Scribd
Upload
8 views

Chapter 8 Controlling - 1.6

Controlling is the process of ensuring actual performance matches planned performance. It identifies deviations and their causes, and suggests corrective actions. The controlling process involves setting standards, measuring actual performance, comparing to standards, analyzing deviations, and taking corrective actions. Planning and controlling are interdependent functions - planning makes controlling easier and controlling reveals ways to improve planning. Controlling looks backward to evaluate past performance and provide lessons for future planning.

Uploaded by

Aishwarya Maradapu
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
8 views

Chapter 8 Controlling - 1.6

Controlling is the process of ensuring actual performance matches planned performance. It identifies deviations and their causes, and suggests corrective actions. The controlling process involves setting standards, measuring actual performance, comparing to standards, analyzing deviations, and taking corrective actions. Planning and controlling are interdependent functions - planning makes controlling easier and controlling reveals ways to improve planning. Controlling looks backward to evaluate past performance and provide lessons for future planning.

Uploaded by

Aishwarya Maradapu
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Chapter – 8

CONTROLLING
Meaning
Controlling is the process through which management ensures that the actual performance
conforms to the planned performance. It discovers deviation from the results expected. It also
identifies the reasons for deviations and suggests suitable action to avoid their recurrence in
future.

Importance / Advantages of Controlling

1. Accomplishing organizational goals – It measures actual performance with standards


and making corrective actions on deviations, so that the organization can achieve its goals
smoothly.
2. Judging accuracy of standards – Controlling helps to check the accuracy of standards in
changing environment, which helps to revise the standards if needed.
3. Efficient use of resources – Controlling seeks to reduce wastages of resources.
4. Improving employee motivation – Controlling ensures employee awareness regarding
what is expected to do and what is the standards fixed on him, so that he will be motivated
to give better performance.
5. Ensures order and discipline – Controlling ensures an order and discipline as there is a
close watch on the activities of all employees.
6. Coordination – In order to coordinate the activities of different persons and departments,
an effective system of control is necessary.
7. Decision making – The process of control is complete when corrective actions are taken.
It will lead to make better decisions in future

Limitations of Controlling

1. Difficulty in setting standards – Controlling will be effective only when standards are
fixed in quantitative terms. But employee morale, job satisfaction, customer response etc.
cannot be expressed quantitatively, so that controlling becomes less effective.
2. Little control on external factors – External factors such as Government policy,
technological changes, competition etc. cannot be controlled by the organization.
3. Resistance from employees – Employees may oppose the control measures taken by
the firm, because they may feel that it will reduce their freedom. E.g., CCTV.
4. Costly affair – Small organizations cannot afford to install an effective control system as it
is very costly.

Relationship between Planning and Controlling – The entire planning process will turn to be
waste unless adequate control measures are exercised. The relationship between planning and
control may be summed up as follows:

a. Planning and control are interdependent and inseparable functions of management.


Without a plan there is nothing to control. Thus planning is useless without control and
controlling is useless without plan.
b. Planning and controlling are interrelated and in fact reinforce each other in the sense that:
 Planning makes controlling easier and effective.
 Controlling reveals the shortcomings of plans and calls for improvement in future.
AJITH KANTHI@ AJITH PP _SKMJ HSS KALPETTA BUSINESS STUDIES – II CHAPTER-8 Page 1
c. Planning is looking ahead while controlling is looking back – Planning is a forward looking
function as plans are prepared for future period. Whereas, controlling is a post-mortem of
past activities to find out the deviations, so that it is a backward looking function of
management.

However, some people argues that, controlling is a also a forward looking function as it
provides valuable information of past experience for future planning.

Controlling Process (Steps in Controlling)

1. Setting Standards

2. Measurement of Actual Performance

3. Comparison of Actual Performance

4. Analyzing Deviations

5. Taking Corrective Actions

1. Setting performance Standards – In order to achieve the goals, standards of


performance have to be determined in planning itself.

Quantitative Standards - As far as possible, standards must be in concrete and tangible


forms which will make evaluation process easy. For example, the profit expected from a
particular product, time required for completing a task, cost of production for one unit is
Rs.100 etc.

Qualitative Standards - Standards can also be in intangible forms. The results expected
from a training programme, loyalties of workers, Improving motivation level of employees,
etc. are the examples for qualitative standards.

2. Measurement of actual performance – The second step is to measure actual


performance of employees or departments. It should measure actual performance of each
activity in terms of quality and quantity.
3. Comparison of actual performance with standards – Comparison of actual
performance with the standards reveals the deviations between actual and desired results.
4. Analyzing deviations – At this stage, the extent of deviations and causes of such
deviations are to be found out. It is important to ascertain whether deviations are within
the expected range. Deviations in key areas of business require urgent attention.
Managers can rely on the following in this regard.
a. Critical Point Control – The control measures should be focused on key result areas
(KRAs) which are critical in the success of an organization. These KRAs are the Critical
Points, if anything goes wrong at this critical point, the entire organization will suffer.
Example: 5% increase in labour cost is a serious matter than 20% increase in postal
charges.

AJITH KANTHI@ AJITH PP _SKMJ HSS KALPETTA BUSINESS STUDIES – II CHAPTER-8 Page 2
b. Management by Exception (MBE) / Control by Exception - All deviations need not
be brought to the attention of top management. Only those deviations which seem
exceptionally high and which cannot be easily solved by lower level management alone
should be reported to top management. Example: 2% increase in the material cost (if it
is within the permissible limit) need not be reported, whereas, if it is far beyond the limit,
say 10% increase, it requires immediate attention of management on a priority basis.
In other words, the top level management is concerned with highly exceptional matters
only and the routine matters will be handled by the lower levels.
5. Taking corrective actions – As soon as deviations are reported, it is the duty of the
executives to take steps to correct the past action so that deviations may not occur again
and the plans are properly executed. If there is no deviation or if the deviation is within the
permissible limit, let the situation remains as it is.

At times, the deviations may be such that which cannot be rectified and beyond the control
of management, they may take necessary decisions by modifying the goals and standards.

Some examples for corrective action:


Cause of deviation Corrective action to be taken
Defective material Change the supplier or quality
Defective machinery Repair or replace
Obsolete machinery Undertake technological up gradation
Increase in lobour turnover Improve working conditions and provide better incentives
Defective process Modify the existing process

************

For latest updates, visit HssVoice Blog:

www.hssplustwo.blogspot.com

AJITH KANTHI@ AJITH PP _SKMJ HSS KALPETTA BUSINESS STUDIES – II CHAPTER-8 Page 3

You might also like