Controlling
CONCEPT
Controlling function can be defined as comparison of actual performance with the planned performance. If
there is any difference or deviation then finding the reasons for such difference and taking corrective
measures or action so that in future there is match between actual and planned performance.
IMPORTANCE OF CONTROLLING
1. Accomplishing organisational goals: The controlling function measures progress towards the
organisational goals and brings to light the deviations if any and indicate corrective action.
2. Judging accuracy of standards: An efficient control system checks changes taking place in the
organisation and in the environment and helps to review and revise the standards.
3. Making efficient use of resources: It acts like a traffic signal and guides the organisation and keeps
it on the right track. As a result, wastage and spoilage of resources will be reduced so that effective
and efficient use of resources can be ensured.
4. Improving employee motivation: A good control system ensures that employees know well in
advance what they are expected to do as well as the basis against which their performance will be
appraised. Thus, it motivates them to give better performance.
5. Ensuring order and discipline: Control creates an atmosphere of order and discipline in
Organisation and helps to minimize dishonest and fraudulent behaviour of employees.
6. Facilitates coordination in action: The activities of each department and employee are governed
and controlled by predetermined standards which are well coordinated with one another.
RELATIONSHIP BETWEEN PLANNING AND CONTROLLING
1. Planning without controlling is meaningless: Controlling is necessary to monitor the progress,
measure it, discover deviations and initiate corrective measures to ensure that activities are
performed according to laid plans and standards are being continuously met.
2. Controlling is blind without planning: If the standards are not set in advance, managers have
nothing to control i.e. when there is no plan, no basis of controlling. Planning is clearly a
prerequisite for controlling. Controlling could not be accomplished without planning.
3. Planning is perspective whereas controlling is evaluative: Planning is basically an intellectual
process involving thinking and analysis to discover and prescribe an appropriate course of action for
achieving objectives. Controlling, on the other hand, checks whether decisions have been translated
into desired action.
4. Both Planning and controlling are backward- and forward-looking functions: Planning involves
looking ahead and is called a forward-looking function as it is done for the future and Controlling is
forward looking as it is done to improve future performance. Controlling is a backward-looking
function as it is like a post mortem of past activities to find deviations from the standards and
planning is backward-looking as it is based on past experiences. Thus, Both Planning and Controlling
are forward looking and backward looking.
CONTROLLING PROCESS
The above steps in the process of controlling have been discussed below:
1. Setting performance standards: Standards are the criteria against which actual performance would
be measured. Standards can be set in both qualitative and quantitative terms.
2. Measurement of actual performance: In the second step, the actual performance should be
measured through personal observation, sample checking, performance reports, calculation of
ratios, etc. The Measurement should be objective and reliable.
3. Comparing actual performance with standard: The comparison of actual performance with the
standard will reveal the deviation, if any. If the deviation is minor, it should be ignored. But, if the
deviation is more, then timely action must be taken.
4. Analysing deviation:
There are two ways to analyse deviations.
a. Critical point control: It means keeping focus on some Key Result Areas (KRAs) which are
critical to the success of an organisation. If anything goes wrong in these critical points, then
it must be attended to urgently.
b. Management by Exception: It means a “manager who tries to control everything may end
up controlling nothing”. Thus, only significant deviations which go beyond permissible limit
should be brought to the notice of management.
5. Taking corrective action: The final step in controlling function is to find out the reasons for
deviations which need immediate attention and trying to remove deviations in future.