Controlling is one of the most important functions of management. It helps managers bridge the gap between their organization’s actual performance and targets. This, in turn, reduces losses and risks for businesses. Management experts and strategists have developed several traditional and modern control techniques for this purpose.
Modern Control Techniques
There are several tools which managers can employ for facilitating control over their organization’s activities. These techniques may be either traditional or modern. Traditional techniques generally rely on non-scientific methods.
Modern techniques, on the other hand, are more scientific in nature. They are also more accurate and logical than traditional techniques. The following modern control techniques exist widely in use these days.
American business executive and management expert Peter Phyrr first introduced zero-base budgeting in the 1970s. This process requires a manager to prepare and justify his budget from scratch (hence the name zero-base). The burden of proving the importance of each facet of budgeting lies on managers here.
Under this process, managers first have to define the objectives of each activity they propose to supervise. Next, they should prepare alternative spending plans relating to smaller facets of each activity. These plans relate to minimum expenditure levels, the requirement of resources, targets achievable with additional expenditure, etc.
After preparing these alternative plans, managers have to rank them in priorities. Furthermore, they need to keep evaluating these plans routinely after implementing them. This technique of controlling allows effective budgeting as well as sound planning.
Browse more Topics under Controlling
- Meaning of Controlling
- Techniques of Managerial Control
- Responsibility Accounting, Management Audit and Pert and CPM
A network is basically a system of interconnected things and plans. Network analysis, thus, is a technique of planning and controlling complex relationships between business activities. These network techniques may be of the following two types:
1. Critical path method
Under this technique, managers break down tasks into smaller factions and define the relationships between them. Next, they mark these relationships on a “network diagram” using flowcharts and mapping techniques.
Changes in one faction, in turn, helps them determine how other factions will change as well. This process, thus, makes controlling and planning easier and effective.
2. Programme evaluation and review technique
Managers generally deploy this technique for planning and controlling individual projects. It basically includes tasks like planning schedules, budgeting, forecasting requirement of resources and developing alternative plans.
Furthermore, this technique uses probability and linear programming to assist in control management. Probability estimates the chances of success and failure of each part of a project. On the other hand, linear programming helps in maximizing the objectives of each individual action.
A management audit is nothing but a systematic evaluation of an organization’s management and its overall performances. It comprises of a systematic and comprehensive appraisal of each individual managerial function.
Management audit differs from a statutory or financial audit in terms of its scope and objectives. While accounting audits study financial performances, management audits deal with managerial activities.
This can be very difficult because such functions do not depend on numerical and scientific metrics. Hence, a management audit often relies on subjective factors like ethics, integrity, skills, etc.
A typical management audit appraises the performances of managers and their organization on various standards.
These include their corporate structure, corporate earnings, treatment of shareholders, production efficiency and fiscal policies.
Even executive evaluation, appraisal of top-level management, research & development, and economic functions are important standards.
Solved examples for you
Question: Mention the missing words in the following statements.
(1) __________ control techniques depend on non-scientific methods.
(2) Peter Phyrr introduced the modern control technique of __________ in the 1970s.
(3) __________ audit relies on subjective considerations.
(4) __________ studies comples interconnected business activities and functions.
Answers: (1) traditional (2) zero-base budgeting (3) management (4) network analysis