Controlling & Change- Control – meaning & importance of control, steps of controlling

process, designing control systems, financial control; Organizational change – meaning,

drivers of change, process of change, resistance to change, overcoming resistance to
change
Control is the process of making sure that the activities of an organization are aligned with the goals and
objectives, of the organization, that are already set. Control operates by monitoring performance, comparing
actual results with planned outcomes and taking actions when necessary to stay on course. It is an important
part of the management process, along with planning, organizing, leading, and staffing.

Types of control: Control in management is essential in order to ensure that the activities of the organization
and its performance is aligned with the objectives of the organization. There are various types of control, each
have been designed to monitor and guide different aspects of organizational processes. The three main types
of control in management are as follows:

• Preventive Control or Feedforward Control: The Preventive or Feedforward control prioritises preventing
problems before they even occur by ensuring that correct resources, procedures and standards are being
followed before the actual operation begins. It is proactive in nature, thus, anticipate and prevent potential
problems before they impact the organization.
• Process Control or Concurrent Control: Process Control or Concurrent control takes place during the
actual operation or process in real time. It requires monitoring the ongoing activities in order to ensure that
they are happening according to the predefined plans. It also involves making real-time adjustments as per
requirement thus, minimizing delays or errors in the workflow.
• Output Control or Feedback Control: Output Control or Feedback control takes place after an activity has
been completed. Its main focus remains on evaluating the results of the completed process thus, using the
feedback to make improvements in future operations. In this type of control, it is important to provide
information on the effectiveness of past activities, allowing for corrective actions and long-term
improvements.

Some other types of control based on scope or focus:

• Strategic Control: Focuses on monitoring and evaluating whether the organization’s strategic goals are
being met.
• Operational Control: Involves day-to-day control over specific tasks, processes, or operations to ensure
efficiency and effectiveness in achieving short-term goals.
• Financial Control: Focuses on managing the organization’s financial resources, ensuring that expenditures
are in line with the budget and financial targets are achieved.
• Bureaucratic Control: This type of control uses formal rules, procedures, and hierarchical authority to
guide employee behaviour and ensure compliance with organizational standards.
• Cultural Control: Relies on the values, beliefs, and norms shared by employees within the organization to
guide behaviour and performance.

Importance of control: Here are the key reasons why control is important in management:

• Guarantees the fulfilment of the objective: Control guarantees the organizational efforts are directed
toward achieving the set goals and objectives. By regularly monitoring performance and comparing it with
targets, managers can keep the organization on track.
• Boosts efficiency within the organization: Control makes sure that resources (time, money, personnel)
are being used effectively and efficiently. It helps identify wastage or inefficiencies and allows for corrective
actions, improving the overall productivity of the organization.
• Supports informed decision-making: Control provides managers with the required information to make
decisions accordingly. By providing data on performance, control systems allow managers to analyze
results, predict outcomes, and make adjustments to strategies or processes as needed.
• Limits mistakes and potential risks: Control helps to identify and rectify the deviations thus reducing the
likelihood of mistakes or risks that could harm the organization. It allows managers to spot issues early and
take preventive measures before they become bigger problems.
• Boosts employee performance: Control mechanisms such as performance appraisals, evaluations, and
feedback systems help monitor employee behaviour and performance. When employees realises that their
work is being assessed, it motivates them to improve their performance and align their efforts with
organizational goals.
• Promotes flexibility in adapting to change: Control helps organizations remain flexible and responsive to
external changes (e.g., market shifts, regulatory changes, or technological advancements). By continuously
monitoring the environment and internal performance, managers can adapt strategies and operations to
remain competitive.
• Ensures compliance with quality benchmarks: Control helps maintain and improve the quality of
products or services by monitoring processes and making adjustments when deviations from quality
standards are detected.
• Promotes accountability and transparency: Control systems establish clear performance standards and
expectations, allowing for accountability at all levels of the organization. By measuring performance against
these standards, management can identify who is responsible for successes or failures.
• Improves communication and coordination across departments: Control ensures that different
departments or units within the organization work in harmony toward common goals. By aligning their
activities and monitoring progress, control systems facilitate coordination and collaboration.
• Fosters a culture of continuous development: Control provides feedback on performance and
outcomes, which can be used to inform future decisions and improve processes continuously. It supports
a culture of learning and adaptation within the organization.

Steps of controlling process: The controlling process, in management, is a systematic approach that is used
to ensure that activities and performances of the organization are aligned with the already established goals.
This process involves several steps, each designed to monitor, evaluate and adjust performance wherever
necessary. Here are the crucial steps of the controlling process:
1. Defining Performance Criteria: The first step in the controlling process is to define the performance
standards clearly so that they are measurable and achievable. These standards serve as the benchmarks
against which actual performance is compared. Standards should align with the organization’s goals and
objectives and can be either quantitative or qualitative.
2. Monitoring Performance Metrics: In this step, managers collect data on actual performance to assess how
well the organization is meeting the established standards. This can be done through various methods such as
performance reports, audits, observations, surveys, and reviews.
3. Assessing Actual Performance in Relation to Standards: Once performance data is collected, it is
compared with the established standards. This comparison allows managers to identify any deviations,
whether positive or negative, and assess the degree of variance from the planned performance.
4. Investigating Deviations: In this step, managers analyze the reasons behind any deviations between actual
performance and the set standards. Deviations can occur due to various factors such as market conditions,
internal inefficiencies, lack of resources, or external changes. Understanding the cause of the deviation is
critical to taking the right corrective action.
5. Taking Corrective measures: After identifying the causes of deviations, managers implement corrective
actions to address the issues and bring performance back in line with the standards. Corrective actions could
involve revising plans, retraining employees, reallocating resources, or adjusting processes.
6. Continuous Monitoring and Feedback: The controlling process is ongoing, meaning that after corrective
actions are implemented, managers continue to monitor performance to ensure improvements are made. This
step involves using feedback from the controlling process to refine goals, improve processes, and make
adjustments where necessary.
Defining Performance Criteria

Monitoring Performance Metrics

Assessing Actual Performance in Relation to Standards

Investigating Deviations

Taking Corrective measures

Continuous Monitoring and Feedback

The control process must be adaptable to shifts in the external environment or the needs of the organization.
Prompt control and corrective measures can stop small issues from escalating into major problems. The
success of the control process relies on the precision of performance data and measurement techniques.

Designing control systems, financial control: A control system is vital for any organization aiming to remain
focused and accomplish its objectives. By overseeing performance, pinpointing issues, and implementing
corrective measures, control systems assist managers in maintaining smooth operations. To create an
effective control system, consider these steps and remember these important points:
1. Establish Clear Objectives: The first step in designing a control system is to clearly define the objectives
the organization or specific process aims to achieve. These objectives should be aligned with the organization’s
overall strategy and must be measurable, specific, and achievable.
2. Identify Key Performance Indicators (KPIs): KPIs are specific metrics that reflect how well an organization
is achieving its objectives. These indicators provide measurable data points for monitoring progress. KPIs
should be directly linked to organizational objectives. They should be quantifiable and easy to track and should
cover various areas like financial performance, customer satisfaction, employee productivity, and quality.
3. Determine Control Methods: Control methods are the techniques and processes used to measure actual
performance. These could include statistical reports, observations, audits, and software systems that provide
real-time data. Choose control methods that align with the organization's operations and resources and utilize
technology (like ERP systems, CRM software, or automated data collection) for accurate, real-time
information.
4. Set Performance Standards: Performance standards are the benchmarks against which actual
performance will be measured. They serve as reference points for identifying deviations from expected
performance. Standards should be clear, quantifiable, and directly linked to objectives. They can be financial,
operational or qualitative.
5. Monitor and Measure Actual Performance: This involves gathering data on actual performance regularly
through various control tools and techniques. Monitoring can be real-time (concurrent control) or periodic
(feedback control). Monitoring should be frequent enough to detect deviations early but not so frequent that it
becomes inefficient. Use accurate, reliable data sources to measure performance.
6. Compare Performance with Standards: Once data on actual performance is collected, it is compared with
the pre-set standards to identify any deviations. This comparison helps in assessing whether the organization
is on track to meet its objectives. Establish a consistent and objective method for comparing performance data
to the standards. Focus on identifying significant deviations that require attention.
7. Identify Causes of Deviations: If a deviation from the standard is identified, it is important to analyze the
root cause of the deviation. This analysis helps to pinpoint whether the problem is internal or external. Use
tools like root cause analysis to uncover the underlying reasons for deviations. Evaluate both quantitative and
qualitative factors contributing to the deviation.
8. Take Corrective Actions: Based on the analysis, management must take corrective actions to resolve
deviations and realign performance with the standards. These actions can involve changes in strategy,
resources, processes, or behaviour. Ensure corrective actions are timely to prevent further deviations. Focus
on addressing the root cause rather than just symptoms. Corrective actions should be communicated clearly
to employees involved.
9. Feedback and Continuous Improvement: Once corrective actions are taken, the control system should
continue to monitor performance and use feedback to improve future performance. The process is cyclical,
with ongoing adjustments based on new data and experiences. Foster a culture of continuous improvement,
where feedback is used to refine processes and standards. Regularly review and update KPIs, standards, and
control methods to keep them relevant.

FINANCIAL CONTROL: Financial control refers to the processes, policies, and procedures put in place to
monitor, manage, and regulate the financial resources of an organization. Effective financial control ensures
that the organization uses its funds efficiently, stays within budget, meets its financial goals, and complies with
legal and regulatory requirements.
• Budgeting: Budgeting involves planning for the financial resources an organization will need to achieve its
objectives. A budget outlines expected income, expenses, and investments over a specific period, helping
managers allocate resources effectively. Budgeting provides a financial blueprint for the organization,
ensuring that funds are available for critical operations and projects.
• Cost Control: Cost control refers to the practice of monitoring and managing expenses to ensure that
spending stays within the planned budget. It involves identifying areas where costs can be reduced or
managed more efficiently. Effective cost control helps organizations prevent wasteful spending, maintain
profitability, and ensure long-term financial sustainability.
• Financial Reporting and Analysis: Financial reporting involves preparing financial statements such as
income statements, balance sheets, and cash flow statements. Financial analysis evaluates the
organization’s financial health by analyzing these reports to identify trends and assess performance.
 Financial reports provide crucial information for decision-making, enabling managers to understand the
organization’s financial position, profitability, and liquidity.
• Internal Auditing: Internal auditing is a process by which an organization’s financial practices, procedures,
and records are reviewed to ensure accuracy, compliance with laws, and adherence to internal policies.
Internal audits help prevent fraud, ensure regulatory compliance, and promote transparency in financial
operations.
• Financial Forecasting: Financial forecasting is the process of estimating future financial outcomes based
on historical data, market trends, and current financial conditions. Forecasts help organizations anticipate
revenues, expenses, and cash flow requirements. Forecasting allows organizations to make informed
decisions about investments, expansions, or cost-cutting measures, ensuring financial preparedness.
• Capital Structure Management: Capital structure refers to the way an organization finances its operations
and growth, whether through debt (loans, bonds) or equity (issuing shares). Managing the capital structure
involves balancing debt and equity to minimize the cost of capital while maintaining financial flexibility. An
optimal capital structure reduces financial risk and ensures that the organization can fund its operations
and growth strategies without jeopardizing its financial stability.
• Cash Flow Management: Cash flow management involves ensuring that the organization has enough cash
on hand to meet its short-term obligations, such as paying employees, suppliers, and creditors, while also
investing in long-term growth opportunities. Effective cash flow management prevents liquidity problems
and ensures that the organization can cover operational expenses without disruptions.
• Working Capital Management: Working capital is the difference between current assets and current
liabilities. Managing working capital ensures the organization has sufficient resources to meet its day-to-
day operational needs. Good working capital management ensures that an organization can continue
operating smoothly without running into liquidity problems.
• Debt Management: Debt management involves the process of planning, issuing, and repaying debt in a
way that minimizes interest costs while ensuring sufficient liquidity for operations and investments.
Managing debt efficiently helps reduce interest expenses, avoid default risks, and maintain a strong credit
rating.
• Compliance with Financial Regulations: Financial control ensures that the organization complies with
legal and regulatory requirements related to financial reporting, taxation, and corporate governance.
Compliance helps organizations avoid penalties, legal issues, and reputational damage that can arise from
non-compliance with financial regulations.

Importance of Financial Control in Management:

• Ensures Resource Efficiency: Financial control helps managers ensure that financial resources are used
effectively and efficiently, preventing waste.
• Enhances Profitability: Through cost control and budgeting, financial control enables organizations to
maintain or improve profitability.
• Prevents Fraud and Errors: Financial controls, such as internal audits and accounting checks, reduce the
risk of fraud or financial misstatements.
• Supports Strategic Decision-Making: Accurate financial data provided through financial control systems
aids in making informed strategic decisions.
• Maintains Financial Stability: Effective management of cash flow, working capital, and debt ensures the
organization's financial health and long-term sustainability.
Organizational change – meaning, drivers of change: Organizational change is the process by which an
organization alters its structures, strategies, operational methods, technologies, or culture to adjust to new
circumstances or enhance its effectiveness. This change can be reactive, responding to external influences, or
proactive, as part of a strategic plan aimed at fostering innovation or improving competitiveness. Organizational
change can involve various levels and scopes, including:
• Strategic Change: Alterations in the overall direction or mission of the organization.
• Structural Change: Changes to the organization's hierarchy, roles, and relationships.
• Cultural Change: Modifications in the organization's values, norms, and behaviours.
• Technological Change: Adoption of new technologies or systems to improve efficiency and
effectiveness.
• Process Change: Changes to the methods and procedures through which work is done.

Drivers of Change: Several factors can drive organizational change, often categorized into internal and external
drivers. Following is some of the external and internal drivers that drive the organizational change:
External Drivers
• Market Dynamics: Changes in market demand, competition, and customer preferences can bring
organizational change. Companies must adapt to shifting consumer behaviour to remain competitive.
• Technological Advancements: Rapid advancements in technology can require organizations to adopt new
tools, systems, and processes. This may involve upgrading existing technologies or adopting entirely new
ones.
• Regulatory Changes: Changes in laws, regulations, or industry standards can prompt organizations to
change their practices to remain compliant.
• Economic Conditions: Economic fluctuations, such as recessions or booms, can force organizations to
adjust their strategies, cut costs, or explore new markets.
• Social and Cultural Trends: Changes in societal values and expectations, such as increased emphasis on
corporate social responsibility (CSR) or diversity, can drive organizational change.
Internal Drivers
• Leadership Changes: Changes in leadership can lead to new visions, strategies, and organizational
priorities. New leaders may bring different values and approaches that drive change.
• Employee Feedback: Feedback from employees regarding processes, culture, or job satisfaction can drive
change. Organizations may initiate changes to improve employee engagement and retention.
• Performance Gaps: When actual performance falls short of desired outcomes, organizations may need to
change their processes, training, or strategies to address these gaps.
• Innovation Initiatives: A focus on innovation and continuous improvement can drive organizations to
change their structures, processes, or cultures to foster creativity and agility.
• Crisis Situations: Unexpected crises (e.g., financial crises, natural disasters, or public health
emergencies) can force organizations to change rapidly in response to immediate challenges.

Process of change, resistance to change, overcoming resistance to change: The organizational change
process consists of multiple stages and may face resistance from employees and other stakeholders. Grasping
the dynamics of change, identifying the sources of resistance, and implementing strategies to address this
resistance is essential for effective change management. Typically, the organizational change process adheres
to a structured framework that is often conceptualized in stages. One well-known model is Kurt Lewin's
Change Model, which encompasses three primary phases:
1. Unfreezing: This phase involves preparing the organization for change by creating awareness of the need
for change. It entails breaking down existing mindsets and challenging the current state. It requires
communicating the reasons for change, highlighting the drawbacks of the current situation and engaging
stakeholders and building support for change.
2. Changing: This is the implementation phase where the actual change occurs. New behaviours, processes,
or structures are introduced. It requires training employees on new systems or processes, implementing
new technologies and adjusting organizational structures or roles.
3. Refreezing: This phase focuses on solidifying the new changes to ensure they are embedded in the
organization’s culture and practices. It reinforces the change so that it becomes the new norm. Refreezing
is all about celebrating successes and milestones, providing ongoing support and training and evaluating
the change process and making necessary adjustments.

Resistance to Change: In management, resistance to change refers to the opposition or pushback that
employees and stakeholders may exhibit when an organization implements new processes, structures, or
strategies. This resistance can manifest in various forms, including passive behaviors, vocal objections, or even
active sabotage. Understanding the root causes of resistance is essential for effective change management.
This resistance can be in various forms, including:
• Emotional Resistance: Fear of the unknown, anxiety about job security, or concern about increased
workloads.
• Cognitive Resistance: Doubts about the effectiveness of the change or disagreement with the reasons
for the change.
• Behavioral Resistance: Active opposition to change, such as refusal to adopt new processes or
undermining change efforts.
Common Causes of Resistance to Change: Following is some of the causes for resistance to change within
an organization:
• Lack of Trust: Employees may distrust leadership or feel that the change is not in their best interest which
can ultimately bring resistance to change.
• Fear of the Unknown: Uncertainty about how the change will affect roles, job security, or work processes
can lead to anxiety. Employees may be apprehensive about how changes will affect their roles, job security,
or work environment.
• Poor Communication: Inadequate, insufficient or unclear communication can foster confusion about the
reasons for change and its benefits can lead to misunderstandings and scepticism and can ultimately lead
to resistance.
• Loss of Control or Comfort with the Status Quo: Changes can disrupt established routines, leading
individuals to feel they are losing control over their work. Employees may prefer existing routines and
processes, viewing change as disruptive.
• Inertia: People often prefer the status quo, and the effort required to adapt to change can be a deterrent.
• Lack of Involvement: When employees are not involved in the change process, they may feel
disconnected and resistant.

Overcoming Resistance to Change: Overcoming resistance to change in management is essential for

successfully implementing new initiatives and ensuring organizational growth. To effectively manage and
overcome resistance to change, organizations can employ various strategies:
• Communicate Clearly and Frequently: Provide clear information about the change, including its purpose,
benefits, and impact on employees. Use various communication channels to reach all stakeholders and
ensure transparency.
• Involve Employees in the Change Process: Engage employees in planning and decision-making to foster
a sense of ownership. Create focus groups or committees that include employees from different levels to
gather input and feedback.
• Address Concerns and Feedback: Actively listen to employee concerns and be open to feedback.
Acknowledge their feelings and provide honest responses to their questions.
• Provide Training and Resources: Offer training programs to help employees develop the skills needed for
the new processes or systems. Provide resources such as manuals, workshops, or one-on-one coaching
to ease the transition.
• Build Trust and Credibility: Cultivate a culture of trust by being consistent, transparent, and reliable in
leadership actions. Share success stories from previous change initiatives to demonstrate positive
outcomes.
• Create a Supportive Environment: Foster a supportive workplace culture where employees feel safe to
express their concerns and adapt to change. Encourage peer support and collaboration among team
members.
• Highlight Benefits and Successes: Emphasize the positive impacts of the change on the organization and
its employees. Share success stories and milestones achieved during the change process to motivate and
inspire.
• Implement Change Gradually: Consider phased or pilot implementations to reduce overwhelm and allow
for adjustments based on feedback. Gradual change can help employees adapt more easily and build
confidence.
• Lead by Example: Leaders should model the behaviours and attitudes they expect from employees during
the change process. Demonstrating commitment and adaptability can inspire employees to embrace
change.
• Recognize and Reward Adaptability: Acknowledge and reward employees who demonstrate flexibility
and a positive attitude toward change. Recognition can boost morale and encourage others to adopt a
similar mindset.