CONTROLLING

Controlling function can be defined as comparison of actual performance with the planned
performance. If there is any difference or deviation then find the reasons for such difference
and take corrective measures or action to stop those reasons so that in future there is
match between actual and planned performance.
FEATURES OF CONTROLLING
Controlling is a goal-oriented function:
Controlling function makes sure every one follows the plan or work is accomplished as per
the plan and plan always aims at achieving organisational goal.

Controlling is an all pervasive function:

Controlling is not the task of top level managers only but also for managers working at all
the levels, i.e., top, middle and operational level perform controlling function.

Controlling is both backward looking as well as forward looking function:

Controlling is backward looking function as managers compare the planned performance
with actual performance and to measure the actual performance they have to look back to
the performance already done.
Controlling is forward looking also because it does not end only by comparing past
performance with future but it also suggests measures to remove the reasons for failure of
plans in future. This function makes sure that plans and performance match in future.

Controlling is a continuous function:

Controlling is not a one time job but it is an ongoing process. It is carried on till the
organisation is surviving.
IMPORTANCE OF CONTROLLING
Helps in achieving organisational goals:
Controlling function ensures that all the activities in the organisation move towards
organisational goal and if there is any deviation, timely action is taken to bring back the
activities on the right path. When all the activities are going according to the plan, then
automatically these will direct towards the achievement of organisational goal.

Judging accuracy of standards:

A good control system enable manager to check whether the standard set are accurate .An
efficient control system keeps a careful check on changes taking place in environment and
organisation and help to review and revise standard in the light of such changes.

Making efficient use of resources:

Like traffic signal control guides the organisation and keeps it on the right track. Each
activity is performed according to predetermined standards. As a result, there is most
effective use of resources.

Improving employee's motivation:

An effective control system communicates the goals and standards of appraisal for
employees to subordinates well in advance.
A good control system also guides employees to come out from their problems. This free
communication and care motivates the employees to give better performance.

Ensures order and discipline:

Control creates an atmosphere of order and discipline in the organisation. Effective
controlling system keeps the subordinates under check and makes sure they perform their
functions efficiently. Sharp control can have a check over dishonesty and fraud of
employees.

Facilitates coordination in action:

All the departments are controlled according to predetermined standards which are well
coordinated with one another. Control provides unity of direction.
RELATIONSHIP BETWEEN PLANNING AND CONTROLLING
Planning provides standard for controlling:
The standard of performance, which serve as basis of controlling are provided by planning.
If standards are not set in advance, managers have nothing to control, when there is no
plan, there is no basis of control.

Planning without controlling is meaningless:

The monitoring done by controlling make sure there is rigid implementation of plan.
Controlling monitor the progress in plan, measure it, discover deviation and initiate
corrective measures to ensure right implementation of plan. Thus planning without
controlling is meaningless .

Planning and controlling both are backward and forward looking:

Controlling is backward looking because the manager looks back to previous year's
performance to find out its deviation from standard.
planning is also backward looking because planning is guided by past experiences and
feedback report of controlling function.

Planning is forward looking because plans are prepared for future. It involves looking in
advance and making policy for maximum utilisation of resources in future.
Controlling is also forward looking because controlling does not end only by comparing
past performance with standard. It involves finding the reasons for deviations and suggests
the measures so that these deviations do not occur in future.

Planning is prescriptive whereas controlling is evaluative:

Planning is basically an intellectual process involving lot of thinking.
Controlling on the other hand, evaluates or checks whether the desired course of action is
followed or not.
CONTROLLING PROCESS
Setting-up of (target) standards:
Standards mean target or the yardstick against which the actual performance is measured.
The standards must be achievable, high or very high standards which cannot be achieved
are of no use.
Standards must be set up keeping in mind the resources of the organisation and as far as
possible standards must be set up in numerical or measurable terms.
Measuring of performance:
Once performance standard are set, the next step is measurement of actual performance.
Performance should be measured in an objective and reliable manner.
There are certain techniques for measurement of performance these include
• Personal observation,
• Sample checking
• Accounting ratios.
Measurement should be done when task is completed but in some cases measurement is
done during performance also.
For example : In case of assembly task each part should be checked before assembling.

Compare performance against standard:

After measuring the performance, the manager compares the actual performance with the
planned performance. If there is match in both then the controlling function ends there only.
But if there is mismatch or deviation then the manager tries to find out the extent of
deviation. If the deviation is minor then it should be ignored. But if the deviation is more,
then timely actions must be taken.

Analysing deviations:
All deviations need not be brought to the notice of top management. A range of deviations
should be established and only cases beyond this range should be brought to the knowledge
of top level management. They must divide the deviations in two categories of deviations
which need to be attended urgently in one category and minor or insignificant decisions in
other category.

Taking corrective measures:

On comparing the actual performance with the planned performance, the manager will
come to know about the deviations between the plan and actual performance. Then the next
step is to know the reasons for such deviations and trying to remove deviations in future.

Feedback in Controlling:
The controlling function does not end by taking corrective action as it is a continuous
process. After suggesting the corrective measure a feedback report is prepared. Feedback
refers to list of reasons for deviations along with reasons. The corrective measures are also
specified in the feedback report .
TECHNIQUES OF ANALYSING DEVIATIONS
Critical point control:
It means keeping focus on some key areas (KRAs) and if there is any deviation in these key
areas, then it must be attended urgently. Key areas are those which have impact on whole
organisation.
For example :If there is increase in production cost by 5, per unit and there is increase
in postal cost by ₹20, then more focus should be to find out reasons for increase in cost of
production as it will affect the profit and future revenue of organisation whereas postal cost
is incurred rarely and managers have no control over postal cost.
Management by exception:
It means a manager who tries to control every thing may end up controlling nothing. The
deviations which are beyond the specific range should only be handled by managers and
minute or minor deviations can be ignored. Manager should not waste his time and energy in
finding solutions for minor deviations rather he should concentrate on removing deviations
of high degree.
For example :If production cost increases by 2, it can be ignored but if it increases
more than 2 then managers must try to find out the reasons for such increase after
identifying the reasons for deviations which need immediate attention.
ACTIVITY
Students must prepare a flow chart of the entire chapter and must staple it at end .
The activity must be completed within three days of the end of the chapter and must be
submitted for correction. The activity must be done in A4 Size white page.

USE THIS BOX FOR CASE BASED QUESTIONS