between superior and subordinates
7. Control Minimize wastage: Control help to reduce the wastage of various resources.
8. Simplified supervision: Control system help top management to supervise subordinates in a
simple manner.
9. Control Guide Operation: Control fixed certain standard. So it guide operation
10. Control facilitates delegation: Control facilities delegation of authority.
11. Control increase efficiency: Efficiency is the relation between return and cost. Controlling
increases this efficiency.

Operations control and financial control

Difference between operations control and financial control are as flows.
Basis Operation control Financial Control

Definition Operation control serves to regulate the day- Financial controls are the control of
to-day output relative to schedules, financial resources as they flow into
specifications and cost etc. the organization.

Focus Focus on the process Focus on the financial resources.

Purpose The main purpose of the operation control is Purpose of financial control
to execute the strategy of the organization. involves cost and expenses control

Example Quality control Monitoring receivable.

Bureaucratic control and decentralized control

Difference between bureaucratic control and decentralized control are shown in the following
table:
Dimension Bureaucratic control Decentralized control.

Goal of control Approach Employee compliance Employee commitment

Degree of formality Strict, Formal control, Rigid Group norms, culture, self

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 control

Performance expectation Minimum level of acceptable Enhance performance above and

performance beyond the minimum.

Organizational design Tall structure Flat structure

Reward System Individual performance Group performance

Participation Limited and formal Extended and informal.

The various area of control

Control can focus on any area of an organization. Basically there are four area
1. Control of physical resources
2. Control of human resources
3. Control of information resources
4. Control of financial resources

1. Control of physical resources: Control of physical resource includes inventory

management, quality control, Equipment control etc.
2. Control of human resources: Control of human resources includes selection and
placement, Training and development, performance appraisal and compensation.,
3. Control of information resources: Control of information resources includes sales and
marketing forecasting, environmental analysis, public relation, etc.
4. Control of financial resources: Control of financial resources includes cost, expense,
revenue, receivable etc.

Strategic control point

Strategic control points are those activities that are important for achieving strategic objectives.
Strategic control point helps to achieve strategic goal of an organization.
Some strategic control point:
1. Income
2. Expense
3. Inventory
4. Quality of the product
5. Absenteeism etc.

Steering control

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The term “steering control” as separate types of control. This types of control is designed to
detect deviation some standard or goal to allow correction to be made before a particular
sequence of actions is completed.
The great advantage of steering control is that corrective action can be taken early.
Example: Steering the car into the lane when it is off the lane.

Types of budget

a) Financial budget
Financial budgets are concerned with planning future earnings and their expenditure.
It includes
 cash budget,
 capital expenditure budget
 Balance sheet budget.

b) Operating budget
This type of budget is an expansion of the Organization planned operation for a particular
period. They are usually
 The sales and revenue budget
 The expense budget
 The project budget

c) Nonmonetary budget
Budget of this types are express in non-financial sales or revenue and expenses and others. It
is most commonly used by manager at lower level of an organization.

From there types of budgetary control we see that budgetary control is must for proper and
right time project implantation.

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