Tag: Controlling

Importance of Controlling; Controlling is the process of assuring the performance as per standard. It is the comparison and verification process of the actual performance with the standard performance. Controlling is both an executive process and, from the point of view of the organizations of the system, a result. As an executive process, each manager has to perform control function in the organization. It is true that according to the level of a manager in the organization, the nature, scope, and limit of his control function may different as compare to a manager at another level.

What is the Importance of Controlling? with their Steps

Controlling is an important and indispensable part of management. Proper control makes smoothness in the working of the organization. Controlling helps in checking mistakes and tells us how new challenges can meet or face. Without, proper mechanism of control, the management process will be incomplete. Control keeps the subordinate under check and brings discipline among them. It reduces the chances of mistakes that may repeat in the future by providing preventive steps.

Importance of Controlling:

Organizations try to achieve their objectives through various actions. From this point of view, all the objectives lead to the achievement of organizational objectives. However, the organizations must also monitor whether they are achieving their objectives or-not.

Thus control is an integrated action of an organization or manager. It offers help in the following directions;

Operations Adjustments:

First, Importance of Controlling; A control system acts as an adjustment in organizational operations. Every organization has certain objectives to achieve which becomes the basis for control. It is not only sufficient to have objectives but also to ensure that these objectives are achieving by various functions.

Control provides this clue by finding out whether plans are observing and suitable progress towards the objectives is make, and acting, if necessary, to correct any deviation. This may result in taking actions more suitable for the achievement of organizational objectives.

Verification of Policy:

Second, Importance of Controlling; Various policies on the organization generate the need for control. For organizational functioning, managers set certain policies and other planning elements, which later become the basis and reason for control. They become the basis in the sense that organizational performance is reviewed in these lights. They also become the reason for control because, through these, an organization tries that its various individuals adhere to such a framework. In this process, the organization and its management can verify the quality of various policies.

Responsibility of Managerial:

Third, Importance of Controlling; In every organization, managerial responsibility is created through the assignment of activities to various individuals. This process starts at the top level and goes to the lower levels. However, when a manager assigns some activities to his subordinates, he remains responsible for that portion of activities for their ultimate performance.

It is quite natural that when a person is responsible for the performance of his subordinates, he must exercise some control over them. Thus, the control is required because of the very basic nature of the organization itself. In large organizations, many individuals contribute to organizational objectives.

For efficient performance, they are arranged in a hierarchy, forming a superior-subordinate relationship throughout the organization. Since each superior is responsible for the activities of his subordinates also, the control flows throughout the organization, beginning at the top level, the only difference being nature and scope of control.

The pressure of Psychological:

Forth, Importance of Controlling; Control process puts psychological pressure on the individuals for better performance. The performance of the individuals is evaluating in the light of targets set for them. A person is likely to put better performance if he is aware that his performance will evaluate. He may feel pressure to achieve the results according to the standards fixed for him.

This is further complemented by the reward and punishment based on the performance. Since the performance measurement is one of the basic elements of the control process, it ensures that every person in the organization contributes to his maximum ability.

Coordination inaction:

Fifth, Importance of Controlling; Though coordination is the essence of management and is achieving through the proper performance of all managerial functions, control affects this aspect significantly. Control systems are designed in such a way that they focus not only on the operating responsibility of a manager but also on his ultimate responsibility.

This forces a manager to coordinate the activities of his subordinates in such a way that each of them contributes positively towards the objectives of the superior. Since this follows throughout the organization, coordination is achieved in the organization as a whole.

Efficiency and Effectiveness in Organizational:

Final, Importance of Controlling; Proper control ensures organizational efficiency and effectiveness. Various factors of control, namely, making managers responsible, motivating them for higher performance, and achieving coordination in their performance, control ensures that the organization works efficiently.

The organization also moves towards effectiveness because of the control system. The organization is effective if it is able to achieve its objectives. Since control focuses on the achievement of organizational objectives, it necessarily leads to organizational effectiveness.

Looking into the various roles that control system plays in the organization, the management should devise a control system which effectively meets the demands of the organization: The manager can do this if he is aware of the essential features of the effective control system.

What are the important Steps in Controlling?

Controlling is the last function of the management process which is performed after planning, organizing, staffing and directing. Its importance becomes apparent when we find that it is needed in all the functions of management. Controlling checks mistakes and tells us how new challenges can meet or face. The success of the organization thus hinges on the effective controlling.

The various steps in controlling may broadly classify into four parts:

• Establishment of control standards.
• Measurement of performance.
• Comparison between performance and standards and communication, and.
• Correction of deviations from standards.

Now, explain each;

Establishment of Control Standards:

Every function in the organizations begins with plans, which are goals, objectives, or targets to achieve. In the light of these, standards are established which are criteria against which actual results are measured. For setting standards for control purposes, it is important to identify clearly and precisely the results which are desiring. Precision in the statement of these standards is important In many areas, great precision is possible.

However, in some areas, standards are less precise. Standards may be precise if they are set in quantities – physical, such as the volume of products, man-hour or monetary, such as costs, revenues, and investment. They may also be in other qualitative terms, which measure performance. After setting the standards, it is also important to decide about the level of achievement or performance, which will regard as good or satisfactory. There are several characteristics of a particular work that determine good performance.

Some Operations:

Important characteristics, which should consider while determining any level of performance as good for some operations are;

• Output.
• Expense, and.
• Resources.

Expense refers to services or functions, which may express in quantity, for achieving a particular level of output Resources refer to capital expenditure, human resources, etc. After identifying these characteristics the desired level of each character is determined. The desired level of performance should be reasonable and feasible. The level should have some amount of flexibility also and should state in terms of range – maximum and minimum.

Control standards are most effective when they are related to the performance of a specific individual because a particular individual can make responsible for specific results. However, sometimes accountability for the desired result is not so simply assigned; for example, the decision regarding investment in inventory is affected by purchase, rate of production and sales. In such a situation, where no one person is accountable for the levels of inventories, standards may be set for each step that is performing by a man.

Measurement of Performance:

The second major step in the control process is the measurement of performance. The step involves measuring the performance in respect of work in terms of control standards. The presence of standards implies a corresponding ability to observe and comprehend the nature of existing conditions and to ascertain the degree of control is achieving.

The measurement of performance against standards should be on a future basis, so that deviations may detect in advance of their actual occurrence and avoid by appropriate actions: Appraisal of actual or expect performance becomes an easy task, if standards are properly determining and methods of measuring performance which can express in physical and monetary terms, such as production units, sales volume, profits, etc. can be easily and precisely measurable.

The performance, which is qualitative and intangible, such as human relations, employee morale, etc., cannot measure precisely. For such purposes, techniques like psychological tests and opinion surveys may apply. Such techniques draw heavily upon intuitive judgment and experience, and these tools are far from exact. According to Peter Drucker, it is very much desirable to have clear and common measurements in all key areas of business. It is not necessary that measurements are rigidly quantitative.

In his opinion, for measuring tangible and intangible performance, the measurement must be;

• Clear, simple, and rational.
• Relevant.
• Direct attention and efforts, and.
• Reliable, self-announcing, and understandable without complicated interpretation or philosophical discussions.

Comparing Actual, and Standard Performance:

When adequate standards are developing and actual performance is measuring accurately, any variation will clearly reveal. Management may have information relating to work performance, data, charts, graphs, and written reports, besides personal observation to keep itself informed about performance in different segments of the organization.

Such performance is comparing with the standard one to find out whether the various segments and individuals of the organization are progressing in the right direction. When the standards are achieving, no further managerial action is necessary and the control process is complete. However, standards may not achieve in all cases and the extent of variations may differ from case to case.

The third major step in the control process is the comparison of actual and standard performance.

It involves two steps:

• Finding out the extent of deviations, and.
• Identifying the causes of such deviations.

Naturally, management is requiring to determine whether strict compliance with standards is requiring or there should be a permissible limit of variation. In fact, there cannot be any uniform practice for determining such variations. Such variations depend upon the type of activity. For example, a very minute variation in engineering products may be significant than a wide variation in other activities.

When the deviation between standard and actual performance is beyond the prescribed limit, an analysis is making of the causes of such deviations. For controlling and planning purposes, ascertaining the causes of variations along with computation of variations is important because such analysis helps management in taking up proper control action.

The analysis will pinpoint the causes, which are controllable by the person responsible. In such a case, the person concerned will take necessary corrective action. However, if the variation is causing by uncontrollable factors, the person concern cannot hold responsible and he cannot take any action. Measurement of performance, analysis of deviations and their causes may be of no use unless these are communicating to the person who can take corrective action.

In addition:

Other people who may interest in control reports are;

• Executives engaged in formulating new plans, and.
• Staff personnel who are expecting to be familiar with control information for giving any advice about the activity under control when approaching.

Such communication is presenting generally in the form of a report showing performance standard, actual performance, deviations between those two tolerance limits, and causes for deviations. As soon as possible, reports containing control information should be sent to the person whose performance is measure and control.

The underlying philosophy is that the person who is responsible for a job can have a better influence on final results by his own action. A summary of the control report should give to the superior concerned because the person on the job may either need the help of his superior in improving the performance or may need a warning for his failure.

Correction of Deviations:

This is the last step in the control process, which requires that actions should take to maintain the desired degree of control in the system or operation. An organization is not a self-regulating system such as thermostat which operates in a state of equilibrium put there by engineering design. In a business organization, this type of automatic control cannot establish because the state of affairs that exists is the result of so many factors in the total environment. Thus, some additional actions are requiring to maintain control.

Such control action may be;

• Review of plans and goals and change therein on the basis of such review.
• Change in the assignment of tasks.
• Different in existing techniques of direction.
• Change in organization structure; provision for new facilities, etc.

In fact, correction of deviation is the step in the management control process, which may involve either all or some of the managerial functions. Due to this, many persons hold the view that correcting deviations is not a step in. the control process. It is the stage where other managerial functions are performing. Koontz and O’Donnell have emphasized that the overlap of control function with the other merely demonstrates the unity of the manager’s job. It shows the managing process to be an integrated system.