What is Controlling?

Controlling- Process, Importance, Principles & Features

Definitions of Controlling

1. According to Terry, “Controlling is determining what is being accomplished, that is, evaluating the performance and, if necessary, applying corrective measures so that the performance takes place according to plans.”
2. Koontz, O’Donnell and Weihrich define controlling as the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.”
3. Another comprehensive definition is provided by Fayola: “Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued, and principles established. It has for its objected to point out weaknesses and errors in order to rectify them and prevent recurrence. It operates on everything things, people actions.”

The Basis Control Process

The basic control process, wherever it is found and whatever is being controlled involves the following four steps:

1. Establishing standards –

   Since plans are the yardsticks against which managers devise controls, the first step in the control process logically would be to establish plans. However, since plans vary in detail and complexity and since managers cannot usually watch everything, special standards are established. Standards are criteria of gains which to judge results. In the planning process, the overall objectives of the enterprises, are broken down into the various objectives for the individual departments, and from these narrower objectives goals are established as to the quality, production, cost time standards, sales quotas, schedules, budgets, and many more specific standards for detailed operations. These objectives and goals, as outlined in the planning become the criteria. The standard, according to which control is exercised. Standards are frequently stated in terms of a range minimum to maximum beyond which conditions are not acceptable. Within the range, there may be fluctuations and variations in results. The extent of the tolerance depends largely on the nature of the activity, the costs of more careful efforts to compress the range, and the nature of the demands being made upon the organization. Standards may be of a physical nature, such as quantities of units, man hours, and other physical measurements, or may be expressed in monetary terms relating to sales, revenues, expenses, costs and so forth. In addition to these standards which can be expressed in physical or monetary terms, there are also standards of an intangible nature, e.g., objectives of reaching a fine reputation among competitors, or having a high morale among employees.

2. Measuring performance-

   The second step in the control process is the measurement of performance information and observation. The step involves measuring the performance in respect of a work in terms of standards of control. The presence of such standards implies a corresponding ability to observe and comprehend the nature of existing conditions and to ascertain the degree of control being achieved. Thus, the whole element of information and communication is a key element in control.

Although such measurement is not always practicable the measurement of performance against standards should ideally be on a forward looking basis so that deviations may be detected in advance of their occurrence and avoided by appropriate actions. Where appropriate standards are established and methods of measuring performance are such that subordinates’ performance can be precisely measured, appraisal of actual or expected performance is fairly easy. But there are many activities for which it is difficult to develop accurate standards. For example human relations, and there are many activities that are hard to measure, for example, the performance of finance director. For measuring such activities, techniques like psychological tests and opinion survey may be used. Such techniques draw heavily upon intuitive judgment experience, etc., and are far from exact. It is to be remembered that though there is need of having clear and common measurements in all key areas of business activity, it is neither necessary nor feasible to have rigidly quantifiable measurements in very area. In the opinion of Peter F. Ducker, measurements used for measuring tangible and intangible performance should be (a) clear, simple and rational, (b) relevant, (c) reliable, (d) self-announcing, and (e) understandable without complicated interpretation or philosophical discussions.

3. Comparing actual and standard performance-

   After the actual performance has been measured, it should be compared with standard performance so as to find out deviations. If any. The present step thus involves two sub-steps: first, finding out the extent of deviation, and secondly, identifying the caused of such deviations. It is needless to mention that this step is completed in respect of each individual, each section, each department, as well as for the whole organization. In those cases, where deviations between actual and standard performance are ‘significant’ (or critical), the deviations are analyzed to diagnose their causes and their impact on the organization. Remedial action is possible only when the causes of deviations have been identified. Such an analysis of pinpoints the causes which are controllable by the person responsible to concerned will take achievement the standard. In such a case, the person necessary corrective action. If on the other hand, the deviation is caused by factors beyond the control of the person concerned, he cannot be held responsible for the deviation and cannot take any corrective action.

4. Taking corrective action-

   The fourth step in the process of control is taking corrective action so that deviations do not occur again and the objectives of the organization are achieved. The essence of control lies in this initiation and follow-up of corrective action. The manger does not truly control unless he has taken corrective action if there has been any need for it. Such corrective action is required in a business enterprise because it is not a self-regulating system such as a thermostat which operates is the result of a large number of environmental factors which must be put to deliberate controls. Managers may take corrective actions:

• by redrawing their plans or modifying their goals,
• by changing or clarifying assignment of tasks,
• by additional staffing, better selection and training, or by firing, or
• by better leading and directing.

Thus, correction of negative deviations in performance is the point at which control can be seen as a part of the whole system of management and where it coalesces with the other managerial function. Some writers on management hold that correcting deviations is not a step in the process of control at all. Rather it is the point where the other managerial function comes into play. This overlap of the control function with the others merely shows the ‘systems unity’ of the manager’s job.

Needs & Importance of Control

The need and importance of control arise on account of the following:

1. Coping with uncertainty:

   Uncertainty arises because organizational goals are set for future events on the basis of the best knowledge at the time of planning. A variety of factors such as customer demand, technology, and the availability of raw materials, etc. operate to bring about changes. By developing control system managers are better able to monitor specific activities and react quickly to significant changes in the external environment.

2. Detecting regularities:

   Controls also helps managers to detect undesirable irregularities, such as product defects, or rising personnel turnover, etc. Early detection of such irregularities often can save a great deal of time and money by preventing minor problems; from increasing into major ones.

3. Identifying opportunities:

   Controls also help highlight situations in which things are going better than expected. This gives an alertness to management to possible opportunities in future.

4. Handling complex situations :

   Controls help managers keep track of various changes taking place in the environment. Operating on an international basis often increases complexity and calls for further consideration of necessary controls.

5. Decentralising authority:

   Another major importance of control is in affording managers more attitude towards decentralization of authority. With controls managers can foster decision-making at lower levels in the organization but still maintain to handle properly.

6. Evaluation of planning and organization:

   Controls can help in evaluation the planning and organization. There is a possibility of deviation in the planning objectives due to wrong organizational structure. Controls help in identifying those defects and correct them according to needs.

7. Co-ordinating between resources:

   Controls enhance co-ordination. It established co-ordination between resources of the organization and its objectives. By exercising controls over functioning of employees, it establishes coordination between policies and objectives of the organization.

8. Motivating the employees:

   Controls also act as motivators. Controls identify which department of the organization discharges its activities with utmost good faith and which is not. Efficient workers can be praised and rewarded for their better performance and at the same time, punishment can be awarded to those who are not performing control.

Principles of Control

Harold Koontz has prescribed the following principles of controls:

1. Principle of assurance of objective:

   This principle requires that controls must contribute to the achievement of objectives set by the planners in time, by detecting deviations, if any and initiating corrective steps.

2. Principle of efficiency of control:

   For efficient controls it is necessary to detect deviations from the original plans so that such deviations do not affect the performance of the enterprise.

3. Principle of responsibility of control:

   This principle requires that the responsibility of monitoring the control system vests with the manager who is authorized for the execution of plans.

4. Principle of future controls:

   According to this principle effective control should be aimed at not only for controlling the present deviations but also future deviations from plans.

5. Principle of direct control:

   This principle requires that there must be direct control systems. For effective controls subordinate managers be made more efficient.

6. Principle of reflection of plans:

   The control systems should be designed in such a way to reflect the nature and characteristics of plans.

7. Principle of organizational stability:

   According to this principle, the control systems should be designed to reflect the structure of an organization. It should contain the characteristics of good organization structures.

8. Principle of individuality of control:

   Controls must be designed to meet the personal needs of the managers at each level.

9. Principle of standards:

   This principle requires existence of certain definite objectives, accuracy and standards for effective control systems.

10. Principle of strategic point control:

    Efficient and effective controls require that more attention be given to strategic point of control.

11. Principle of exception:

    This principle requires that only important and major deviations are brought to the attention of the top management. This will eliminate unnecessary and uneconomic supervision, reporting and waste of executive’s time.

12. Principle of flexibility of controls:

    According to this principle, the systems of control must be flexible enough to meet new or revised requirements and can be adapted to new situations without much difficulty.

13. Principle of review:

    The control system should be reviewed without short intervals and if necessary, needful adjustments should be made according to the needs.

14. Principle of action:

    The benefits of control will be available only when proper steps are taken to correct the deviations, if any, detected from plans.

Characteristics of Controlling

A careful analysis of the definitions noted above reveals the following characteristics of controlling:

1. Control is a managerial function:

   Controlling is an essential function of every manager irrespective of his hierarchy in the organization. It is the duty of the manager to control those activities the results of which are his responsibility. Controlling is the manager’s function and responsibility

2. It is a continuous process:

   Controlling is not a one-step process to be undertaken at the point of performance, but a continuous process. It involves a constant revision and analysis of standards resulting from the deviations between actual and planned performance.

3. Its essence is action:

   Controlling implies action towards adjusting performance to predetermined standards if deviations occur. Mere measurement of performance and finding out of deviation do not achieve control.

4. It is closely related to planning:

   It is important to remember that control is intrinsically interwoven with planning. In the managerial process of planning the manager sets the various performance standards, and it is these standards against which performance is checked and appraised, and it is occur deviations between the planned performance and actual performance, then the manager will have to take corrective action, and this corrective action itself may entail new standards. Unless the manager has set goals and standards, he cannot control. Also planning will not have much meaning if there is no control.

5. Its purpose is positive:

   Control is not exercised to put restrictions. The purpose of control is always positive- to make things happen, within stated constraints, as planned. It is a managerial necessity and a help, not an impediment or hindrance.

Important links

• Direction in Business- Features, Importance, Principles, Technique
• Z Theory of Motivation or “Theory of Ouchi”
• Leadership & Leadership Style- Theories, Importance etc.
• Channels of communication- Formal & Informal
• Communication- Meaning, Features, Significance
• Barriers to Communication | Measures for Effective Communication
• Communication- Models, Types & Process
• PEST Analysis- Meaning, Analysis & Application
• TOWS Matrix- Rules, 4 Matrix Strategies & Limitations

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