Controlling is the process of evaluating the actual performance in comparison with the planned targets and taking suitable corrective actions whenever necessary.
Through controlling the manager keeps watch on the situation, monitors it regularly make sure that the work is done in a planned way and takes suitable actions to that effect. A good controlling system is generally designed to keep things from going wrong, not jest to correct them after wards.
Learn about: 1. Meaning of Controlling 2. Definitions of Controlling 3. Characteristics 4. Importance 5. Principles 6. Elements 7. Types 8. Steps 9. Requirements of Effective Control Systems 10. Techniques
11. Qualities of Effective Control System 12. Dimensions 13. Human Resistance to Controls (With Reasons and Measures) 14. Control Frequency Factors 15. Relationship between Controlling and Planning Functions 16. Management by Exception 17. Limitations.
Controlling in Management: Meaning, Definitions, Characteristics, Importance, Principles, Types, Steps and Techniques
Controlling in Management – Meaning
Control is an important function of scientific management. It means to check and ensure that each activity is performed in a planned manner as decided by the management. Managerial control is necessary to minimise variability and unpredictability in the use of means and attainment of ends or goals.
The well designed control system ensures the results are achieved according to plan. It is steering of the ship. Control is implicit because it is simply the process of directing a set of variables towards predetermined objectives. Control is a process that guides activity towards predetermined goals.
Controlling is the process of evaluating the actual performance in comparison with the planned targets and taking suitable corrective actions whenever necessary. Through controlling the manager keeps watch on the situation, monitors it regularly make sure that the work is done in a planned way and takes suitable actions to that effect. A good controlling system is generally designed to keep things from going wrong, not jest to correct them after wards.
Controlling in Management – Definitions
Controlling may be defined as the process of ensuring that activities are producing the desired results. It involves guiding and regulating operations towards some pre-determined goal. According to Koontz and O’Donnell, “Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans.”
It is the continuous process of measuring the actual results of the operations of an organization in relation to the planned results and of minimizing the gap between the two. In the words of Robert N. Anthony, “management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of an organisation’s objectives”.
Thus, control may be defined as the continuous process of verifying whether actions are being taken as planned and taking corrective action to ensure that events conform to plans as closely as possible.
Some of the popular definitions of control and controlling are as follows:
Control consists in verifying whether everything occurs in conformity with the plans adopted, the instructions issued and the principle established. Its object is to point out the weakness and error in order to rectify them and prevent reoccurrence. It operate on everything, i.e., things, people and action: – Henry Fayol
Control is checking current performance against predetermined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance and also recording the experience gained from the working of these plans as guide to possible future need. – E.F.L. Breach
Control, in its managerial sense, can be defined as – “the presence in a business of that force which guides it to a predetermined objective by means of predetermined policies and decisions.” – Dalton E. Mc. Far land
Controlling can be defined as the process of determining what is to be accomplished, that standard, what is being accomplished, that is the performance, and if necessary applying corrective measures so that performance takes place according to plans, that is, conformity with the standard. – G.R, Terry
Thus control is fundamental management function that ensures work accomplishment according to plans. It implies measurement of actual performance, comparing it with the standards set by plans and correction of deviations to ensure attainment of objectives according to plans.
Controlling in Management – 8 Main Characteristics
The main characteristics of managerial control are given below:
1. Control Process is Universal:
Control process consists of the same elements irrespective of the type of organization or function to be controlled. It is the responsibility of every manager to regulate on-going activity and to keep the operations focused towards goal attainment.
2. Control is a Continuous Process:
As long as an organization exists some sort of control is required. “Just as the navigator continually takes reading to ascertain whether he is relative to a planned course, so should the business manager continually take reading to assure himself that his enterprise or department is on course.” Control is dynamic not static.
3. Control is Forward Looking:
Control aims at future because one can control future events and not the past. However, control is in the nature of follow up to other functions of management. It involves review of past performance and one cannot measure the outcome of an event which has not taken place. But the corrective action decided on the basis of past experience is taken for future.
4. Control Involves Measurement:
To control means to check or monitor actual performance, to keep a watch on activities. It requires measuring results against pre-established targets and review of the outcome of activities. But control not only involves checking current performance. It also suggests guidelines for future course of action. It helps to steer events towards targets so as to make things happen. Evaluation and measurement is the heat of control process.
5. Control is an Influence Process:
Control seeks to structure events and to condition behaviour. It is designed to curb undesirable trends and to shape the pattern of future events] It induces people to conform to certain norms and standards.
6. Management Control is a System:
Control is often considered a watchdog, a judgement on behaviour and performance. Management control is in fact a system consisting of certain interdependent elements, e.g. goal or standard, sensory device to monitor events, mechanism to detect and analyze deviations (warning signal), and adjustment or corrective element.
7. Control is Best Aimed at Results Not at People as such:
Managerial control aims at increasing efficiency and effectiveness rather than curtailing the rights and freedom of individuals.
An appropriate mix of freedom and control are necessary to achieve organizational effectiveness. Positive control is always designed to improve results rather than to punish individuals. Behaviour modification and learning are the positive means of control while punishment and threat are negative means. A good control system is one which facilitates right action at the right time rather than restricting the required action. Thus control is best aimed at results not at people as such.
8. Control is Goal Oriented:
Fundamentally control is any process that guides activity towards predetermined goal. Its essence is in determining whether the activity is achieving the desired results. Thus, control is not an end in itself but a means to achieve desired objectives.
Controlling in Management – Importance
The importance of control is evident from the following points:
i. Managerial Accountability:
Personnel are assigned responsibilities from top to bottom in an organizational structure. A superior is accountable for the performance of his subordinates. Control flows from top to bottom, and as a result, a superior has control over his subordinates. Everyone in the organization has responsibility for the work assigned to him.
ii. Effective Implementation of Plans:
Control ensures that each plan is implemented in a predetermined manner. It provides important information on the basis of which existing plans may be revised and new plans may be adopted. The controlling process translates plans into action for achieving organizational goals.
iii. Facilitating Decision-Making:
The process of control is complete only when corrective measures are taken. This requires taking a right decision regarding the type of follow-up action is to be taken. Controlling enables the management to detect the adverse deviations and helps in quick decision-making for future course of action.
iv. Accomplishing organizational Goals:
Controlling is a goal-oriented process. It plays an important role in achieving the objectives of an organization. All activities are directed towards the planned objectives through the process of controlling. Management keeps a close watch and monitors the performance at various levels of organization by exercising efficient controlling.
v. Bringing in Coordination and Team Spirit:
Control helps in coordination and brings in a feeling of team spirit through unity of action. It facilitates coordination by keeping all activities and efforts directed towards achievement of the planned goals. An efficient system of control is necessary in order to coordinate various activities.
vi. Facilitating Effective Supervision:
Control bridges the gap between thinking functions and doing functions. A good system of control detects the weak points very quickly. This enables the expansion of span of control at all levels in the organization. It facilitates better performance and regulates the efforts of the employees.
vii. Efficient Use of Resources:
A controlling system brings in a feeling of self-discipline and self-consciousness among the workers. It induces the employees to perform the work efficiently. Employees are well aware that defective performance is linked with various types of punishment. This helps in reducing wastage, spoilage, accidents, and cost of production. The resources are used in such a way so that they remain neither unutilized nor are they over-used.
viii. Boosting the Morale of Employees:
Controlling helps in boosting the morale of the employees. It creates an atmosphere of discipline in the organization. The workers are expected to do their best to complete the work for the satisfaction of the management. Controlling induces the workers to follow predetermined standards to achieve results according to the plan. As a result, every employee knows what he is expected to do. This helps the morale of the employees at a higher level.
ix. Bringing Order and Discipline into the Organization:
Efficient control regulates the dishonest behaviour on the part of employees. Control facilitates better performance and regulates the efforts of the employees. Disorders, indiscipline, and chaotic conditions can adversely affect the smooth functioning of an organization. Effective controlling ensures order and discipline into the organization.
x. Essence of Action:
Control is an action-oriented process. An efficient system of control provides the basis for future corrective action. Control ensures that the same mistake is not repeated in future. The corrective action should be taken by the management if there is any deviation (especially adverse deviations) from the standard.
Controlling in Management – Top 4 Principles
An understanding of principles of control has been considered as important for grasping and appreciating the ideal of managerial control.
As per views of Lyondell Urwick there are four principles of managerial control:
(A) The Principle of Uniformity:
The object of control is to drive the best work performance. It is necessary that the principle of uniformity must be observed. It requires the presentation of data, information, figures and reports for control purposes in terms of organisation structure.
(B) The Principle of Compassion:
A good control must provide quick comparison that the manager of control can attend to possible trouble, while the operation is in control. The purpose of comparison is to enable the manager to predict future results.
(C) The Principle of Utility:
Under this principle the value of reports for control changes directly with the suitability of the period covered by report keeping in view of the purpose of control. A manager can be successful in controlling by uniting the ideas of the men around him. The control system should be acceptable to the persons being controlled.
(D) The Principle of Exception:
It holds that the manager should devote greater attention to the strategic points of unusual time. Optimum control can be achieved only if critical points can be identified and a close attention is paid to them. Control has been considered as expensive.
Controlling in Management – Elements: Planning, Information Feedback, Delegation of Authority and Remedial Action
Element # 1. Planning:
Control is designed to achieve certain objectives. Planning involves the setting of objectives to be accomplished and the actions required to attain them. Unless the goals are specific and clear, it is not possible to determine whether the action is proceeding along the right lines.
Moreover, control involves detecting deviations from the charted course. Deviations can be detected only when the predetermined standards exist in the form of desired course of action. It is planning that provides targets or standards for measuring actual performance.
Thus, control is not possible without planning. In the absence of planning control is blind as there is no criteria for measuring and evaluating results and for identifying deviations. Planning serves as the basis for control. In fact planning and control go hand in hand. The process of control uses certain standards for measuring performance which are laid down by planning.
Control, in turn, helps to ensure that plans are being implemented properly. Control points out the shortcomings of planning and may lead to the revision of plans. Control directs attention to situations where new planning is required and provides some of the data on which future plans are based. Thus, there is a reciprocal relationship between planning and control.
Thus, planning is the basis, action is the essence, delegation is the key and information is the guide to control.
Inter-Relationship between Planning and Control:
There is close inter-relationship between planning and control functions of management. Planning is the basis of control. Control implies the existence of certain standards against which actual results may be evaluated. Planning provides such standards, where there is no plan there is no basis for control. Planning initiates the process of management, Control completes the process. Without plans control is blind for when one does not know where to go, one cannot judge whether one is not the right track or not.
H.G. Hicks has rightly stated that “planning is clearly a prerequisite for controlling. It is utterly foolish to think that controlling could be accomplished without planning. Without planning there is no predetermined understanding of the desired performance.” According to Billy E. Gotez, “Management planning seeks consistent, integrated and articulated programmes while management control seeks to compel events to conform to plans.”
Comparison of Planning and Control:
1. Emphasis on impersonal, abstract, long-range problems.
2. Less structured
3. Uses ranges, estimates
4. Top executive spend much of time
5. Evaluation of results difficult, and takes longer time to determine.
1. More emphasis on personal, concrete, immediate problems.
2. Often highly structured
3. More reliance on measured data from specific cases
4. Operating and lower level personnel involved
5. Results are often visible relatively soon, and are easier to assess in simple situations but may be difficult to evaluate in complex cases.
At the same time, planning without control is merely a pipe dream or wishful thinking. Without an adequate control system, the best laid plans may go astray. Control ensure that the operations proceed according to plans and the planned targets are achieved. It also indicates need for revision of plans.
The information collected for control is also useful for planning in future. Control, therefore, makes planning is a meaningful exercise just as planning provides the guideline for control. Planning is an intellectual or thinking exercise whereas control is an action and result oriented function.
Thus, planning is meaningless without control and control is aimless without planning. In fact, “planning and control are the inseparable (Siamese) twins of management. Unplanned actions cannot be controlled, for control involves keeping activities on course by correcting deviations from plans. Any attempt to control without plans would be meaningless since there is no way anyone can tell whither he is going the task of control, unless first he knows where he want to go the task of planning.”
It is often said that planning is looking ahead and control is looking back. The statement is partially correct. Plans are prepared for future and they are based on forecasts of future environment. Therefore, planning involves looking ahead and anticipating future conditions. Control involves measurement and evaluation of what has happened so as to identify what should be done in future. Control is looking back but the control action is taken to regulate future events.
One cannot control what has already happened. Past experience is only the guide and the lesson learnt from it is used to prevent undesirable events in future. In this way, control is both looking back and looking ahead. Planning is a bulwark against snap and impulsive decisions. It is needed to overcome forces of uncertainty, and complexity and control is a bulwark against drift into inaction and malfunctioning. It is needed to preserve integrity and effectiveness of the organisation.
Element # 2. Information Feedback:
Control involves comparison of actual performance with planned performance. Such comparison is possible only when management is supplied with adequate and accurate information at the right time. Reports on the performance at the lower level must be available on a regular basis. A manager should keep himself aware of the progress of work.
Prompt and up-to-date information (feedback) enables a manager to know where and when deviation from the planned course has taken place so that he may take prompt remedial action. The management information system must be tailored to the specific management control needs at every level. The effectiveness of a control system depends upon the information system of the organization.
Element # 3. Delegation of Authority:
Control action can be taken only when adequate authority has been delegated to detect deviations and to correct them. In the absence of adequate authority, a manager cannot take effective steps for correcting deviations from the standards when a manager is assigned the responsibility for a particular work, he has to control the operations involved in that work.
Therefore, he must be authorized to take decisions on various matters concerning his responsibility. Otherwise, he will not be able to discharge his responsibility. Need for control arises whenever authority is delegated to subordinates.
Element # 4. Remedial Action:
There is no control until action is taken to rectify the mistakes and deviations. Mere reporting of actual performance or its comparison with predetermined standards is not sufficient. Unless timely action is taken to adjust-operations to standards, control process is incomplete. Corrective action may involve setting of new goals, change in organisation structure, and improvement in staffing and new techniques of directing.
Controlling in Management – 3 Types of Control: Post/Feedback Control, Concurrent Control and Feed-Forward Control
Depending on the time at which corrective action is taken, controls are of three kinds:
1. Feedback control,
2. Concurrent control, and
3. Feed-forward control.
Type # 1. Post Control or Feedback Control:
Traditionally, control is viewed as historical or post- action control. Under it results are measured after the performance. Such measurement provides information about how goals have been achieved. This information is known as feedback and on this basis corrective action is taken. Therefore, correction occurs after the event.
Feedback control is the process of adjusting future action on the basis of information about past performance. It is not possible to go back and correct past performance. Accounting records, disciplinary action, performance appraisal interview, budgetary control and quality inspection are examples of feedback control. It is also called historical control.
A good control system is based on information feedback which discloses errors in accomplishing goals. Feedback refers to the process of adjusting future actions on the basis of information about past performance. Feedback is after the event information. But it is vital to the control process because it is the guide for initiating corrective action.
The controlling function in management is similar to the function of the thermostat in a refrigerator. Thermostat is a closed loop control device that makes control instantaneous. In a refrigerator, thermostat measures the actual temperature inside the refrigerator. It compares the actual temperature with the required temperature and initiates corrective action to bring the actual temperature to the required level.
Similarly, management control continuously records information about actual performance, compares it with the desired performance and takes corrective action to bring the actual performance to the desired level. Information received and used by management is the feedback which may be formal or informal. Formal feedback is the written information about actual performance presented in the form of reports, financial statements, etc. On the other hand, informal feedback is received through personal observations, personal contracts and informal discussions.
The control function of management cannot be as instantaneous and self-correcting as a thermostat in a refrigerator. There always exists a time lag between recording deviations from planned performance and taking corrective actions. The collected or recorded information needs to be analyzed and interpreted properly before suggesting any corrective action.
Managerial control performs the same function which at thermostat does in a refrigerator. But a thermostat is an instantaneous and self-correcting mechanism while managerial control involves a time lag. Moreover, the information itself cannot correct deficiencies. Action by a manager is required to set things right.
A thermostat detects deviations as well as regulates actual performance. But a top manager receives report on actual performance from his subordinates and on the basis of such reports he takes the necessary corrective action. A thermostat is a built in device and it is a closed loop system but management control is an open system and it is not a built in device.
The thermostat in a refrigerator operates on the principle of cybernetics which implies predetermined self-direction and self-regulation of the internal functioning of a system in a closed setting through automatic feedback. There are arrangements for continuously monitoring, measuring and maintaining a predetermined level of temperature in the refrigerator in an automatic manner by such mechanisms as sensor, compressor, selector and effector.
The objective is to keep the system’s activity and output well regulated and balanced in a mechanistic manner without human intervention. In other words, a mechanism is built into the system for automatic self-regulation and self-adjustment of the system’s functioning and performance in a ‘steady state’.
Such cybernetic or automatic control is possible only in case of mechanical systems e.g. refrigerator, computer, etc. such built in mechanisms cannot be applied in human systems like management which have to adapt and respond to changes in the external environment. In management the activities to be controlled are non-repetitive. It requires managerial judgement, discretion and innovation to monitor, measure, regulate and adapt the functioning of the system (organisation) and to keep it in a state of dynamic equilibrium.
Type # 2. Concurrent Control:
It is also known as real time or steering control. It involves the adjustment of performance before any serious damage is done. Concurrent control occurs while an activity is still taking place. As an activity goes on, it is monitored and wherever necessary corrective action is taken to achieve desired results. For example, the navigator of a ship adjusts its movements depending upon the direction of destination, obstacles and other factors. In industry quality control chart is an example of concurrent control. Inventory control, production control, etc. are other examples of such control.
Type # 3. Feed-Forward or Pre-Control:
This control system anticipates the problems that the management is likely to encounter in future and identifies the steps to be taken to overcome them. It attempts to anticipate deviations in advance of their occurrence and allows corrective actions to be taken in advance of the problem. Therefore, it is also known as ‘predictive control’, preventive control and pre control. It is a more aggressive approach to control because correction can be made before the system output is affected.
Preventive maintenance programme is an example of feed forward control. It is employed to prevent a breakdown of plant and machinery. Another example of feed-forward control is the cash budget used to forecast the next year’s flows of cash so as to avoid shortage or excess of cash. However, feed-forward control is costly. Moreover, it may not be possible to do continuous monitoring for some activities.
Feedback control involves a time lag in the process of correction. Feed-forward control attempts to remove the limitation of time lag in taking corrective action.
Feed-forward control is likely to be most effective when the following guidelines are followed:
(i) Thorough planning and analysis must be done to ensure that detention of deviations from input standards is credible.
(ii) Deviations from input standards must be highly competent to predict organizational problems.
(iii) Careful discrimination must be applied in selecting input variables.
(iv) Data on input variables must be regularly collected and assessed to predict problems.
(v) The preventive action must be taken in time to avoid impending trouble. Feed-forward controls are superior to post control and concurrent control.
Controlling in Management – Process (With 5 Steps)
The process of managerial control consists of the following main steps:
Step # 1. Establishment of Standards:
The first step in control process is the setting up of control standards. Standards represent the criteria against which actual performance is measured. Standards serve as the benchmarks because they reflect the desired results or acceptable level of performance.
Control standards may be of the following kinds:
(a) Quantitative Standards:
These standards are set in physical or monetary terms. Such standards are set up in production, sales, finance, and other areas where results can be measured in precise quantitative terms.
Quantitative standards may be further classified as follows:
(i) Cost standards which specify the cost limits within which results should be achieved.
(ii) Revenue standards which represent the desired level of profits.
(iii) Time standards which specify the time limits within which work should be completed.
(iv) Physical standards, e.g. quantity of output, units of sales, number of customers, etc.
(b) Qualitative Standards:
There are certain areas in which it is not possible to set standards in quantitative terms. Goodwill, employee morale, motivation, industrial relations, etc. are such areas. In these areas standards are laid down in intangible terms.
To be effective, performance standards should satisfy the following requirements:
(i) As far as possible standards should be set in precise quantitative terms.
(ii) Standards should be objective and accurate. They should be based on scientific analysis rather than on guesswork.
(iii) Standards should be flexible, i.e., capable of being modified when the circumstances so require. Acceptable range of deviations should be defined for every standard.
(iv) Standards should be clear (easily understandable) and meaningful to those for whom they are set.
(v) Standards should be reasonable (workable) and acceptable. They should be set in consultation with the employees concerned.
(vi) Standards should focus on some strategic points that reflect the total operation.
(vii) Standards should be revised periodically to keep them up-to-date.
Step # 2. Measurement of Performance:
After performance standards are established, the next step is the measurement of actual performance. Measurement of performance should be accurate and reliable. It should be clear, simple and objective. Where quantitative standards are established performance should be measured in quantitative terms. This will make evaluation easy and reliable.
In other cases performance may be measured in terms of opinion surveys and other qualitative terms wherever possible measurement should be done during performance. For example, each part is checked while assembling the product. There are several techniques for measurement of performance e.g., personal observation, sample checking, performance reports etc. A sound management information system should be developed for accurate and timely measurement of performance.
Step # 3. Comparing Performance with Standards:
The third major step on the control process involves the comparison of actual performance with standard performance. Such comparison will reveal the deviation between actual and desired results. Comparison is easy where standards have been set in quantitative terms. In other cases where results are intangible direct personal observation and reports may be used to identify defects or deficiencies in performance.
According to Ernest Dale, control reports must satisfy there criteria. First, control reports must produce figures that are truly comparable from one period to another and from one section of the business to another. Secondly, they must be co-ordinated so that they not only portray the results in different sections of the business but also indicate the reasons for the results. Thirdly, control reports must be presented in such a form that the manager can get the bird’s eye view.
Step # 4. Analysis of Deviations:
All deviations need not be brought to the notice of top management. A range of deviations should be established and only cases beyond this range should be reported. This is known as control by exception. When the deviations between standard and actual performance are beyond the prescribed limit, an analysis of deviations should be made to identify the causes of deviations. Then the deviations and causes are reported to the managers who are authorized to take action.
Step # 5. Take Corrective Action:
The final step in the control process is taking corrective action so that deviations may not occur again and the objectives are achieved. Corrective action may be- (a) revision of standards, (b) change in the assignment of task, (c) training of employees, (d) improvement in the techniques of direction, etc. At this stage a manager should avoid two types of mistakes. First, taking corrective action when no action is required and secondly, not taking action when action is required. The real test of a good control system is whether right action is taken at the right time.
Controlling in Management – 11 Main Requirements of an Efficient Control System
The main requirements of an efficient control system are as follows:
1. Focus on Objectives and Needs – The control system should aim at accomplishing the organizational goals. It should be tailored to fit the needs of the organization. For example, the flow of information regarding actual performance should correspond with the organizational structure. The technique of control employed should be appropriate to the work being controlled.
2. Forward Looking – The control system should be directed towards future. It must focus attention on how future action can be confirmed with plans. It should identify situations where new plans are needed should provide data upon which future plans can be based.
3. Prompt – An effective control system should detect and report deviations promptly so that necessary corrective action may be taken in time. A good appraisal and management information system is required for this purpose.
4. Critical Point Control – It is not economical to control each every activity. Therefore, control should be selective. It should focus on the key result areas which are critical to the survival and success of the organization.
5. Control by Exception – Some deviations from standards has little impact while others have serious impact. Control system should direct attention on critical deviations. Only exceptional deviations require management attention. This is known as the principle of control is exception. The more a manager concentrates his control efforts on exceptions, the more efficient will be the result of his control.
6. Flexibility – Control system must keep pace with changing conditions of the business world. It should be adaptable to new developments including the failure of the control system itself. Flexibility in control system can be introduced by preparing alternative plans (e.g. flexible budgets) for various probable situations.
7. Objectivity – Standards of performance should, as far as possible, be objective and specific. They should be quantified or verifiable. They should be based on facts and participation so that control is acceptable and workable. Measurement of actual performance should also be objective and accurate.
8. Economical – The control system must be worth its costs. It must justify the expenses involved. In other words, the savings anticipated from it should be greater than the expected costs on its working. A small enterprise cannot afford the elaborate and expensive control systems employed in large concerns.
9. Motivating – An effective control system should pay due attention to human factor. It should be designed to secure positive reasons from people. It should focus on work not on workers. It should free rather than restrict action and should prevent mistakes rather than punish individuals. Self-control tends to be motivating. Direct contact between the controller and the controlled is also helpful in making the control system motivational.
10. Suggestive – Merely pointing out deviations is not enough in a good control system. It must lead to corrective action that can check undesirable deviations from standards. The control system should lead to the attainment of objectives with minimum of unsought consequences.
11. Simple – A good control system must be simple and understandable so that all mangers can use it effectively. Complicated control techniques, e.g. mathematical formulae fail to communicate the meaning of control data to the managers who use them.
Controlling in Management – Key Areas
We understand that control is an essential function of the management, which is needed to lead the organizational performance towards predetermined goals. But we must understand that each and every activity in an organization cannot be subjected to control. It is simply not feasible.
Now the question is how to select the points of control so that by controlling the key areas of activities, substantially the whole organization can be controlled. The answer lies with technique of identifying key performance areas and points of strategic controls.
1. Identifying Key Performance Areas:
Key performance or key result areas are those aspects of the unit or organization that have to function effectively in order for the entire unit or organization to succeed. These areas usually involve major organizational activities or groups of related activities that occur throughout the organization or unit For example- its financial transactions, its manager-subordinate relations, or its manufacturing operations.
The broad controls that upper managers establish for these key performance areas will help define the more detailed control systems and standards for lower-level management.
2. Identifying Critical or Strategic Points:
In addition to key performance areas, it is also important to determine the critical points in the system where monitoring or information collecting should occur. If such strategic control points can be located, then the amount of information that has to be gathered and evaluated can be reduced considerably.
The most important and useful method of selecting strategic control points is to focus on the most significant elements in a given operation. Usually only a small percentage of the activities, events, individuals, or objects in a given operation will account for a high proportion of the expense or problems that managers will have to face.
For example- 10 per cent of a manufacturer’s products may well yield 60 per cent of its sales; 2 per cent of an organization’s employees may account for 80 per cent of its employee grievances; and 20 per cent of the physical inventory may account for 70 per cent total value of inventory.
Another useful consideration in selecting an operation’s strategic control points is the location of those areas of the operation in which change occurs. For example- in an organization’s system for filling customer orders, a change occurs when the purchase order becomes an invoice, when an inventory item becomes an item to be shipped, or when the item to be shipped becomes part of a truckload.
Since errors are more likely to be made when such changes occur, monitoring change points is usually a highly effective way to control an operation.
An example of critical points control is the dashboard on a car. There are many things that can go wrong with a car. Only the most critical items to the car’s operation are the focus on the dashboard (oil level, engine heat, fuel gauge, etc.). Variations in these items are most likely to inflict the most damage to the car.
The critical items on the dashboard are easily understood and used by drivers. They point out a problem and specify a solution. They are accurate and timely. They call the driver’s attention to variations in time to prevent serious damage. Yet, there is not so much information on the dashboard that the driver is overwhelmed.
3. Control by Exception:
Identifying key performance areas, and critical points and establishing control systems covering those areas is not the end task of a manager. He has to intervene and correct the situation if control system reports deviations from the standards. Now the question is – is every deviation from standard need to be reported to top management and tackled by them? Of course not.
Generally the top management identifies the significant levels of variations when they need to be reported, otherwise a system is devised where lower level managers take care of not so significant deviations. This is known as control by exception. This type of “exception system” ensures that a manager isn’t overwhelmed by information on variations from standard.
For example- an organization might have a policy that gives supervisors the authority to give annual employee raises up to Rs.200 a month, approve individual expenses up to Rs.500, and make capital expenditures up to Rs.5,000. Then, only deviations above these amounts require approval from higher levels of management. These check-points become controls that are part of the structural authority constraints and free management from reviewing routine expenditures.
Controlling in Management – Qualities of Effective Control Systems
The effective control systems tend to have certain good qualities.
These are as follows:
The control system must be suitable to the needs of an organisation. It must conform the nature and needs of the job and the area to be controlled. The flow of control information should reflect the organisation pattern. The control techniques should be used in production department will be different from that used in marketing department or finance department.
The control system should be easy to understand and operate. The complicated control system such as – mathematical formulae, statistical methods and another complicated charts and graphs are ineffective, if they create mistakes, confusion and frustration among employees.
The standard of performance and their measurement should be objective, specific and verifiable as far as possible. It should not be subjective and arbitrary. The controls should be accurate, acceptable workable and unbiased. Vague standards are not easily understood.
(iv) Prompt Reporting:
The controls should report deviations promptly. Timeliness is the essence of control. More realistic information on deviations should be monitored and feedback to the system immediately so that corrections are effected with minimum cost and inconvenience.
The control system must focus attention on key, strategic and important factors which are critical to performance in this way manager can save their time and meet problems hand on in an effective manner.
(vi) Forward Looking:
An effective control system should be forward looking. It should focus attention on providing early information regarding the changes which are likely to occur with the environment. The managers take remedial steps immediately before thing go out of gear.
(vii) Economically Realistic:
The system of control should be economical and easy to maintain. The cost of implementing of a control system should be less than or at most equal to the benefits defined from the control system in order to minimise costs, manager should try to impose the least amount of control that is necessary to produce desired results .
It is important that flexibility should be built in to the standards because control system must be adjust to adverse changes or to take advantage of new opportunities.
According to Robin, controls must be reasonable and attainable. If they are too high or unreasonable, they do not longer motivate employees. On the other hand, when controls are set at low levels, they do not pose any challenge to employees. The control should challenge and stretch employees to reach higher performance without being demotivating.
(x) Remedial Measures:
The purpose of control is to keep the system on its predetermined track by preventing deviations from occurring. A good control system should point out where a deviation has occurred, what are the reasons for deviation and what corrective action should be taken.
(xi) Human Factor:
A good control system should be employee centered rather than work centered as control is exercised on the performance of workers. It must find the persons accountable for results whenever large deviations take place. The human factor must be given proper attention while controlling.
In short, planning is the basis of control, action is essence and information its guide. It is necessary that sufficient information of right type is necessary to the manager for taking corrective steps in time, if a control mechanism does not transmit such information to the management; it is not going to last long. Therefore, there must be a provision of feedback to make a good system of controlling.
Controlling in Management – Top 2 Dimensions
The word control suggests activities of checking, testing, regulating, verifying and making necessary adjustment. In a large Multiplan, multi products and multi-location organisation, it is not possible to check everything whenever things go off the track; the managers have to decide in advance the area of operation and set of activities which are more important such as – key and critical ones, which have a significant bearing on the performance of various departments in the organisation.
In this regard, there are two dimensions which are as follows:
(i) Critical or Strategic Point Control:
Practically it is not possible to control and check each and every point of the organisation because it is not economical and easy also. Therefore manager pick some critical or strategic points that reflect entire organisation. These points are so important that if anything goes out of track, the entire organisation suffers immediately.
After identification of critical activities, the suitable standard of performance can be evolved for controlling the critical areas of activities of the organisation depends on the nature of its operation.
For example ABC analysis of inventory controls. In this control system, more attention is focused on ‘A’ category inventory items which are small on number but large in value.
(ii) Management by Exception or Control by Exception:
According to this principle manager should give more attention to unusual or exceptional items. This principle is developed by F.W. Taylor. During controlling the activities of subordinates the manager should measure, evaluate and report only those activities in which major deviations have been occurred.
The concept of control by exception is based on assumption that “no news is good news” if nothing to report it may be assumed that the system is functioning well. The manager might request the subordinate to report on those activities which have not been performed in conformity with standards. This principle high lights the importance of the statement that if you want to control everything you end up controlling nothing.
“It offers the following benefits”:
(a) It is very effective approach in controlling modern organisation.
(b) It identifies critical problem areas save time and stimulate communication.
(c) It reduces the frequency of decision making.
(d) It focuses more concentration on strategic points.
(e) It makes use of more knowledge and data.
Controlling in Management – Human Resistance to Controls (With Reasons and Measures)
Human factor must be recognised while designing a control system. Employees often resist control which are likely to restrict their freedom and obstruct the achievement of their personal goals. Managers must anticipate employee’s reactions to controls and take appropriate steps to prevent and minimise resistance to controls.
Reasons for Human Resistance to Controls:
People may dislike and resist controls, due to the following reasons:
1. Ambiguous Standards – Employees resist control when they do not accept and understand the standards or goals. This may happen when standards are imposed on them without their participation and co-operation in the fixation of standards. Standards may also be opposed when they are rigid and unrealistic. People may feel that standards are unreasonably high or based on subjective judgements.
2. Check on Freedom – Employees may perceive controls as curbs to freedom and as instruments of oppression. The control may suppress the creative and innovative urges of the people. Excessive controls reduce flexibility.
3. Inaccurate Measurement – Control may be resisted when people feel that measurements are inaccurate or biased. If controls are administered in an arbitrary or discriminatory manner, people oppose them.
4. Bias – People resist control when control measures concentrate on deviations and do not account for effort. The control systems may focus on fault findings and penalizing people rather than guiding their behaviour towards better actions. Controls may be based on the assumption that people are basically lazy, they shirk work and need to be supervised closely.
5. Untimely – Control measures may not be timely enough or they may only get at the surface.
6. Fear – Some persons find it difficult to accept the facts of life and become frustrated. They put the blame on the system that reveals their weaknesses or exposes their limitations. They resist control for ego reasons.
7. Emotions – Controls have status and power implications. For example, a quality control inspector may carry more power than a supervisor and this may be resisted.
Controls are essential for the success of an organization. But no control system can be successful without the co-operation of the employees.
Therefore, following measures should be adopted to overcome people’s resistance to controls:
Measures to Overcome Resistance to Controls:
(i) Standards or goals must be established in consultation with the employees. The need for and the value of standards should be explained so that they are recognized as legitimate. Participation of employees in the establishment of performance standards makes the standards more acceptable. Therefore, the people whose performance and behaviour are to be controlled must have a say in the determination of standards and administration of controls.
(ii) Standards should be realistic and flexible. They should make allowance for general human failures. The controls should not suppress the genuine aspirations of people for self-expression and creative urge. They should give due emphasis to self-direction and self-control. An optimum mix of freedom and control are essential to achieve organizational effectiveness.
(iii) Control measures should focus on improvement of behaviour and performance rather than on deviations and faults. Employees should be assured that they will not be unfairly censured for an occasional mistake or for failure beyond their control.
(iv) Controls should be administered objectively and fairly. Employees dislike control when they feel that evaluation is improper. To overcome these difficulty employees may be allowed to participate in evaluating their own performance. No discrimination should be done between individuals.
(v) Management should have faith in the capacity and character of subordinates. They should apply selective control. Control by exception should be the rule where subordinates are responsible and dependable.
(vi) In order to overcome the ego problem in control, management should develop positive attitudes among employees through learning, behaviour modification, etc. Managers should avoid negative controls such as threats and punishments.
(vii) The reward structure in the organisation should be integrated with the control system. Subordinates should be offered rewards for acceptable performance and behaviour so that they may get positive reinforcement.
(viii) A two way communication system should be established in the organisation. Employees should be encouraged to send their reactions and suggestions to management. Managers should use persuasion to convince the subordinates that controls are meant to achieve the goals and not to curb the freedom of individuals. Control system should be incorporated as a dynamic part of the way of managing so as to develop a dispassionate view.
Robert Tannenbaum has identified the following behavioural implications of controls:
(i) Control has both rational and symbolic implications – It tells what an individual must or must not do. It also implies something about the person’s importance and freedom in the organization.
(ii) Most persons prefer to exercise control over the themselves and their surroundings – They usually experience greater satisfaction when they are able to exercise self-control.
(iii) When one can exercise some control, one is more likely to identify with and support the organizations, objectives.
(iv) Persons who are unable to exercise control tend to be less satisfied with their work and to be apathetic and alienated – Such person’s lack of personal insolvent of those who exercise control.
(v) Those who exercise control may more willingly accept controls upon themselves – Due to greater involvement and loyalty, such persons might more readily submit to additional controls.
Controlling in Management – Control Frequency Factors
Control frequency refers to how frequently the controls need to be exercised within a given period of time. Here the question is – will the measures be taken to control the performance periodically, say from time to time, continuously or occasionally?
The control frequency depends on several factors, namely:
(a) The quality expectations
(b) Process speed
(c) Scope for repair or correction
(d) Project Cost
(f) Reputation associated with
(g) Degree of accuracy required
(h) Discretionary powers
(i) Situation/context demands
(j) Public attention
(k) Regulatory compliances, and
(l) Any other factor affecting the cost, quality, time and service.
The above list may not be exhaustive. While frequent controls are good for maintaining quality of the product and services, they also become prohibitively costly. So, there is a need for trade-off between the control requirements and the costs associated with. If it is a live TV proceeding, any disruption or technical failure may result in loss of TV audience and hence it is under constant supervision and control of a qualified engineer.
Similarly, in case of an operation theatre, we know how closely the vital readings of the patient are monitored on line because any slight degree of omission may cost the human life. These are the cases where one cannot compromise. Even if it is costly, it is worth spending so high to maintain uninterrupted services with quality.
The quality expectations of the customers and other stakeholders force companies to go for highly frequent controls. If the process speed is high and the scope for repair or correction is low, it is worth creating a system where the controls are exercised more frequently.
In cases where the project cost is high and implementation of the project costs without cost/time over runs, the only way is to have continuous reports on progress of the project and it is worth spending to appoint a team of full time project managers who will continuously monitor the project progress.
Six sigma companies which are known of attaining high quality (these companies are known of less than 3.4 defects per one million cases of not meeting the required specifications) give top priority for high degree of control to be nearly flawless in executing their key processes.
Take the case of a materials manager; he spends closer control over the high cost products/spares of his inventory, medium control on medium cost products and spares and low control over less costly products and spares.
i. Legal Compliances:
Every legal requirement is a compliance to ensure that the organisation’s progressing in the right direction.
A publisher of textbooks need to pay more attention to every error because they are supposed to produce error-free reading materials and the controls need to be very frequent at each critical point such as – pre-press proofs and printing. Relatively speaking, not controls at the later stages such as – binding, sales and marketing and distribution need not be so frequent.
ii. Line Manager:
Line manager in shop floor needs to be very alert about the functioning of every machine in line production. Any breakdown in the shop floor will delay the subsequent processes and this call for frequent controls.
iii. Quality Control Managers:
QC managers use control charts to assess the robustness of every manufacturing process using process control and acceptance sampling methods. Here the controls are less frequent.
Earlier, banks used to have financial statements prepared for every quarter to project its progress from quarter to quarter. Today with technology around, the banks close their accounts on day to day basis and where require they prepare financial statements more frequently.
v. During Pushkarms and Kumbhmela:
During such events which are held on the banks of prominent rivers in India once in every 12 years, large congregations of humans assemble to offer their prayers to the river Gods. This type of events requires continuous vigilance to prevent stampede, loss of human life, loss of property.
Leaders and officials including chief ministers personally sit in the locations to monitor the conduct of the events. The only decisive factor that can contribute to happy completion of such grand events is the different types of control you exercise at different locations involving both government machinery and public participation with continuous monitoring. There are cases of loss of human life because of stampede and the reasons that were identified for such lapses were lack of frequent controls.
vi. During Disasters:
Natural calamities such as – tsunami, earthquakes, floods, temple stampedes, the losses are minimized only through preventive controls such as alerting the general public, cautioning and even physically preventing the fishermen to go into the deep seas for fishing, closing down the schools and colleges and assessing the situation using latest technology. It is only such controls that can minimise the loss of human and physical resources.
In cases where the controls are less frequent particularly in providing public services such as – electricity or transportation, the problems could be very complex and intrigue. Some of the examples include failures of Electricity department in control of transformers, failures of railways in maintaining level crossings, failures of police dept. in maintaining traffic and road management, failures of municipalities in sewerage controls and food adulteration controls and so on.
vii. The Traffic Management and Control Systems:
Traffic management and control systems in the modern context started levying large fines for violation of every traffic rule. The fear of huge fine is the trigger to generate control among the general public on roads. The police are empowered with latest gadgets such as – digital cameras to shoot every traffic violation such as wrong parking etc.
The technology is leveraged to record every over speed drive and bring it to book the case. Infact, all these controls brought a little discipline on the road and reduced the accidents. The e-chalans body worn cameras and registering cases against those involved in Drunk and drive in the presence of media – all these brought facelift for the police functioning.
These reduced the interface between the offenders and the police officials and this directly reduced the cases of corruption and complaints of misbehavior.
On the success side of controls, example of corporate Hospitals and corporate colleges for which Hyderabad is famous. Infact, in these two sectors namely Hospitals and Education, control is really not a big necessity but here it changed the total game plan and gave them super success. The controls are exercised in an imaginative and proactive way. These are the cases of toning up the performance through systematic and periodic controls.
Organisations can definitely move to next level of excellence by just focusing on controls. Most of the organisations collapse only because they do not observe controls both at the personal and organisational level. For instance, in many case, corporate founders lose sight of organisational goals when they start seeing big money and this is the critical stage when they observe self-control and become role models so that their employees can emulate their leaders.
Not depositing company money into personal account is a big control leader observes to maintain difference between personal account and business account. Adhere to ethics and human values in both personal and business transaction; never compromise for short term gains or profits; look for long term sustainability and these acts as controls for organisations for toning up their performance. Also in all these cases, control frequency should be of very high order.
Controlling in Management – Relationship between Controlling and Planning Functions
Controlling is viewed as the essence of management process. Without control, the purpose of management is not achieved. It is the control function that ensures the delivery of performance, achievement of results and achievement of the purpose of the organisation as per the plans and targets.
In other words, controlling function starts with the targets or plans set for performance. Planning and controlling are two inseparable and integral functions of management. There is controlling in planning function and planning in controlling function.
In other words, plans are formulated in line with the overall objectives and the performance is controlled in line with the plans. Once the performance is delivered, it is compared with the targets or plans. If the performance matches with the target, then the plans are said to be achieved and the purpose of the organisation is fulfilled.
Though the list of management functions show that controlling comes last, it is interesting to observe that there is controlling function in every other function of management namely planning, organising, staffing, directing, leading, coordinating, communication, budgeting, etc. Controlling ensures that the right things happen, in the right way, and at the right time.
At every stage, it ensures that the efforts and overall directions of individuals and teams/groups are in line with short and long-term plans and contribute to organisational success. Controlling is the only way to verify whether objectives and accomplishments are consistent with one another across the organisation.
There could be number of rules, policies, procedures, regulations and the control function ensures that there is total compliance in all respects. Where is deviation, the concerned manager has to report the same to the top management. Thus, it maintains compliance with essential organisational rules and policies.
Controlling in Management – Management by Exception (An Important Principle) and Its Benefits
Management by exception or control by exception is an important principle of managerial control suggested by classical writers on management. It is based on the belief that an attempt to control everything results in controlling nothing. According to this principle, only exceptional (significant) deviations from standards should be brought to the notice of management. So long as actual performance is within the acceptable range of deviations from the standards, it needs to be reported to management as no follow-up action is necessary.
But if there is a major deviation from the standard, it should be brought to the attention of management. For example, the production manager establishes quality control standard wherein five defects per 100 units produced are permissible. So long as the defects do not exceed 5 the supervisor/foremen (subordinates) will handle the problem.
Whenever there are more than 5 defects, the matter will be reported to the production manager. If management attempts to regulate each and every minor deviation, its time and attention will get so scattered that it will not be able to focus on any problem. Therefore, it should focus on strategic or key deviations and leave the minor ones for lower level operating staff.
Thus, if you want to control everything you may end up controlling nothing. This is also known as the principle of control at strategic points.
Management by exception provides the following benefits:
(i) It saves the time of managers because they deal only with exceptional matters. Routine problems are left to subordinates.
(ii) It focuses managerial attention on major problems. As a result there is better utilization of managerial talents and energy.
(iii) It facilitates delegation of authority. Top management concentrates on strategic decisions and operational decisions are left to the lower levels. There is increase in span of control. This leads to motivation and development of subordinates.
(iv) It is a technique of separating important information from unimportant one. It forces managers to review past history and study related business data for identifying deviations. There is better use of knowledge of trends, history and available business data.
(v) It keeps management alert to opportunities and threats by identifying critical problems. It can avoid uninformed and impulsive action.
(vi) Management by exception provides better yardsticks for judging results. It is helpful in objective performance appraisal.
Control by exception, however, suffers from the following limitations:
1. It requires a comprehensive system for recording a reporting of data.
2. It tends to multiply paperwork.
3. It may provide a false sense of security.
4. It is very difficult to identify critical or exceptional deviations.
5. It cannot be a substitute for thinking and judgement.
6. It may lead managers to interpret the exceptions as only a nuisance to be avoided.
Controlling in Management – Limitations
A control system may be faced with the following limitations:
(i) An enterprise cannot control the external factors such as government policies, technological changes, changes in fashion, etc.
(ii) Employees often resist controls and as a result the effectiveness of control is reduced. Control also loses its effectiveness when it is not possible to fix the responsibility on specific individuals,
(iii) Control is an expensive process. Sufficient attention has to be paid to observe the performance of subordinates. This requires a lot of time an effort,
(iv) Control system loses its effectiveness when standards of performance cannot be defined in quantitative terms. For instance, it is very difficult to measure human behaivour and employee morale.
Though control is essential for better performance it has some limitations.
They are explained below:
1. Influence of external factors – The external factors like changes of government policy, strategy of competitors, technology changes, consumer preference changes, etc. are beyond the control of the organisation.
2. Absence of perfect standards – Standards cannot be fixed in all cases. In the absence of quantitative standards, the performance cannot be measured accurately.
3. Difficulty in fixing responsibility – In big concerns, a number of employees are involved in the performance of a task. The management faces difficulty in fixing responsibility.
4. Expensive process – Control is an expensive process. It requires a lot of time and effort.
5. Opposition from subordinates – Control interferes with the individual actions and thinking of subordinates. So, the subordinates often resist controls.