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Controlling Notes

Controlling is a management process that involves monitoring performance against set standards and taking corrective actions to ensure alignment with organizational goals. It is crucial for resource efficiency, employee motivation, and maintaining order within the organization. The process of controlling includes setting performance standards, measuring actual performance, analyzing deviations, and implementing corrective actions, all of which are interdependent with planning.

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6 views2 pages

Controlling Notes

Controlling is a management process that involves monitoring performance against set standards and taking corrective actions to ensure alignment with organizational goals. It is crucial for resource efficiency, employee motivation, and maintaining order within the organization. The process of controlling includes setting performance standards, measuring actual performance, analyzing deviations, and implementing corrective actions, all of which are interdependent with planning.

Uploaded by

brownie.chopra05
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Controlling

Meaning of Controlling
●​ Controlling is the process of monitoring performance, comparing it with set standards,
and taking corrective action if needed.
●​ It ensures that actual performance aligns with planned objectives, leading to efficient
resource utilization.
●​ It is a goal-oriented function and an integral part of management at all levels.

Importance of Controlling
1.​ Accomplishing Organisational Goals – Helps in measuring progress and deviations
from objectives, ensuring that goals are achieved.
2.​ Judging Accuracy of Standards – Allows management to evaluate whether set
standards are realistic, achievable, and relevant.
3.​ Ensuring Efficient Use of Resources – Reduces wastage and misuse of resources
by ensuring every activity follows planned standards.
4.​ Improving Employee Motivation – Clearly defined performance standards encourage
employees to perform better.
5.​ Ensuring Order & Discipline – Keeps employees accountable, reducing unethical
practices and fraud.
6.​ Facilitating Coordination – Ensures that all departments work towards common
objectives without conflicts.

Relationship Between Planning &


Controlling
●​ Planning and Controlling are interdependent and inseparable.
●​ Planning sets objectives and standards, while controlling ensures their
implementation.
●​ Without controlling, planning becomes meaningless as there is no way to track
progress.
●​ Controlling provides feedback for better planning in future cycles.
●​ Planning is forward-looking (deciding future actions), whereas controlling is
backward-looking (analyzing past performance).
Process of Controlling
Step 1: Setting Performance Standards

●​ Standards act as benchmarks for evaluating actual performance.


●​ Can be quantitative (sales target, production cost) or qualitative (brand reputation,
employee satisfaction).
●​ Example: A company sets a standard of producing 1,000 units per week.

Step 2: Measuring Actual Performance

●​ Performance is measured using personal observations, sample checking,


performance reports, financial ratios, etc.
●​ Measurement should be objective, accurate, and reliable.
●​ Example: A manager calculates the actual weekly production output to compare with
set targets.

Step 3: Comparing Actual Performance with Standards

●​ Deviation Analysis: If actual performance matches standards, no corrective action


is needed.
●​ If performance deviates significantly, managers investigate causes.
●​ Example: If actual production is only 900 units instead of 1,000, a deviation of 100
units needs investigation.

Step 4: Analyzing Deviations

●​ Not all deviations require action; only significant deviations are addressed.
●​ Critical Point Control (CPC): Focuses on key areas affecting overall performance.
●​ Management by Exception (MBE): Only major deviations are reported to top
management, avoiding micromanagement.

Step 5: Taking Corrective Action

●​ If deviations are beyond acceptable limits, corrective measures are implemented.


●​ Examples of corrective actions:
○​ Training employees to improve performance.
○​ Upgrading machinery to increase efficiency.
○​ Changing strategies if market conditions demand it.

Conclusion
●​ Controlling ensures that actual performance meets planned objectives.
●​ It identifies deviations, analyzes their causes, and takes corrective measures.
●​ Traditional and modern techniques help in maintaining efficiency and accountability.
●​ Planning and Controlling are interlinked – Planning sets goals, and Controlling
ensures they are achieved.

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