Controlling

Importance of Controlling

1. Controlling helps in achieving organizational goals:

The controlling function tracks progress toward organizational objectives and flags any deviations so that remedial action can be taken.

2. Judging accuracy of standards

An effective control system allows management to determine if the standards set are accurate or not by closely monitoring changes in the organization's environment.

3. Making efficient use of resources

A manager can reduce resource waste by effective utilizing resources through the controlling process.

4. Improving employees' motivation

An effective control system guarantees that staff are aware of what they are expected to do as well as the performance requirements. As a result, it inspires and assists them in delivering superior results.

5. Ensuring order and discipline:

By maintaining a careful eye on the activities of its employees, the controlling function generates an atmosphere of order and discipline in the firm.

6. Facilitating Coordination in action:

The last and most crucial role of controlling is to ensure that each department and employee is governed by predetermined standards and goals that are well-understood and coordinated. This guarantees that the organization's overall goals are met in a timely way.

Limitations of controlling

Difficulty in seting quatitative standards: When standards cannot be measured, a control system loses some of its effectiveness.
2. Little control on external factors: External elements such as government legislation, technical advancements, and competition, among others, are beyond the control of an organization.
3. Resistance from employees: Employees, for the most part, despise being controlled by their bosses and they dislike being in constant vigilance of the management.
4. Costly affair: Control is an expensive procedure because it necessitates a lot of money, time, and effort in terms of setting standards, measuring performance and correcting the deviations.

Features of Controlling

In an organization, control is a major goal-oriented function of management. It is a process of comparing actual performance to the company's defined standards to ensure that actions are carried out according to the plans, and if they aren't, corrective action is taken.

Goal oriented: The attainment of defined goals or organization whether it is profit making, non-profit making, business or non-business, at all levels whether it is top level management or middle level management or lower-level managment.
Pervasive: Controlling is required in all types of organization whether it is profit making, non-profit making, business or non-business, at all levels whether it is top level management or middle level management or lower-level management.
Continuous: Continuous performance development, is a real-time, forward-looking approach to performance that businesses utilise to align and grow their people while assisting them in their success.
Controlling is the process of reviewing staff performance: Through controlling function, the management can keep a check on the performance, dedication, and problem areas of the staff.
It is a forward-looking function: Controlling is a forward looking function, as it helps in deciding the future course of action in case the actual performance does not match with the standards set.
It is dependent on the planning: Controlling is dependent on the planning function, as the comparison of actual performance is made with the planned performance. Hence planning acts as a base for controlling.
Action oriented: The focus of management is on accomplishing the work with the help of human resources. It is the effective and efficient coordination of all available resources. The actions in an organisation are carried out by subordinates, or workers, who work under the supervision of a manager.

Relationship between planning and controlling

Planning and controlling are intertwinned and mutually reinforcing in the sense that:

Planning is required for effective control. The norm for controlling is set by plans. Managers have no influence over anything if the standards aren't defined ahead of time.
Without controlling, planning is worthless. When control is exercised, it is fruitful. It detects any deviations and takes corrective action if necessary.
Controlling assesses the efficiency of planning and aids in the implementation of remedial actions.
Planning is forward-thinking, whereas controlling is backward-thinking. Planning is a future-oriented activity since it entails thinking ahead and establishing policies to maximize resource use in the future, which is why it is referred to as a forward-looking function.
In controlling, we examine the employees' previous performance and compare it to the established requirements. If there are any discrepancies between real and expected performance or output, the controlling functions ensure that future actual performance meets expected performance. As a result, controlling is a function that looks ahead.
As a result, planning and controlling are intertwined, and they walk hand in hand. Controlling becomes more successful because of planning, whereas planning enhances future controlling.

Controlling Process

Setting performance standards
Measurememnt of actual performance
Comparision of actual performance with standards
Analyzing deviations
Taking corrective action

Setting performance standards

The criteria against which actual performance can be measured are known as standards
Standards are the goals that an organisation aspires to achieve.
Due to changes in the business environment, standards should be flexible enough to be adjusted as needed.
Standards could be qualitative or quantitative or it could also be time bound or cost bound.

Measurement of actual performance

Performance standards are established first, and then actual performance is assessed.
Personal observation and sample checking should be used to measure performance in an objective and reliable manner.
Performance should be measured in the same terms that standards have been defined to make comparisions easier.
Performance can be checked simultaneously when the work is being performed or after the completion of work.

Comparing actual performance with standard

In this step, real performance is compared to the standard.
If the perfomance meets the norms, everything appears to be under control.
There can be three secnarios
1. Standards = actual performance
2. Standards > actual performance
3. Standards < actual performance

Analyzing deviations

The permissible range of variations determined by assessing deviations from the stands.

Critical point control: control should be focused on key result areas (KRAs) that are cruicial to an organization's success.
These KRAs have been designated as important.
Management by Exception: Exceptional management Control by exception, often known as control by exception, is a key management control philosophy based on the belief that attempting to control everything leads to managing nothing. In other words, you can't control everything at the same time.

Taking corrective action

Taking remedial action is the final step in controlling process. When the variance is within acceptable bounds, no corrective action is necessary. When major aberrations occur, however, corrective action is required like:

Alarms are being installed.
Equipment is redesigned or replaced.
Tools are arranged which were needed for production
Work processes are being updated.
In case of overestemation or underestimation of standards, the standards are set again.