Fundamentals of Controlling

Fundamentals
• All managerial functions are broken into five
categories: planning, organization, staffing,
directing, and controlling.
• When it comes to management, controlling is all
about ensuring that a company's performance is
consistent with its stated goals and objectives.
• The management's job is to ensure that events
do not deviate from their predetermined course
of action.
 Fundamentals
• Set standards for performance, measure and
compare results to those criteria, take
and remedial action if necessary.
• Organizational goals can be assessed by
comparing performance to established standards
of practice, identifying the discrepancies, and
recommending corrective action through the
managerial role of regulating.
• Consequently, the controlling function in
management directs the organization toward
attaining its goals over the long term.
 Definitions of controlling
• According to Henri Fayol Control of an
undertaking consists of seeing that everything
is being carried out in accordance with the
plan which has been adopted, the orders
which have been given, and the principles
which have been laid down.
• Its object is to point out mistakes in order that
they may be rectified and prevented from
recurring
 Definitions
• According to Harold Koontz Controlling is the
measurement and correction of performance in
order to make sure that enterprise objectives and
the plans devised to attain them are
accomplished
• According to EFL Breach Control is checking
current performance against predetermined
standards contained in the plans, with a view to
ensure adequate progress and satisfactory
performance
 Characteristics of controlling
• Continuous process
• Action Oriented
• Dynamic process
• Forward looking
• Exercised at all levels
• Management Function
• End Function
 FEATURES OF CONTROLLING
Control is forward looking :
• One can control future happenings and not
the past.

• Managers suggest corrective actions for the

future period.
 FEATURES OF CONTROLLING
Control is both an executive process and a result :
• Each manager has to perform control
function in the organization
• Nature, scope and limit of the control function
may be different for different managers. The
word ‘control ‘ is preceded by an adjective to
designate control : quality control,
problem inventory production control,
control,
administrative control etc
 FEATURES OF CONTROLLING
• Control is a continuous process : Managerial
control follows a definite pattern and time table,
month after month and year after year on a
continuous basis
• A control system is a coordinated –
integrated system :
• Data collected for different purposes should
be reconciled with one another.
• Control is a single system, but more accurate
to think of it as a set of interlocking subsystems.
 IMPORTANCE OF CONTROL
Adjustment in operations :
• Objectives – basis of control.
• Adjustment done through control
Policy verification :
• Policies generate the need for control.
• Managers set certain policies which
become the basis and reason for control.
• Verify the quality of policies.
 FEATURES OF CONTROLLING
• Managerial responsibility :
• Managerial responsibility – created
through assignment of activities to various
individuals.
• Starts at the top level and goes down to
the bottom level.
• Manager is responsible for the
ultimate performance of his
subordinates.
 FEATURES OF CONTROLLING
• Psychological pressure :
• Psychological pressure on individuals to
perform better.
• Rewards and punishment based on the
performances

• Coordination in action :
• Coordination is achieved through
proper performance.
• Manager coordinates the activities of his
subordinates to achieve the organizational goals.
 FEATURES OF CONTROLLING
• Organizational efficiency and effectiveness :
• Proper control ensures
organizational efficiency and effectiveness.
• Control system – brings the
organization closer to its objectives.
 Types of control

Input Process outputs

• Forward control • Concurrent • Feedback control
• Anticipates control • Correct problem
problem • Correct problems after they occure
as they happen
 Types of control
1, Feed Forward Control
• Also called preliminary or preventive controls,
attempt to identify and prevent deviations in
the standards before they occur.
• Feed forward controls focus on human,
material, and financial resources within the
organization.
• These controls are evident in the selection
and hiring of new employees.
 Types of ccntrol
2, Concurrent Control
• Monitor ongoing employee activity to ensure
consistency with quality standards.
• These controls rely on performance
standards, rules, and regulations for guiding
employee tasks and behaviors.
• Their purpose is to ensure that work
activities produce the desired results.
3, Feed Back Control
• Control takes place when the work
is performed.
• It involve reviewing information to
determine whether performance meets
established standards
 STEPS IN CONTROLLING
• Control is reciprocally related to planning :
• Draws attention to situations where
new planning is needed.

• Provides data upon which plans can

be based.
 Steps in controlling
Various steps in control process which are
necessary in its relationship to planning :
• Establishment of control standards.
• Measurement of performance.
• Comparison between performance
and standards and the communication.
• Correction of deviation from the
standards
Design of executive control system
• 1. ESTABLISHMENT OF CONTROL STANDARDS
• Plans - goals, objectives, targets to
be achieved.
• Actual results are measured against them.
•
• 2. MEASUREMENT OF PERFORMANCE
• Involves measuring the performance in the work in terms of control
standards.
• Methods of measuring performance :
• Quantitative – Physical and monetary terms, easily and
precisely measurable. E.g. Production units, sales, volume, profits
etc.
• Qualitative – Intangible, cannot be measured precisely.
E.g. Human relations etc. Techniques – Psychological tests,
opinion surveys.
• Measurement must be (i) clear, simple and rational, (ii)
relevant,
(iii) direct attention and efforts, (iv) reliable, self announcing, and
understandable without complicated interpretation or philosophical
discussions.
• 3. COMPARING ACTUAL AND STANDARD
PERFORMANCE
• Steps :
• Finding out the extent of deviations.
• Identifying the causes of such
deviations.
• Accurate standards and accurate
measurement of actual performance are very
important for clear revelation of variations.
• Required standards achieved :
• No further managerial action is necessary.
• Control process is complete.
• Required standards not achieved :
• Extent of variation may differ from case
to case, depends upon the type of activity.
• Strict compliance with standards
or permissible limit of variation.
• E.g. Engineering products – a very
minute variation may be significant
• When the deviation between standard and actual
performance is beyond the prescribed limit, an
analysis is made of the causes of such deviation.
• Controllable factors – Person concerned will
take necessary corrective action.
• Uncontrollable factors – Person concerned
cannot be held responsible.
• Communication of data to the person who can
take corrective action.
• 4. CORRECTION OF DEVIATIONS
• Organization is not a self – regulating system.
• Actions should be taken to maintain the
desired degree of control in the system or
operation.
• Control actions :
• Review of plans and goals and change therein on
the basis of such review.
• Change in the assignment of tasks.
• Change in existing techniques of direction.
• Change in the organization structure.
• Provision for new facilities.
 Causes of resistance to concntrol
• There are four reasons why employees
resist control in an organization.
• 1. Over-Control
• 2. Inappropriate Focus
• 3. Rewards for Inefficiency
• 4. Accountability.
 Causes of resistance to concntrol
Over-Control:
• Occasionally, organizations go into excessiveness and
make the mistake of over-control; they try to control
too many things.
• This becomes especially problematic when the controls
pertain directly to employee behavior relating to their
daily activities (such as whom to work, when to relax,
when to have tea and lunch, when to return).
• Yet, many organizations find it necessary to impose
these rules. If controls are perceived as excessive,
employees resist them
 Causes of resistance to concntrol
• Inappropriate Focus:
• The second main reason for resistance is that
the focus of the control system may be
inappropriate.
• The control system may be too narrow, or it
may focus too much on quantifiable variables,
leaving hardly any room for analysis or
interpretation
 Causes of resistance to concntrol
• A sales standard, for instance, that encourages
high-pressure tactics to maximize short-run
sales may do so at the expense of goodwill
from long-term customers. Such a standard is
too narrow
• Rewards for Inefficiency:
• People naturally resist control when there is
punishment for being efficient and reward for
being inefficient, i.e., when there is no suitable
reward for appropriate effort.
• For example, department 1 may have budget cut
next year for efficiently utilizing the fund in the
current year and thus exhausting the budgetary
allocation. Department 2 may have budget
increase for incurring a deficit in the current year
 Causes of resistance to concntrol
• Accountability:
• Another reason why some people resist
control is that effective control systems create
accountability.
• Some people, especially those who are doing
a good job, do not want to be answerable for
their mistakes and deficiencies (such as
unsatisfactory performance) and, therefore,
resist control.