THE MEANING OF CONTROL

In 1916, Henri Fayol formulated one of the first definitions of control as it pertains to management:
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.
According to EFL Brech:
Control is checking current performance against pre-determined standards contained in the plans, with a
view to ensure adequate progress and satisfactory performance.
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.
Robert J. Mockler presented a more comprehensive definition of managerial control:
Management control can be defined as a systematic effort by business management to compare
performance to predetermined standards, plans, or objectives in order to determine whether performance
is in line with these standards and presumably in order to take any remedial action required to see that
human and other corporate resources are being used in the most effective and efficient way possible in
achieving corporate objectives.

WHY CONTROL IS IMPORTANT

TYPES OF CONTROL METHODS

Methods of control can be grouped into one of four basic types:

1. Pre-action Controls (sometimes called pre-controls) ensure that before an action is undertaken the
necessary human, material, and financial resources have been budgeted. When the time for action occurs,
budgets make sure the requisites resources will be available in the types, quality, quantities, and locations
needed.

2. Steering Controls, or “feedforward controls,” are designed to detect deviations from some standard
or goal and to allow corrections to be made before a particular sequence of actions is completed.

3. Yes/No or Screening Controls provides a screening process in which specific aspects of a procedure
must be approved or specific conditions met before operations may continue.

4. Post-action Controls measure the results of a completed action. The causes of any deviation from the
plan or standard are determined, and the findings are applied to similar future activities.

CONTROL DEVICES (Harold Koontz and Heinz Weihrich, Essentials of Management, 1990)

1. Statistical Data

Statistical analyses of the various aspects of an operation and the clear presentation of statistical
data – whether of a historical or a forecast nature, are important to control. Most managers understand
statistical data best when the data are presented in chart or graphic form, since trends and relationships
are then easier to see.

2. Special Reports and Analyses

For control purposes, special reports and analyses help in particular problem areas. While it is
true that routine accounting and statistical reports furnish a good share of necessary information, there
are often areas in which they are inadequate.

3. Operational Audit

Another effective tool of managerial control is the internal audit, or, as it is now coming to be
called, the operational audit. Operational auditing, in its broadest sense, is the regular and independent
appraisal, by a staff of internal auditors, of the accounting, financial, and other operations of an
enterprise.

4. Personal Observation

One should never overlook the importance of control through personal observation. Budgets,
charts, reports, ratios. Auditor’s recommendations, and other devices are essential to control. However,
the manager who relies wholly on these devices and sits, so to speak, in a soundproof control room
reading dials and manipulating levers can hardly expect to do a thorough job of control. Much information
can be obtained by an experienced manager from personal observation, even from an occasional walk
through a plant, an office, or a school. This practice is sometimes called “management by walking around.”

INFORMATION AND CONTROL

Managers must appreciate the center role played by information in making control effective. They
must also realize that all the managerial functions, especially planning and controlling, need to be
supported by systems for supplying information to managers. Only with accurate and timely information
can managers turns plans into reality and monitor progress toward their goals.

There are various ways in which organizational information help provide the information required
for effective control. Three forms of computer-based systems for utilizing information are management
information systems (MISs), decision support systems (DSSs), and expert systems (ESs). This last-named
form is an application of artificial intelligence. Since computer-based information systems offer managers
ever-increasing opportunities for improving their control systems, it has become crucial for managers to
understand how these systems should be designed, implemented, and managed.

The Value and Cost of Information

According to McFadden and Suver, cost-effectiveness of an information system can be difficult to

determine because the value of the information is difficult to quantify. However, Gregory and Van Horn
have suggested that the value of information depends on four factors:
 a. Information quality. To judge the quality of information, managers should compare the
reported facts to reality. The more accurate the information, the higher in quality and the more securely
managers can rely on it when making decisions.

b. Information timeliness. For effective control, corrective action must be applied before too
great a deviation from the plan or standard has taken place.

c. Information quality. Without sufficient information, managers can hardly make accurate and
timely decisions.

d. Information relevance. The information that managers receive must have relevance to their
responsibilities and tasks.

Distinctions between Data, Information, and Management Information

 Data are raw, unanalyzed facts, figures, and events from which information can be developed.

 Information is analyzed or processed data that informs a recipient about a situation.

 Management information is information that has action implications; that is, because it is
accurate, timely and relevant and because it represents the key features of a situation, managers
can determine from it what they must do about the situation.

MANAGEMENT INFORMATION SYSTEM

 A management information system (MIS) is a computer system consisting of hardware and

software that serves as the backbone of an organization’s operations. An MIS gathers data from
multiple online systems, analyzes the information, and reports data to aid in management
decision-making.
 MIS is also the study of how such systems work.
 A formal method of making available to management the accurate and timely information
necessary to facilitate the decision-making process and enable the organization’s planning,
control, and operational functions to be carried out effectively. (James A.F. Stoner and Charles
Wankel)

The Evolution of MIS

In the past, management information systems were of a highly informal nature in their set-up and
utilization. With the advent of computers, along with their ability to process and condense large quantities
of data, the design of management information systems became a formal process and field of study.

Stoner and Wenkel have identified four stages in the evolution of MIS:

1. EDP. When computers were first introduced into organizations, they were used mainly to process data
for a few organizational functions, such as accounting and billing, and were located in electronic data
processing (EDP) departments.

2. MIS. The growth of EDP departments spurred managers to plan their organizations’ information
systems more rationally. The efforts led to the emergence of the concept of computer-based information
systems (CBIS), which became better known as computer-based MIS – or simply MIS.

3. DSS. Recent advances in computer hardware and software have made it possible for EDP/MIS experts,
and then for managers, to gain “on-line” or “real-time” access to the data bases in CBISs. The widespread
use of microcomputers has enabled managers to create their own data bases and electronically
manipulate information as needed rather than waiting for reports to be issued by the EDP/MIS
department. MIS reports are still necessary for monitoring ongoing operations; DSS, however, permits
less structured use of data bases as special decision needs arise.

4. Expert Systems. Expert systems uses artificial intelligence to diagnose problems, recommend strategies
to avert or solve these problems, offer a rationale for these recommendations, and “learn” from each
experience or situation. In effect, the expert system acts like a human “expert” in analyzing unstructured
situations.

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References:

Gaudencio V. Aquino, Educational Management Principles, Functions, Concepts, 2000

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