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21 views23 pages

Wa0002

Uploaded by

yashpawar1289
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CONCEPTS AND PROCESS OF

CONTROLING
SANCHIT GUPTA
BCOM[HONS]
51098
TABLE OF CONTENTS
1. Introduction

2. Definitions of Controlling

3. Nature of Controlling

4. Importance of Controlling

5. Limitations of Controlling

6. Conclusion
Introduction

Every organization aims at achieving some goals from its


business activities and it is essential to ensure whether or not the
firm is performing activities according to the pre-determined
goals.
Definitions of Controlling

Control is the process of bringing about conformity of


performance with planned action.– Dale Henning
Nature of Controlling
▪ Controlling is a goal-oriented function of
management.
▪ Controlling is a continuous process.
▪ Controlling is all-pervasive.
▪ Controlling process is both a forward-looking and
backward-looking function
Importance of Controlling
1. Accomplishing Organizational Goals:
• Controlling function measures progress towards the
organizational goals and brings to light the deviations, if any,
and indicates corrective action. It, thus, guides the organization
and keeps it on the right track so that organizational goals might
be achieved
2. Judging Accuracy of Standards:
• An effective controlling process can help an organization in
verifying whether or not the firm has set the standards
accurate.
• An efficient control system keeps a careful check on the
changes taking place in the organization and in the
environment and helps to review and revise the standards in
light of such changes.
3. Making Efficient Use of Resources:
• Controlling helps an organization in reducing wastage of
resources, as it aims at ensuring that every activity of the
firm is performed according to the pre-determined goals.
• The clarity in the job in advance of what the employees are
supposed to do avoids confusion and motivates employees to
put in their best.
4. 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.
5. Ensuring Order and Discipline
• Control is an indispensable function of management. Without
control the best of plans can go awry.
• Controlling creates an atmosphere of order and discipline in the
organization.
• It helps to minimise dishonest behaviour on the part of the
employees by keeping a close check on their activities.
STEPS OF CONTROLLING
• Step 1: Setting Performance Standards:

• Standards are the criteria against which actual performance would be


measured.
• 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.
• Sometimes standards may also be set in qualitative terms. Improving
goodwill and motivation level of employees are examples of
qualitative standards.
• Step 2: Measurement of Actual Performance:
•

• There are several techniques for measurement of performance.


These include personal observation, sample checking,
performance reports, etc.
• As far as possible, performance should be measured in the same
units in which standards are set as this would make their
comparison easier.
• 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.
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.

• Step 4: Analysing Deviations:


• Some deviation in performance can expected in all activities. It
is, therefore, Important to determine the acceptable range of
deviations.
Methods of analysing deviation:-
1. Critical Point Control:
• it is neither economical nor easy to keep a check on each and
everyactivity in an organisation. should, therefore, focus on key
result areas (KRAs) which are critical to the success of an
organisation.
• These KRAs are set as the critical points. If anything goes wrong
at the critical points, the entire organisation suffers.

2. Management by Exception:
• Management by exception, which is often referred to as control
by exception, is an important principle of management control
based on the belief that an attempt to control everything results
in controlling nothing.
• Thus, only significant deviations which go beyond the
permissible limit should be brought to the notice of management.
• Step 5: 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
Relationship between
Controlling and Planning
• 1. Planning and controlling are Inseparable
twins of management.

• A system of control presupposes the existence of certain


standards provided by planning.
• Once a plan becomes operational, controlling is necessary to
monitor the progress, measure it, discover deviations, and
Initiate corrective measures to ensure that events conform to
the plans. Thus, planning without controlling is meaningless
2. Controlling is blind without planning.

• If the standards are not set in advance, managers have


nothing to control. When there is no plan, there is no
basis of controlling.
• Planning is clearly a prerequisite for controlling.
Without planning there is no predetermined
understanding of the desired performance.
• 3.Planning is basically an intellectual
process:

• Controlling checks whether decisions have been


translated into desired action. Planning is thus,
prescriptive whereas, controlling is evaluative.
• 4. Planning and Controlling are both Backward-
Looking as well as a Forward- Looking Function.

• Plans are prepared for future and are based on forecasts about
future conditions. Therefore, planning Involves looking ahead
and is called a Forward-Looking Function.
• On the contrary, controlling is like a postmortem of past
activities to find out deviations from the standards. In that sense,
controlling is a backward-looking function.
• However, planning is guided by past experiences and the
corrective action initiated by control function aims to improve
future performance.
• Thus, planning and controlling are both Backward-Looking as
well as a Forward- Looking Function.
Conclusion
The controlling process is a crucial management
function that ensures organizational goals are achieved
efficiently and effectively. By setting performance
standards, measuring actual performance, identifying
deviations, and taking corrective actions, managers
can maintain control and drive progress.
Bibliography
References
• Wikipedia.org
• myCBSEguide.com
• BUSINESS STUDIES NCERT [CLASS 12]
• Toppr.com

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