5C CONTROL

CONTENTS

sC.l Definition 5C.3 Steps / process in Control

Control
SC.2 Importance of control 5C.4 Tools / techniques of

5C.1 Definition
Control is a fundamental function of management that helps
organisationsachieve desired outcomes and maintain efficiency. Control
js a crucial task since it helps in identifying faults and implementing
Corrective measures to reduce departure from standards and successfully
accomplish the organisation's stated goals. Controllingentails ensuring
that everything happens in accordance with the adopted plans,
instructions and established principles. Controlling makes sure that
organisational resources are used effectively and efficiently to accomplish
the intended aims. Controlling determines the causes of such deviations,
measures the difference between actual and expected performance and
assists in making Corrections. So control involves some steps that will
help the management of any organisation to take proper decisions and
help the company to excel. From the following diagram one can have
Some idea about the steps involved in the control process :

Step I Step |l Step ll Step IV

Measurement Comparison Corrective

Establishment of of actual
standards of actual performance with action if
performance the standards necessany

Feedback

Control in management plays a crucial role in achieving organisational

bjectives by ensuring that activities are executed effectively, efficiently
313
 Principles and Practice of
314 Management
intended goals. It
and in alignment with the make provides
necessary information
and manage risks.
to decisions,
re manager
allocate
sourC
Effective control systems contribute
es s with the
and to effectively
dynamiorcganibusisationnessal
stability, predictability adaptability in a
environment.

Different management thinkers have defined

observations and some of the important definitionscontrol as per
are given their
In 1916, Henri Fayol formulated l one of the first below:
Accordingto him control consists of verifying whether definitions
of
control.
in conformity with the plan adopted, the everything occurs
instructions
principles established. It's object is to point out weaknesses issued and
in order to rectify [them] and prevent recurrence. and errors
According to Brech, Controlling is a systematic exercise
called as a process of checking actual performance againstthes which is
or plans with a view to ensure adequate progress and also standards
recording
such experience as is gained as a contribution to possible future needs."
According to Donnell, "Just as a navigator continually takes reading
to ensure whether he is relative to a planned action, so should a
business manager continually take reading to assure himself that his
enterprise is on right course"
Henri Fayol stated that "Control consists of verifying whether
everything occurs in conformity with the plan adopted, the instructions
issued and the principles established."
Robert N. Anthony is of opinion, "Control is the process by which
managers assure that resources are obtained and used effectively anu
efficiently in the accomplishiment of the organisation's objectives"
measures
In the words of J., L. Massie, "Control is the that
process
predeterminedgoals."
current performance and guides it towards some
In the words of controlis any
Haynes and Massie, "Fundamentally,
process that guides activity towards
goal.
predeterminedgoal.
The
achieving
essence of the some Vis
concept is in whether the activity
the desired results" determining
 Motivation, Coordination and Control 315

It is evident from the abovementioned definitions that the managerial

function of control entails a comparison of the actual performance with
the anticipated performance with the goal of determining whether
everything is proceeding as expected and if not, why. Theplans will be
corrected and the appropriate changes willbe made with the help of
Corrective action that results from an analysis of variations between the
actual performance and the standard or planned performance. In reality,
there cannot be controlling without prior organising, directing and
planning. No control can be exercised in avacuum.

5C.2Importance of Control
The importance of control in management cannot be overstated. It
plays a crucial role in ensuring organisational success and achieving
desired outcomes. Here are some key reasons why control is important.

Importance of Control

i) Goal Achievemnent
ii) Performance Evaluation
iüü) Resource Optimization
iv) Risk Management
v) Decision Making
vi) Accountability and Transparency
vii) Continuous Improvement

i) Goal Achievement : Control helps in aligning organisational

activities with predetermined goals and objectives. It provides a
framework to monitor progress, measure performance and take
corrective actions to ensure that goals are accomplished
effectively and efficiently. Control allows managers to stay
focused on strategic objectives and make necessary adjustments
to keep the organisation on track.
316 Principles and Practice of Management
ii) Performance
Evaluation: Control provides a means to evaluate
the performance of individuals, teams and departments within
an organisation.By setting clear standards and measuring actual
performance, control enables managers to assess how well
employees are performing and identify areas for improvement.
It helps in recognising high performers,
and initiating developmental interventionsproviding feedback,
when necessary.
iii) ResourceOptimisation :Control helps in optimizing the use of
organisational resources. It ensures that resources, such as
financial capital, human resources and materials are utilised
effectively and eficiently. Through monitoring and evaluation,
Control identifies areas of waste,
inefficiencies, or
underutilisation resources, allowing managers to take
of
Corrective actions and make better resource allocation decisions.
iv) Risk Management : Control assists in managing risks and
minimising potential losses or negative impacts on the
organisation. By implementing control mechanisms, managers
can identify and mitigate risks early on. Control processes such
as internal audits, risk assessments and compliance monitoring
help in identifying deviations from established standards and
taking corrective actions to mitigate risks.
v) Decision Making : Control provides managers with accurate
and timely information necessary for decision-making, Itenables
managers to assess the effectiveness of strategies, identify
deviations, and make informed decisions to address
performance gaps. Control systems provide valuable insights
into the impact of decisions, helping managers adjust their
approach and make more effective choices in the future.
vi) Accountability and Transparency : Control promotes
accountability and transparency within the organisation.
ensures that individuals and teams are responsible for their
actions and outcomes. By establishing standards and monitoring
performance, control holds employees accountable for meeting
expectations. It also promotes transparency by providing
visibility into processes, performance and outcomes.
 Motivation, Coordination and Control 317

vii) Continuous Improvement : Control fosters a culture of

continuous improvement within an organisation. Through
feedback mechanisms and corrective actions, control enables
organisations to learn from past experiences, identify areas for
improvement and implement changes. It facilitates a cycle of
evaluation, adjustment and refinement that leads to enhanced
performance and organisational effectiveness.
Overall, control is vital for effective management as it helps in
achieving goals, evaluating performance, optimising resources, managing
risks, facilitating decision-making, promoting accountability and driving
continuousimprovement. It provides managers with the necessary tools
and information to steer the organisation towards success, adapt to
changing circumstances and ensurè long-term sustainability.

5C.3 Steps/Process in Control

The process of control typically involves several key steps to ensure
effective monitoring, evaluation and adjustment of organizational
activities. While the specific steps may vary based on the context and
organization,here isa general outline of the controlprocess. From the
following diagram one can understand steps in control :
Establish Measure Compare
Standards Performance Performnance

Identify Analyse Take Corrective

Deviations Causes Actions

Monitor and Feedback and

Review Learning
a) Establish Standards : The first step in the control process is to
establish clear and measurable standards or benchmarks against
which performance will be evaluated. These standards can
include quantitative measures such as sales targets, production
quotas or quality specifications, as well as qualitative factors
like customer satisfaction or employee feedback.
318 Principles and Practice of Management

b) Measure Performance : Once the standards are established,

the next step is to measure actual performance. This involves
gathering relevant data and information to assess how well the
organisation is performing in relation to the established
standards. Performance measurement can be done through
various methods such as financial reports, performance
indicators, customer surveys or employee evaluations.
c) Compare Performance : After measuring performance, a
comparison is made between the actual results and the
established standards. This step involves analysing the data
collected to determine the extent of any deviations or gaps
between desired and actual outcomes. The comparison helps
identify areas of success, as well as areas that require
improvement or Corrective action.
d) Identify Deviations : When comparing performance, it is
important to identify any significant deviations from the
established standards. Deviations can indicate areas where
performance is falling short or exceeding expectations. By
identifying deviations, managers can focus their attention on
the areas that require intervention or improvement.
e) Analyse Causes : Once deviations are identified, the next step
is to analyse their causes. This involves understanding the
factors that contribute to the deviations, whether they are due
to internal factors such as inadequate resources, inefficient
processes or external factors like changes in the market or
customer preferences. Analysing the causes helps in determining
the root causes of the deviations and identifying potential
solutions.
f) Take Corrective Actions : Based on the analysis of deviations
and their causes, appropriate corrective actions are takern to
address the issues and bring performance back in line with the
established standards. Corrective actions may involve making
adjustments to processes, reallocating resources, providinB
additional training or support to employees, revising strategies
or implementing new measures. The goal is to minimise the
 Motivation, Coordination and Control 319

impact of deviations and guide the organisation towards its

desired objectives.
g) Monitor and Review: Control is an ongoing process and it
requires continuous monitoring and review of performance.
Regularly monitoring performance against the established
standards helps in identifying any new deviations, ensuring that
further
corrective actions are effective and providing feedback for
to
improvement. Monitoring and review. allow organisations
make timely
maintain control over their activities and
adjustments as needed.
component
h) Feedback and Learning : Feedback is an essential
employees with
of the control process. It involves providing strength
information on their performance, highlighting areas of
learning
and areas that need improvement. Feedback encourages
culture of continuous
and growth, as well as fosters a
feedback
improvement within the organisation. By incorporating
organisations can enhance
and pronmoting a learning mindset, over time.
their control mechanisms and overall performance
iterative and cyclical.
It'simportant to note that the control process is refine
they continuously
As organisations progress through the steps, techniques and
their standards, measurement methods, analysis This
circumstances.
corrective actions based on feedback and changing
adaptation to
iterative nature allows for continuous improvement and
ensure effective control over organisational activities.

5C.4 Tools/techniques of Control

strategies have been employed to
Over the years, a range of tools and things they do for their
in maintaining control the
dSSist managers limited resources at its
strives to use the
Opary. Dvery management accomplish this goal, a
manner. To
disposal in an efficient and effective plans and
management on how its
honitoring system that updates must be developed. Variations in
out
POnCies are being carried management's attention if the plans
performance must be brought to corrective action can
be
prompt
are not carried out correctly so that
 320 Principles and Practice of Management

taken. In order to exercise control over the performance of the company

various tools or techniques have been developed and these tools are
subdivided into two
i) Traditional, and
i) Modern
Each technique can again be subdivided into various types and these
are as under:

Techniques of Control

1. Traditional 2. Modern

a) Direct supervision a) Data Analytics and

Business Intelligence
b) Break-Even Analysis
b) Programme Evaluation
c) Statistical Reports and Review Technique
d) Budgetary Control (PERT)

e) Management by c) Management Information

Objectives (MBO) System (MIS)
d) Dashboards and
)Standard Operating
Procedures (SOP) Scorecards

8) Quality Control e) Critical Path Method

f) Balanced Scorecard

g) Artificial Intelligence and

Machine Learning

I Traditional Techniques
closely
a) Direct supervision : Direct supervision involves managersincludes
monitoring and guiding the work of subordinates. It
 Motivation, Coordination and Control 321

activities such as observing performance, providing feedback, giving

instructions and resolving issues that arise during work.
b) Break-even Analysis : The break even point is a point of no profit
or loss, and break even analysis is a valuable approach for
examining the relationship between expenses and profit. When
sales hit the break-even point, it means that the business is no
longer making aprofit or losing money. Managers are able to
predict profits at various levels of cost and revenue with the aid of
the break-even analysis technique. The following formula is used
to determine the break-even point :
Y

Total Revenue
crores)
Profit
Break-even Point Total Cost
In
(Rs.
Revenue

Variable Cost
% Loss

Cost
40
30
Fixed Cost
10

X
10 20 30 40 50 60 70 80
Sales (in thousand units)
Break Even Chart

From the above diagram it appears that the firm will have a break
even point at 60,000 units of sale. At this point the firm earns
neither profit nor loss. The firm starts earning profit beyond this
point.
c) Statistical Reports : Managers can learn essential information
about how the organisation is performing in several areas via
statistical analysis presented in the form of averages, percentages,
Principles of Management (Sem-l)-21
322 Principles and Practice of Management

ratios, correlation, etc. Amanager's ability to characterise an issise

discover and assess potential solutions, estimate error, monitor
processes and implement appropriate remedial measures is aided
by statistical knowledge.
When such information is presented as charts, graphs, tables, etc.
it makes it easier for managers to comprehend it and facilitates
comparison with performance from prior periods as well as with
benchmarks.

d) Budgetary Control : Budgetary control involves setting financial

targets and comparing actual results with the predetermined
budgets. It enables managers to monitor expenses, revenue, and
overall financial performance. Variances between actual and
budgeted figures are analysed and corrective actions are taken if
necessary.
Management by Objectives (MBO) : MBO is a goal-setting
technique in which managers and employees collaboratively set
specific, measurable, attainable,relevant and time-bound (SMART)
objectives. The progress towards these objectives is regularly
reviewed and feedback is provided to improve performance.
f) Standard Operating Procedures (SOP) :SOPs are detailed step
by-step instructions that define how specific tasks or processes
should be performed within an organisation. They ensure
consistency, quality and efficiency in operations and provide a
basis for control and performance evaluation.
g) Quality Control :Quality control techniques focus on ensuring
that products or services meet specified quality standards. This
can involve inspections, statistical sampling, testing and other
quality assurance measures to identify and correct deviations fromn
the desired quality level.

2 Modern Techniques
a) Data Analytics and Business Intelligence : Data analytics tools
and BI software help organisations analyse large datasets to
 Motivation, Coordination and Control
323
gain valuable insights into their
operations,
and market trends. Managers can use thesecustomer behavior,
insights to
data-driven decisions and optimise their strategies. make
b) Programme Evaluation and Review Technique (PERT) : A
project management planning tool called the Programme
Evaluation Review Technique (PERT) is used to estimate how
long it will actually take to complete a project. PERT charts are
used to arrange tasks within a project, making it simpler to
cOordinate with team members and schedule deliveries.
However with PERT, the organisation creates three different
time estimates for the project :
The shortest possible amount of time each task will take.
The most probable amount of time.
The longest amount of time tasks might take if things don't go
as planned.
c) Management Information System MIS): In the current
business environment,the choice to create a formal Management
Information and Control System (MICS) becomes almost
inevitable. The creation of _uch asystem is mandated by the
escalating demands for uniform, succinct and timely information
by all levels of management. Better control over the business
and increased profitability are possible outcomes. In order for a
MICS to function effectively, all relevant data required for the
operation of abusiness must be transmitted to one or more
managerment information centres, where it is maintained and
subsequently distributed in discrete form to all levels of
managerment. Computers or any other specific sort of data
processing equipment are not mentioned in this definition.
Having data processing hardware is not a need for Management
Information and Control Systems, it is important to stress this.
If costs and volume permit, outstanding instruments like
computers, punched card equipment, data gathering and
324 Principles and Practice of Management

transmission equipment etc., can be very helpful in a

Management Information and Control Systems programme.
d) Dashboards and Scorecards : Dashboards and scorecards
provide a visual representation of important performance
metrics and Key Performance Indicators (KPIs). These tools
allow managers to quickly grasp the overall health of their
organisation and identify areas that need attention.
e) Critical Path Method : With the intention of avoiding project
schedule issues and process bottlenecks, the critical path method
(CPM) is a step-by-step project management tool for process
planning. Projects with several operations that interact intricatey
are best suited for CPM.

In applying CPM, the following five steps are often followed :

Define the required tasks and arrange them in an ordered,
sequenced list.
Create a flowchart or other critical path diagram showing
each task in relation to the others.
Identify the critical and non-critical relationships or paths
among the tasks.
" Determine the expected end date or execution or completion
time for each task.
" Locate or devise alternatives or backups for the most critical
paths.
f) Balanced Scorecard : The balanced scorecard is a strategic
performance management framework that aligns an
organisation's objectives, KPIs, targets and initiatives with its
overall strategy. It ensures a balanced approach across financial,
customer, internal process and learning and growth perspectives.
g) Artificial Intelligence and Machine Learning : AI and ML
technologies are increasingly used to analyse complex data sets,
make predictions and automate certain decision-making
processes.
 Motivation, Coordination and Control 325

Besides the above other modern techniques are also there viz., Robotic
Process Automation (RPA), Internet of Things (loT) Devices,
Real-timne Monitoring and Control Systems, Enterprise Resource
Planning (ERP)Systems etc. Keep in mind that the field of management
and technology is continually evolving, and new tools have also
emerged almost regularly. Additionally, the adoption and usage of these
tools may vary depending on the industry and specific organisational
needs.

SHORT QUESTIONS AND ANSWERS

1. Define the term controlling.

called as a process
Ans. Controlling is a systematic exercise which is
standards or plans
of checking actual performance against the
also recording such
with a view to ensure adequate progress and
possible future.
experience as is gained as a contribution to
needs
control is needed.
2. Mention two purposes for which
Ans. i) Goal Achievement: Control helps in aligning
organisational activities with predetermined goals and
objectives. It provides a framework to monitor progress,
ensure
measure performance, and take corrective actions to
that goals are accomplished effectively and eficiently.
ii) Performance Evaluation : Control provides a means to
evaluate the performance of individuals, teams and
departments within an organisation. By setting clear
standards and measuring actual performance, control
enables managers to assess how well employees are
performing and identify areas for improvement.
3. What is break-even analysis?
Ans. The break-even point is a point of no profit or no loss and break
even analysis is a valuable approach for examining the
relationship between cost and profit. When sales hit the break
even point, it means that the business is no longer making a
326 Principles and Practice of Management

profit or losing money. Managers are able to predict profits at

various levels of cost and revenue with the aid of the break-even
analysis technique.
4. What is budgetary control?
Ans. Budgetary control involves setting financial targets and
comparing actual results with the predetermined budgets. It
enables managers to monitor expenses, revenue and overall
financial performance. Variances between actual and budgeted
figures are analysed and corrective actions are taken if necessary.
5. Define standard operating procedure (SOP).
Ans. SOPs are detailed step-by-step instructions that define how
specific tasks or processes should be performed within an
organisation. They ensure consistency, quality and efficiency in
operations, and provide a basis for control and performance
evaluation.

6. What do you mean by data analytics and business intelligence?

Ans. Data analytics tools and BI software help organisations analyse
large datasets to gain valuable insights into their operations,
customer behaviour and market trends. Managers can use these
insights to make data-driven decisions and optimise their
strategies.
7. What is dash board and scorecard?
Ans. Dashboards and scorecards provide a visual representation of
important performance metrics and Key Performance Indicators
(KPIS). These tools allow managers to quickly grasp the overall
health of their organisation and identify areas that need attention.
8. What do you mean by Balance Scorecard?
Ans. The balanced scorecard is a strategic performance management
framework that aligns an organisation's objectives, KPIs, targets
and initiatives with its overall strategy. It ensures a balanced
approach across financial, and
customer, internal process ar
learning and growth perspectives.
 Motivation, Coordination and Control 327

9. Define Artificial Intelligence and Machine Learning

Ans. Artificial Intelligence and Machine Learning technologies are
increasingly used to analyse complex data sets, make predictions
and automate certain decision-making processes.

EXERCISE

o Short questions
1. Define the term control.
control is needed.
2. Mention two purposes for which
3. What is break-even analysis?
Balance Scorecard?
4. What do you mean by
5. What isbudgetory control?
Machine Learning.
6. Define Artificial Intelligence and
7. What is PERT?
Objective (MB0).
8. Define Management by
Medium and Long Questions
importance?
1. What is control? What is its
control.
2. Discuss the steps in
control. Discuss about the traditional
importance of
3. Discuss the business world.
control techniques used in
control techniques used in the world of
4. Define control. Discuss the
business.