CONTROLLING

INTRODUCTION
The last and most important function of management is
to control. Issue of orders and instructions to the
subordinates does not ensure that work will be accomplished.
Their performance is to be checked continuously so that the
difficulties in performance are removed before any damage take place.

Every manager has to exercise control irrespective of the

level of his authority.

 Controlling involves setting standards of performance,

comparing performance of the subordinates against these
standards and taking corrective action to ensure that
activities are carried out according to the plans.
 DEFINITON OF CONTROLLING
A few definitions by some of the prominent
writers on the subject are given below:
(1) “Controlling is the measuring and correcting
of activities of subordinates to ensure tat events
conform to plans”.
Koontz and Cyril O’ Donnell
(2) “Control consists in verifying whether
everything occurs in conformity with the plans
adopted, the instructions issued and principles
established. It has the object to point out the
weaknesses, and errors in order to rectify them and
prevent their recurrence”.
Henry Fayol
Thus, managerial control is a process through
which the performance of subordinates is evaluated
to see whether the activities of the enterprise are
going on in the required manner or not. If anything
is found, remedial measures are taken. To ensure
that the activities are carried out according to the
plans.
 NATURE OF CONTROL
The nature of characteristics of control may be
described as under:
1. Last Process
Managerial control is the last process of
management because the work of control starts after
planning, organization, direction, coordination and
motivation.
2. Dynamic Process
Control is a dynamic process of management
because in this process, necessary changes are made
keeping in view the changed circumstances of
enterprise.
3. Continuous Process
Control is the continuous process of management,
it continues as long as the production continues in
the enterprise.
4. Control on Future Events
In the process of control all the best efforts are
made to check the possible losses in future. In fact,
managerial control is a process of directing the
activities of the enterprise for future on the basis of
 5. Based on Scientific Principles
and Statistical Factors
The process of control is based
upon scientific principle and
statistical factors.
6. Attainment of Goals
The main object of control is to
ensure the proper functioning of
enterprise according to pre-
determined rules, policies, procedures
and programmes. It aims at the
attainment of pre decided objectives
of the enterprise.
 OBJECTIVES OF CONTROL
An effective system of control helps
in achieving the following objectives:
1.Determining the progress of work.
2.Detecting deviations from the
planned standards.
3.Investigating the causes of
deviations.
4.Taking corrective measures to check
deviations.
5.Keeping the loss due to faulty
production within the minimum possible
limit.
 PROCESS OF CONTROL
The process of managerial control involves a
series of four steps as given below:
1- Establishment of Standard
Establishment of standards in terms of quantity,
quality or time is necessary for effective control
because it is essential to determine how the
performance will be appraised.

2- Measurement of Performance
This step involves measuring of actual
performance of various individuals, groups or units
for comparing it with the standards. The
quantitative measurement should be done
whenever possible
 3- Appraisal of Performance
It means comparison of actual
performance with the standards laid
down earlier. The process of
performance appraisal will reveal
the deviations from the standards.

4- Taking Corrective Actions

The final step in the control
process is taking corrective actions
so the deviations may not occur
again. This may involve re-planning
or redrawing of standards, or
clarification of duties.
Types of Organizational Controls
 Control can focus on events before, during, or after a process.
 For example, a local automobile dealer can focus on activities before, during,
or after sales of new cars.
 Careful inspection of new cars and cautious selection of sales employees are
ways to ensure high quality or profitable sales even before those sales take
place.
= feedforward control
 Monitoring how salespeople act with customers is a control during the sales
task.
= concurrent control
 Counting the number of new cars sold during the month and telephoning
buyers about their satisfaction with sales transactions are controls after sales
have occurred.
= Feedback control
 These types of controls are formally called feedforward, concurrent, and
feedback, respectively.
Feedforward controls
 Feedforward controls, sometimes called preliminary
or preventive controls,
 attempt to identify and prevent deviations in the
standards before they occur.
 Feedforward controls focus on human, material, and
financial resources within the organization.
 These controls are evident in the selection and hiring
of new employees. For example, organizations
attempt to improve the likelihood that employees will
perform up to standards by identifying the necessary
job skills and by using tests and other screening
devices to hire people with those skills.
Concurrent controls
 Concurrent controls monitor ongoing employee
activity to ensure consistency with quality standards.
 These controls rely on performance standards, rules, and
regulations for guiding employee tasks and behaviours.
 Their purpose is to ensure that work activities produce
the desired results.
 As an example, many manufacturing operations include
devices that measure whether the items being produced
meet quality standards.
 Employees monitor the measurements; if they see that
standards are not being met in some area, they make a
correction themselves or let a manager know that a
problem is occurring.
Feedback controls
 Feedback controls involve reviewing information
to determine whether performance meets
established standards.
 For example, suppose that an organization
establishes a goal of increasing its profit by 12
percent next year.
 To ensure that this goal is reached, the
organization must monitor its profit on a monthly
basis.
 Afterthree months, if profit has increased by 3
percent, management might assume that plans
are going according to schedule.
Financial Controls - Budget

Budgetary control is financial

jargon for managing income and
expenditure. In practice it means
regularly comparing actual income
or expenditure to planned income
or expenditure to identify whether
or not corrective action is required.
BUDGET
 Budget:

· A formal statement of the financial

resources set aside for carrying out specific
activities in a given period of time.
· It helps to co-ordinate the activities of the
organisation.

 An example would be an advertising budget

or sales force budget.
Budgetary control:

·A control technique whereby actual

results are compared with budgets.
·Any differences (variances) are made
the responsibility of key individuals
who can either exercise control action
or revise the original budgets.
Information Control

 Informationcontrol is the gathering,

group, upkeep and research of
knowledge to supply insights that
permit higher decision-making and
execution.
 The corporate Information Services (IS)
department is the unit responsible for
providing or coordinating the delivery
of computer-based information
services in an organization.
balanced scorecard

A balanced scorecard (BSC) is defined

as a management system that
provides feedback on both internal
business processes and external
outcomes to continuously improve
strategic performance and results.
The Balanced Scorecard—Measures that Drive
Performance
by Robert S. Kaplan and David P. Norton
 “balanced scorecard”—a set of measures that gives
top managers a fast but comprehensive view of the
business.
 The balanced scorecard includes financial measures
that tell the results of actions already taken. And it
complements the financial measures with
operational measures on customer satisfaction,
internal processes, and the organization’s innovation
and improvement activities—operational measures
that are the drivers of future financial performance.
 Cockpit View
 Think of the balanced scorecard as
the dials and indicators in an
airplane cockpit.
 For the complex task of navigating
and flying an airplane, pilots need
detailed information about many
aspects of the flight. They need
information on fuel, air speed,
altitude, bearing, destination, and
other indicators that summarize the
current and predicted environment.
 Reliance on one instrument can be
fatal.
 Similarly,the complexity of managing an
organization today requires that managers
be able to view performance in several areas
simultaneously.
The balanced scorecard allows managers to
look at the business from four important
perspectives. (See the exhibit “The Balanced
Scorecard Links Performance Measures.”) It
provides answers to four basic questions:
 The
Balanced Scorecard Links Performance
Measures
 How do customers see us? (customer
perspective)
 Whatmust we excel at? (internal
perspective)
 Canwe continue to improve and create
value? (innovation and learning perspective)
 How do we look to shareholders? (financial
WHAT IS BENCHMARKING?
 Benchmarking is defined as the process of
measuring products, services, and processes
against those of organizations known to be leaders
in one or more aspects of their operations.
Benchmarking provides necessary insights to help
you understand how your organization compares
with similar organizations, even if they are in a
different business or have a different group of
customers.

 Benchmarking can also help organizations identify

areas, systems, or processes for improvements—
either incremental (continuous) improvements or
dramatic (business process re-engineering)
BENCHMARKING EXAMPLE

 Pollution level of Vehicles vis-à-vis those of

European / American Standards
 Salaries of employees in comparison to Industry
Standards
 Percentage of budget allocated on advertising in
comparison to Industry Standards
 Amount spent on CSR activities
 Profit Margin of Company A in comparison to
industry standard
GANTT CHARTS

A Gantt chart is a type of bar chart that illustrates a

project schedule, named after its popularizer, Henry
Gantt (1861–1919), who designed such a chart around
the years 1910–1915.[1][2] Modern Gantt charts also
show the dependency relationships between activities
and the current schedule status.

 Gantt charts help teams to plan work around

deadlines and properly allocate resources. Projects
planners also use Gantt charts to maintain a bird's
eye view of projects. They depict, among other
things, the relationship between the start and end
dates of tasks, milestones, and dependent tasks.
 Even a simple Gantt chart should
include the following 7 critical
elements: The list of tasks needed for
this project: what are the activities
required for project completion? The
start date and end date of each task.
The progress made toward the
completion of each task: is the task on
track, at risk, or delayed?
PERT CHARTS
 A PERT chart, sometimes called a PERT diagram, is a
project management tool used to schedule,
organize and coordinate tasks within a project. It
provides a graphical representation of a project's
timeline that enables project managers to break
down each individual task in the project for analysis.

The PERT chart template uses nodes -- drawn as rectangles or

circles -- to represent events and milestones throughout the project.
The nodes are connected by vectors -- drawn as lines -- which
represent the various tasks that need to be completed.
 Terminology
 Here is a list of terms associated with PERT charts:
 Nodes are visual representations of milestones or events within the project. They are drawn as either
numbered boxes or numbered circles.
 Arrows are visual representations of the tasks that occur throughout the project. The direction of the arrow
indicates the sequence of the task. Diverging arrows show that various tasks can be completed at the same
time.
 Fast tracking is when tasks and activities are performed simultaneously.
 A PERT event is the point at which one or more tasks are started or completed.
 A predecessor event occurs immediately before some events. A successor event naturally
occurs after events.
 Slack is the amount of time a single task can be delayed without harming other tasks or the project as a whole.
 The critical path is the longest -- or most time-consuming -- path from the start to the completion of an event
or task.
 Critical path activity refers to a task that does not experience slack.
 Crashing critical path is when the completion time of a task is shortened.
 Lag time refers to the earliest point at which a task can follow another.
 Lead time is the amount of time it should take to complete a task without impacting the following activities.
 Expected time is the best estimation of how long a task will take to complete, taking into consideration any
problems or obstacles that might arise.
 Optimistic time refers to the minimum amount of time it will take to complete a task.
 Pessimistic time is the maximum amount of time it will take to finish a task.
 Most likely time is the best guess of how long a task will take, assuming no problems arise.
How Is a PERT Chart Different from a Gantt
Chart?

 PERT charts are similar to Gantt charts in

that they offer a graphical view of a project’s
tasks, schedule, and timelines. But there are
several significant differences between these
two types of project management diagrams:
 1. Gantt charts are bar graphs; PERT charts are free-
form
 Gantt charts are drawn as bar graphs along a
timeline, as shown below. They represent the tasks
and phases of a project with horizontal bars, each
drawn to a length representing its estimated
timeframe.
 A PERT chart, by contrast, can be drawn as a free-
form diagram. Project managers create PERT charts
by drawing boxes or circles (“nodes”) representing
events or milestones and connecting them via
arrows, representing the tasks that must be
 2. PERT charts illustrate dependencies; Gantt charts
do not
 One disadvantage of using a Gantt chart to track a
project is that it does not indicate task
dependencies. Each bar on the graph stands alone.
This makes it difficult for project managers to know
how much one missed deadline could affect other
chart tasks.
 PERT charts solve this challenge with the use of
directional arrows. These directional (or
“concurrent”) arrows indicate that a series of tasks
must be completed in sequence because they have
interdependencies. On the other hand, diverging
arrows indicate functions that can be completed
parallel or out of order because they do not have
dependencies.