THE INSTITUTE OF FINANCE MANAGEMENT
MSD 06202 - FUNDAMENTALS OF MANAGEMENT
TOPIC 7: CONTROLLING FUNCTION
1. Define the term Control/ Controlling Function
According to Koontz “Controlling refers to the measurement and correction
of performance to make sure proper implementation of the devised plans for
accomplishment of enterprise objectives
Or
Is the process of monitoring, comparing and correcting work performance,
Robbins (2014).
Or
Is the process of ensuring that organizational activities are going according
to plan, accomplished by comparing actual performance to predetermined
standards or objectives, then taking action to correct any deviations.
2. What are the characteristics of control?
o Control process is universal o Exercised at all level of mgt
o Control is continuous process o A corrective action
o Control is action based o A dynamic process
o Control is forward looking o Management control is a
system
3. What are steps in controlling? (process)
i. Measuring actual performance;
HOW? Through Personal observation, statistical reports, oral and written
reports
ii. Comparing actual performance against standards:
The step helps to determine variation between actual performance and the
established standard. There should be an acceptable range of variation as
seen in figure 1 below
iii. Taking managerial action: Management can choose among three
possible course of action – to
Do nothing
Correct actual performance; This can be done by:-
Immediate corrective action – corrective action that corrects
problems at once to get performance back on track
Basic corrective action – is corrective action that looks at how
and WHY performance deviated before correcting the source
of deviation
Revise the standard
1
Figure 1; comparing actual performance against standards
Acceptable Upper Limit
Acceptable Range of Variation
STANDARD
Acceptable Lower Limit
Figure 2: Controlling Process
Compare YES
Is standard being attained?
OBJECTIVES actual Do Nothing
performance
and
Standard NO
PLANS YES
Is Variation acceptable? Do nothing
Measure
Standard actual NO
Performanc YES
e Is standard Acceptable? Identify
cause of
variation
NO
REVISE Correct
STANDARD Performanc
e
4. Why controlling?
2
o Guide operations of the business
o Provides assurance that activities are going as planned
o Ensure managers and workers efforts are geared to attainment of
goals
o It also provide reasons for not meeting objectives (if goals are not met)
o Reduce risk of system failure
o Ensure effective use of scarce resources
o Simplifies overall coordination & supervision
o Provides basis for future action
o Shows an indicator for managerial weakness
5. What are the disadvantages of control?
o Control is expensive and time-consuming process.
o Human behavior and employee morale also cannot be measured.
6. Give some critical point for control standards
o Cost standards o Goals standards
o Revenue standards o Program standards.
7. What are the types of control?
i. Feed forward control – A control that is take place before a work
activity is done (anticipate problems), I.e. “INPUTS” e.g. Quality
issues
ii. Concurrent control – a control that takes place while a work activity
is in progress (corrects problems that happens), i.e. “PROCESS” e.g.
direct supervision
iii. Feedback control – A control that takes place after a work activity is
done (corrects problems after they occur) i.e. “OUTCOME” e.g
Financial control
6. What are critical areas of control?
o Control over policies o Control over Capital
o Control over personnel expenditure
o Control over Costs o Control over Production
o Control over Research and o Control over Performance
Dev o Control over Morale
o Control over Financial o Overall control
3
7. What is important aspect (requirements) for effective control?
The effective control system has to be;-
o Objective- specific focus
o Have prompt reporting of issues
o Forward looking
o Point out expectations
o Economical – the benefits > costs
o It must be simple- easy understood by an ordinary layman
o It should be flexible
o integrate with planning
o Suggest remedial action