Definition

Controlling function of management comes to the rescue of a manager here. It not only helps in keeping a track on the progress of activities but also ensures that activities conform to the standards set in advance so that organisational goals are achieved.

Meaning of Controlling

Control may be defined as the process of analysing whether actions are being taken as planned and taking corrective measures to make them conform tp the plan of action. Control is the essence of good management. It is concerned with ascertaining that planning, organising and directing functions result in attainment of organisational objectives.

According to Henri Fayol:

 "Control consists in verifying whether everything occurs in conformity with the plan adopted, instructions i'ssuedand principles established."

Features of Controlling-

a) Goal-oriented function

Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals. Controlling is, thus, a goal-oriented function.

b) Pervasive function

Controlling function of a manager is a pervasive function. It is a primary function of every manager. Managers at all levels of management—top,  middle and lower-need to perform controlling functions to keep a control over activities in their areas. Moreover, controlling is as much required in an educational institution, military, hospital, and a club as in any business organisation.

c) Continuous Function-

Controlling should not be misunderstood as the last function of management. It is a function that brings back the management cycle back to the planning function. The controlling function finds out how far actual performance deviates from standards, analyses the causes of such deviations and attempts to take corrective actions based on the same. Thus, controlling only completes one cycle of management process and improves planning in the next cycle.

d) Delegation is the key to control

 Effective control requires adequate delegation of authority. An executive can perform the control function properly if he enjoys the authority  to take remedial action and is to be held accountable for results.

e) Control allows the organisation to cope with uncertainty 

 Control helps in regulating the uncertain events of the organisation. It anticipates any shift in task and preferences of consumers and directs the organisation to modify its process in order to meet the contingencies of the future.

 Importance of Controlling

 Control is an indispensable function of management. Without control the best of plans can go awry. A good control system helps an organisation in the following ways:

(i) Accomplishing organisational goals:

The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action. It, thus, guides the organisation and keeps it on the right track so that organisational goals might be achieved.

(ii) Judging accuracy of standards:

 An efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes.

(iii) Making efficient use of resources:

 By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.

 (iv) Improving employee motivation:

A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.

 (v) Ensuring order and discipline:

 Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities. The box explains how an importexport company was able to track dishonest employees by using computer monitoring as a part of their control system.

 (vi) Facilitating coordination in action:

 Controlling provides direction to all activities and efforts for achieving organisational goals. Each department and employee is governed by predetermined standards which are well coordinated with one another. This ensures that overall organisational objectives are accomplished.

 Limitations of Controlling

 Although controlling is an important function of management, it suffers from the following limitations.

(i) Difficulty in setting quantitative standards:

Control system are difficult to be stated in terms of quality and measurement is also another challenge.

 (ii) Little control on external factors:

Generally an enterprise cannot control external factors such as government policies, t e c h n o l o g i c a l c h a n g e s , competition etc.

 (iii) Resistance from employees:

 Control is often resisted by employees. They see it as a restriction on their freedom. For instance, employees might object when they are kept under a strict watch with the help of Closed Circuit Televisions (CCTVs).

 (iv) Costly affair:

Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Controlling Process

Control is more than a matter of establishing standards, measuring performance and correcting for deviations. To initiate corrective action, there should be a programme (or a plan of action) which needs to be implemented and monitored as to whether such implementation will give the desired performance.

Step 1: Setting Performance Standards:

The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured.

Standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms.

For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, all represents quantitative standards.

 Step 2: Measurement of Actual Performance:

Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. It is generally believed that measurement should be done after the task is completed. However, wherever possible, measurement of work should be done during the performance.

Measurement of performance of an employee may require preparation of performance report by his superior. Measurement of a company’s performance may involve calculation of certain ratios like gross profit ratio, net profit ratio, return on investment, etc., at periodic intervals.

In small organisations, each piece produced may be checked to ensure that it conforms to quality specifications laid down for the product. However, this might not be possible in a large organisation. Thus, in large organisations, certain pieces are checked at random for quality. This is known as sample checking.

Step 3: Comparing Actual Performance with Standards:

This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.

Step 4: Analysing Deviations:

Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.

1. Critical Point Control:

EXAMPLE-  in a manufacturing organisation, an increase of 5 per cent in the labour cost may be more troublesome than a 15 per cent increase in postal charges.

2. Management by Exception:

If the plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a manufacturing organisation, only increase in labour cost beyond 2 per cent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 per cent), the matter has to receive immediate action of management on a priority basis.

Advantages of CPC (Critical Point Control)  & MBE (Management by Exception)

When a manager sets critical points and focuses attention on significant deviations which cross the permissible limit, the following advantages accrue:

1. It saves the time and efforts of managers as they deal with only significant deviations.

 2. It focuses managerial attention on important areas. Thus, there is better utilisation of managerial talent.

3. The routine problems are left to the subordinates. Management by exception, thus, facilitates delegation of authority and increases morale of the employees.

4. It identifies critical problems which need timely action to keep the organisation in right track.

 These include unrealistic standards, defective process, inadequacy of resources, structural drawbacks, organisational constraints and environmental factors beyond the control of the organisation. It is necessary to identify the exact cause(s) of deviations, failing which, an appropriate corrective action might not be possible. The deviations and their causes are then reported and corrective action taken at appropriate level.

 Step 5: Taking Corrective Action:

The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished. Corrective action might involve training of employees if the production target could not be met.