Polytechnic University of the Philippines

Sta. Mesa Manila

A.Y. 2019 - 2020

Principles of Management and

Organization

“The Concept of Controlling”

Submitted by:

Lady Eunice A. Santos

Alecsandra S. Quisto

Ericamae Santos

BSOA 1 – 3N
Controlling

Controlling is another important function of management. This function tries to

ensure that all actions and activities are in conformity with the plans and objectives of
the firm.

Controlling aims to make things happen in order to attain successfully the

objectives and goals of the firm.

Characteristics of Control

1. Controlling is a management function.

2. All - pervasive function, it exists in all levels of management.
3. Controlling is a universal process.
4. Controlling is a continuous and unending process.
5. Controlling involves dynamic process; it is not static.
6. Controlling is a positive and constructive process
7. Controlling is a goal – oriented function of management.
8. Controlling is an action – oriented function of management.
9. Controlling is forward – looking in a business operation.
10. Controlling and planning are closely related
11. Controlling is not interfering with the works and activities of others.

Types of control

1. Feed – Forward Control

 are future-directed — they attempt to detect and anticipate problems or
deviations from the standards in advance of their occurrence.
 They are in-process controls and are much more active, aggressive in
nature, allowing corrective action to be taken in advance of the problem.
 Feed forward control devices are of two broad categories: diagnostic and
therapeutic.
 i. Diagnostic controls seek to determine what deviation is taking (or
has taken) place. Discovering the ‘why’ is often the most difficult
part of the process.
ii. Therapeutic controls tell us both what and why, and then proceed
to take corrective action.
2. Concurrent (Prevention) Control
 also called steering control because it allows people to act on a process or
activity while it is proceeding, not after it is proceeding, nor after it is
completed.
 Corrections and adjustments can be made as and when the need arises.
3. Feedback Control
 Feedback Control is future-oriented.
 It is historical in nature and is also known as post-action control.
 The implication is that the measured activity has already occurred, and it
is impossible to go back and correct performance to bring it up to
standard. Rather, corrections must occur after the act.

Ethical Issues in Control

 Self – Dealing
o occurs when managers find a way to feather their own nests with
corporate funds.
o Senior managers who treat corporate funds as their own personal
treasury, raiding them to support a lavish lifestyle.
o senior managers who use their control over the compensation committee
of the board of directors to award themselves multi-million-dollar pay
increases or stock option grants that are out of proportion with their
contribution to the corporation
o instances where individual managers award business contracts not to the
most efficient supplier but to the one that provides the largest kickback.
 Information Manipulation
 o occurs when managers use their control over corporate data to distort or
hide information to enhance their own financial situations or the
competitive position of the firm.
 Anti – Competitive Behavior
o includes a range of actions aimed at harming actual or potential
competitors, most often by using monopoly power to enhance the
prospects of the firm.
 Opportunistic Exploitation
o occurs when the managers of a firm seek to unilaterally rewrite the terms
of a contract with suppliers, distributors, or complement providers in a way
that is more favorable to the firm, often using the firm’s power to force the
revision through.
 Substandard Working Conditions
o arise when managers tolerate unsafe working conditions or pay
employees below-market rates to reduce costs of production.
 Environmental Degradation
o occurs when managers take actions that directly or indirectly result in
pollution or other forms of environmental harm.
 Corruption
o arise in a business context when managers pay bribes to gain access to
lucrative business contracts.

Requirements of Effective Controlling

1. It should serve the needs for which they are intended.

2. It should be economical to maximize profit.
3. It should be stable yet flexible to cope – up with the changing needs of the firm.
4. It should identify changes or deviations.
5. It should be objective and free from any biases.
6. It should consider the organizational structure.
7. It must be properly understood.
 8. It should be able to indicate future deviation from what has been planned.
9. It should include several alternatives to correct deviations.
10. It should promote unity, cooperation and goodwill.

Kinds of Techniques in Controlling

Conventional and Modern Techniques

 Types of Conventional Technique

1. Personal observation.
2. Setting as model.
3. Plans and policies.
4. Organizational chart and function charts.
5. Operation manual.
6. Disciplinary measures.
7. Oral and written instructions.
8. Statistical reports
9. Annual / monthly and special reports
10. Records management and evaluation.
11. Financial statements
12. Audit system
13. Simple break – even analysis.
14. Standard costing
15. Budget operation management control
16. Cash auditing
17. Inventory control

 Types of Modern Technique

1. Return on Investment (ROI) – is a technique of control of the overall
accomplishment of the firm.
2. Management audit – is a systematic technique of evaluating the operation
and effectiveness of the management of a firm.
 3. Management Information System (MIS) – is a system of collecting,
processing, recording and transmitting information needed by
management.
4. Zero – Based Budgeting (ZBB) – is a budgeting technique which does not
consider figures of previous fiscal year in the preparation of a budget
5. PERT / CPM – PERT and CPM, these are techniques that can be used to
control the actions and activities of personnel.

Application of Control

Strategy Planning
- Process of establishing goals and plans to achieve the goals. For instance in
achieving successful sales or launching of new products.
Requirements Management
-Formally documenting plans as requirements and managing change to these plans.
Financial Controls
- Also known as budgeting. Proper control of finance in a business includes
developing, monitoring, and accounting for budget.
Performance Management
- is the process of planning, monitoring, reviewing and evaluating the performance of
each employees of a corporation or organization. It can also improve productivity,
efficiency, and work quality.
Change Control
- it is designed to provide stability to projects and operational products, systems, and
documents.
Risk Control
- The repeated process of identifying, analyzing, and treating risks.
Safety Controls
- identifying and eliminating safety hazards and implementing ways to reduce safety
risks
Security Controls
 - Implementing safeguards and countermeasures to protect people, property and
information from threats.
Compliance Control
- the implementation of processes, procedures, systems, checks, measurements and
reports to comply with laws, regulations, standards and internal policy.
Benchmarking
- it is an essential business activity that is key to understanding competitive
advantages and disadvantages.
Quality Control
- it is a process of ensuring that things meet their function requirements, non-
functional requirements, and detailed specifications.
Inventory Control
- regulating and accounting for inventory to avoid a shortage or surplus of a supply.

Importance of Controlling in Management

1. Accomplishing Organizational Goals:

Controlling helps in comparing the actual performance with the predetermined
standards, finding out deviation and taking corrective measures to ensure that
the activities are performed according to plans. Thus, it helps in achieving
organizational goals.
2. Judging Accuracy of Standards:
An efficient control system helps in judging the accuracy of standards. It further
helps in reviewing & revising the standards according to the changes in the
organization and the environment.
3. Making Efficient Use of Resources:
Controlling checks the working of employees at each and every stage of
operations. Hence, it ensures effective and efficient use of all resources in an
organization with minimum wastage or spoilage.
4. Improving Employee Motivation:
Employees know the standards against which their performance will be judged.
Systematic evaluation of performance and consequent rewards in the form of
increment, bonus, promotion etc. motivate the employees to put in their best
efforts.
5. Ensuring Order and Discipline:
Controlling ensures a close check on the activities of the employees. Hence, it
helps in reducing the dishonest behavior of the employees and in creating order
and discipline in an organization.
6. Facilitating Coordination in Action:
Controlling helps in providing a common direction to the all the activities of
different departments and efforts of individuals for attaining the organizational
objectives.