CONTROLLING BY: ARYAN PANWAR

Panwararyan2001@[Link]; 7575878547

Controlling
Controlling is not the last function of management but it is the function which bring back the
management cycle to planning.

Controlling means ensuring that activities in an organisation are performed as per

the plans.

“Controlling is measurement and correction of the performance of the subordinates to make

sure that the enterprise objectives and plans devised to attain them are being accomplished.”
– Koontz and O’Donnell

Characteristics/Nature/Features of controlling:

[Link] is both
[Link] is a goal- [Link] is an all- Controlling is continuous
backward looking as well
oriented function pervasive function function
as forward looking

1. Controlling is a goal-oriented function- Controlling also ensures that an organisation’s

resources are being used effectively and efficiently for the achievement of predetermined
goals. Controlling is, thus, a goal-oriented function.
2. Controlling is an all-pervasive function – It is a primary function of every manager.
Managers at all levels of management—top, middle and lower-need to perform controlling
functions to keep a control over activities in their areas. Moreover, controlling is as much
required in an educational institution, military, hospital, and a club as in any business
organisation.
3. Controlling is both backward looking as well as forward looking-

1
CONTROLLING BY: ARYAN PANWAR
Panwararyan2001@[Link]; 7575878547

It is a function that brings back the management cycle back to the planning function. The
controlling function finds out how far actual performance deviates from standards, analyses
the causes of such deviations and attempts to take corrective actions based on the same.
This process helps in formulation of future plans in the light of the problems that were
identified and, thus, helps in better planning in future periods.

4. Controlling is a continuous function – Controlling is not a one time job but it is an ongoing
process. It is carried on till the organisation in surviving.

Importance of controlling:

Accomplishing organisational goals

Judging accuracy of standards

Making efficient use of resources

Improving employee motivation

Ensuring order and discipline

Facilitating coordination in action

1. Accomplishing organizational goals- Controlling measures progress towards the

organisational goals and brings to light the deviations, if any, and indicates corrective action.
It, thus, guides the organisation and keeps it on the right track so that organisational goals
might be achieved.
2. Judging accuracy of standards – Through strategic controlling, we can easily judge whether
the standard or target set are accurate or not.
3. Making efficient use of resources – Like traffic signal, controlling guides the
organization and keep it on the right track. Each activity is performed according to
predetermined standards. As a result, there is most and effective use of resources.
4. Improving employee’s motivation - A good control system ensures that employees know
well in advance what they are expected to do and what are the standards of performance
on the basis of which they will be appraised. It, thus, motivates them and helps them to give
better performance.
5. Ensuring order and discipline - Controlling creates an atmosphere of order and discipline
in the organisation. Effective controlling system keeps the subordinates under check and
makes sure they perform their functions efficiently. A strict control can have a check over
dishonesty and fraud of employees.
6. Facilitates coordination in action - Controlling provides direction to all activities and
efforts for achieving organisational goals. Each department and employee is governed by
pre-determined standards which are well coordinated with one another. This ensures that
overall organisational objectives are accomplished.

2
 Relationship between Planning and Controlling

1. Meaning of Planning and Controlling

- Planning: Deciding in advance what to do, when to do, how to do and who will do it. It sets
objectives and standards.
- Controlling: Ensuring that activities are carried out as per the plans. It involves measuring actual
performance, comparing with standards, and taking corrective action.

2. Close Relationship
Planning and Controlling are inseparable twins of management.
- Planning is futuristic (decides what is to be done).
- Controlling is backward looking (reviews past performance) but also forward looking (improves
future performance).

3. How They Are Interrelated

1. Planning provides the basis of controlling.
2. Controlling ensures that planning is successful.
3. Planning and controlling are complementary.

4. Cycle of Planning and Controlling

Planning → Standards → Execution → Measuring → Corrective Action → Improved Planning.
This makes them a continuous cycle.

5. Conclusion
- Planning is the first function; controlling is the last.
- Both are dependent on each other and cannot exist independently.
- Together, they ensure that organizational goals are achieved efficiently.

Exam Tip: “Planning without controlling is meaningless and controlling without planning is blind.”
CONTROLLING BY: ARYAN PANWAR
Panwararyan2001@[Link]; 7575878547

Process of controlling:

Taking
corrective
Analysing action
deviations
Comparison of
actual
Measurement performance
of actual with standards
Setting performance
performance
standards

1. Setting performance standards:

 The first step in the controlling process is setting up of performance standards.
Standards are the criteria against which actual performance would be measured.
Thus, standards serve as benchmarks towards which an organisation strives to
 work.
 Standards can be set in both quantitative as well as qualitative terms. For e.g.
 standard sale Rs20 lakh p.a., standard profit Rs4 lakh, reduction in cost by 5%.
 It is important that standards should be flexible enough to be modified whenever
required. Due to changes taking place in the internal and external business
environment, standards may need some modification to be realistic in the
 changed business environment.
2. Measurement of actual performance:
 The next step is measurement of actual performance. Performance should be
 measured in an objective and reliable manner.
 There are several techniques for measurement of performance. These include
personal observation, sample checking, performance reports, etc. As far as
possible, performance should be measured in the same units in which standards
 are set as this would make their comparison easier.
 In large organisations, certain pieces are checked at random for quality. This is
 known as sample checking.
3. Comparison of actual performance with standards:

 This step involves comparison of actual performance with the standard. Such
 comparison will reveal the deviation between actual and desired results.
 Comparison becomes easier when standards are set in quantitative terms. For
instance, performance of a worker in terms of units produced in a week can be
easily measured against the standard output for the week.

4. Analysing deviations:
All deviations need not to be brought to the notice of top management. A range of
deviations should be established and only cases beyond this range should be brought to
the top level management.

3
CONTROLLING BY: ARYAN PANWAR
Panwararyan2001@[Link]; 7575878547

Deviations should be divided in two broad categories. First, that need to be attended urgently in
one category. Secondly, minor or insignificant decisions.

 Critical Point Control: It means keeping focus on some key areas (KRAs) and if there is any
deviation in these key areas, then it must be attended urgently. Key areas means those
areas which have impact on the whole organisation. For example: In a manufacturing
organisation, an increase of 5 per cent in the labour cost may be more troublesome than a
 15 per cent increase in postal charges.
 Management by exception: It means a manager who tries to control everything may end
up controlling nothing. The deviations which are beyond the specific range should only be
handled by managers and minute or minor deviations can be ignored. For example: If the
plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a
manufacturing organisation, only increase in labour cost beyond 2 per cent should be
brought to the notice of the management. However, in case of major deviation from the
standard (say, 5 per cent), the matter has to receive immediate action of management on
a priority basis.

5. Taking corrective action:

 The final step in the controlling process is taking corrective action. No corrective action is
required when the deviations are within acceptable limits. However, when the deviations go
beyond the acceptable range, especially in the important areas, it demands immediate
managerial attention so that deviations do not occur again and standards are accomplished.

 Corrective action might involve training of employees if the production target could not
be met. Similarly, if an important project is running behind schedule, corrective action
might involve assigning of additional workers and equipment to the project and
 permission for overtime work.
 In case the deviation cannot be corrected through managerial action, the standards may
have to be revised.

BY: ARYAN PANWAR

Panwararyan2001@[Link]; 7575878547

------------------------The End----------------------