One of the important functions of management is controlling. Every manager of an organization from the lowest to the highest level performs this function. Let us take a look at the control function and the control processes.
What is Controlling?
Economists Hicks and Gullet say it best, “controlling is the process by which the management sees that what is happening is what was suppose to happen”. Basically controlling is managers ensuring that the activities performed by the firm are producing results in line with the goals and objectives of the firm.
So controlling not only involves the monitoring of the activities of the firm but also reviewing the results, giving constructive feedback and taking any corrective actions that are necessary. Controlling is essentially the counterpart of the planning function of management.
The process of controlling follows a sequence of logical steps as follows
1] Setting Standards
This is the first step of the control process. Before we begin any other work, the managers need to set the standards against which the actual performances will be measured. These standards, objectives, goals, targets etc. will be used to define the purpose of the firm.
Before these standards are set a proper study of the economy, circumstances and feasibility must be done so that the standards set are realistic in nature. Also, managers must ensure that such standards have some flexibility. Extremely rigid standards are unrealistic in a dynamic business environment.
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2] Measurement of Actual Performance
The next logical step in the control process is to measure the actual performance of the employees of the organization. The manager has to compare the actual performances with the standards set in the first step. However, this measurement of performances is not as straightforward as it sounds, especially for non-technical jobs. The basis of this measurement should be the same as the basis on which the standards have been set.
3] Comparing Actual Performances with Standards
This comparison of the actual performances with the standards will reveal the differences and deviations. In real case scenarios, these numbers almost never match up completely. There will always be deviations, and to some extent these deviations are acceptable. But managers need to ensure that these deviations are not beyond the acceptable ranges.
4] Taking Corrective Action
This brings us to the final step of the control process. If the deviations in the third step are in an unacceptable range, then the firm needs to improve their performances. So if the actual result is far from the desired result (the standards that have been set), then the manager has to take some corrective action.
So if the variance is adverse, there is an inquiry to find out the reasons. And the management must take action to improve the actual performance of the firm in those problem areas. And if the variance is favorable, then also there must be an investigation. It does not always point to a good performance, it could be that the standards set were very substandard and need to be revised.
Question on Control Processes
Q: What is Critical Point Control?
Ans: In an organization, it is not always possible to check every activity and performance. Instead, the management will focus their control on the key result areas. These are the most instrumental in the success of the firm.