Chapter - 8

Controlling

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1. Definition: Controlling is the process of monitoring organizational activities to ensure that they are being accomplished as planned and correcting any significant deviations. It involves setting standards, measuring actual performance, and taking corrective actions.

2. Nature of Controlling:

   • Goal-Oriented: Ensures that organizational activities are aligned with set goals.

   • Pervasive Function: Required at all levels of management and in all types of organizations.

   • Continuous Process: An ongoing activity throughout the organization’s lifecycle.

   • Dynamic Function: Adaptable to changes and helps in responding to them effectively.

   • Forward-Looking: Though it involves evaluating past performance, it focuses on future improvements.

 

Importance of Controlling

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1. Accomplishes Organizational Goals: Ensures that organizational activities are aligned with the planned objectives.

2. Judges Accuracy of Standards: Helps in evaluating whether the set standards are appropriate and realistic.

3. Makes Efficient Use of Resources: Prevents wastage and ensures optimal utilization of resources.

4. Improves Employee Motivation: Provides feedback on performance, which can motivate employees to improve.

5. Facilitates Coordination: Ensures that all departments and employees are working towards common goals.

6. Ensures Order and Discipline: Helps in maintaining discipline by monitoring employees’ activities and behavior.

 

Controlling Process

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1. Setting Performance Standards: Establishing benchmarks or criteria against which performance is measured. These standards can be in the form of goals, budgets, quotas, and quality specifications.

2. Measuring Actual Performance: Collecting data on actual performance through various methods such as reports, audits, and observations.

3. Comparing Actual Performance with Standards: Evaluating the performance data to identify any deviations from the set standards.

4. Analyzing Deviations: Identifying the reasons for deviations and determining their impact on organizational performance.

   • Critical Point Control: Focusing on key areas that significantly affect overall performance.

   • Management by Exception: Dealing with significant deviations while ignoring minor ones.

5. Taking Corrective Actions: Implementing measures to correct deviations and prevent their recurrence. This could involve revising standards, providing additional training, or reallocating resources.

 

Types of Control

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1. Feedforward Control: Anticipates problems before they occur and takes preventive measures.

2. Concurrent Control: Monitors activities in real-time to ensure they conform to standards.

3. Feedback Control: Evaluates completed activities and outcomes to provide feedback for future improvements.

 

Techniques of Managerial Control

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1. Traditional Techniques:

   • Personal Observation: Directly observing employees’ work.

   • Statistical Reports: Using statistical data to monitor performance.

   • Break-Even Analysis: Determining the level of sales needed to cover costs.

   • Budgetary Control: Using budgets as a standard for measuring performance.

2. Modern Techniques:

   • Management by Objectives (MBO): Setting specific, measurable goals collaboratively with employees and using them as benchmarks for performance.

   • Computer-Aided Control (CAC): Utilizing computer systems to monitor and control activities.

   • Just-In-Time (JIT): Reducing inventory costs by ensuring materials and products are available only when needed.

   • Total Quality Management (TQM): Focusing on continuous improvement in all organizational processes.

 

Relationship Between Planning and Controlling

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1. Planning and controlling are closely related functions:

   • Planning Sets the Standards: Provides the benchmarks for controlling.

   • Controlling Provides Feedback: Offers information on deviations that can be used for future planning.

2. Cyclical Process: Planning and controlling form a cycle, with planning leading to controlling and controlling leading to revised planning.

 

Conclusion

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This chapter emphasizes that controlling is a vital managerial function that ensures organizational activities are in line with set objectives. By understanding the controlling process, its importance, and techniques, managers can effectively monitor performance, identify deviations, and take corrective actions, thereby contributing to the overall efficiency and effectiveness of the organization.

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