Chapter Eight

Dec 2025
“Obstacles to the achievement of organizational goals abound but effective managers are able to control
them.” Lord Cassidy.
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 Controlling Contents
8. Meaning of Controlling
8.1 Controlling as A Management Function
8.2. Controlling Process
8.2.1. Steps in the Controlling Process
8.3. Types of Controls
8.3.1. Major Control Types by Timing
8.4. Controlling Organizational Performance

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 Meaning of Controlling

▪ With the continued expansion of worldwide economic

connections, organizations everywhere have come to recognize
that they are competing not only domestically, but also globally.
▪ Global linkages of financial markets, technology, and production
have resulted in the emergence of previously unknown and
unanticipated marketplace opportunities and threats.
▪ Yet today such global strategies are a common phenomenon.
▪ The key to the success of such strategies goes beyond simply
identifying marketplace opportunities. 4
 Cont..

▪ To this end, control is essential for determining how well an

organization is performing, whether improvement is needed,
where it should occur, how much is needed, and how quickly.
▪ Controlling is concerned with monitoring planned and organized
efforts, comparing programmes with planned objectives and
making of necessary decisions to ensure success.
▪ Defines controlling as a management function that aims to keep
activities directed in such a way that defined results are achieved.
▪ Monitoring of performance is the starting point of control.
▪ Controlling is essentially a managerial function, and the
establishment of control systems is usually the concern of top and 5

senior managers.
 What Is Control ?

❑ The purpose of Control

➢ To ensure that activities are completed in ways that lead to accomplishment of organizational goals.

➢ Why is control so important? Planning can be done, an organizational structure can be created to
efficiently facilitate the achievement of goals, and employees can be motivated through effective
leadership.

➢ But there’s no assurance that activities are going as planned and that the goals employees and
managers are working toward are, in fact, being attained.

➢ Control is important, therefore, because it's the final link in the management functions. It's the only
way managers know whether organizational goals are being met and, if not, the reasons why.

➢ The effective managers follow up to ensure that what employees are supposed to do is, in fact, being
done and goals are being achieved.
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 Why Is Control Important? Cont..
❑ The purpose of Control
➢ The second reason controlling is important is because of employee empowerment.
➢ Many managers are reluctant to empower their employees because of the fear
something will go wrong for which they would be held responsible.
➢ But an effective control system can provide information and feedback on employees’
performance and minimize the chance of potential problems.
➢ The final reason that managers control is to protect the organization and its assets.
➢ Today’s environment brings heightened threats from natural disasters, financial
scandals, workplace violence. Supply chain disruptions, security breaches, and even
possible terrorist attacks. 7

➢ Comprehensive controls and backup plans will help assure minimal work disruptions.
 Controlling as a Management Function

❖Controlling is the process of regulating organizational

activities so that actual performance conforms to
expected organizational standards and goals (Newman,
1975).
❖As the definition suggests, controlling means that
managers develop appropriate standards, and take
steps to ensure that corrective actions are taken when
necessary(Curley, 1951).

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 Controlling Process

• Although control systems must be ➢Managers usually base their main

tailored to specific situations, such controls on the organizational goals
systems generally follow the same basic and objectives developed during the
process. planning process.
• Steps in the control process:
2. Establish Standards
1. Determine areas to control:
➢In the control process, standards are
➢At the start of the control process, essential because they spell out
managers must decide which major specific criteria for evaluating
areas will be controlled. performance and related employee
➢Choices are necessary because it is behaviors.
expensive and virtually impossible to
control every aspect of an organization’s ➢Sometimes, though, they need to 9be
activities. developed during the control process
 Cont..
3. Measure Performance
➢Once standards are determined, the next step is measuring performance.
➢ For given standard, a manager must decide both how to measure actual
performance and how often to do so.
➢The means of measuring performance will depend on the standards that
have been set.
4. Compare performance against Standards:
➢This step consists of comparing the performance measured in step 3 with
the standards established in step 2.
➢Managers often base their comparisons on information provided in report 10
that summarize planned versus actual results.
 Cont..

➢Through networks of linked computers, managers can obtain up-to-the-minute status

reports on a variety of quantitative performance measures.
5. Recognize positive Performance
➢When performance meets or exceeds the standards set, managers should recognize
the positive performance.
➢ This recognition given can vary from a spoken “well done” for a routine achievement
to more substantial rewards, such as bonuses, training opportunities, or pay raises,
for major achievements or consistently good work.
6. Take Corrective Action as Necessary
➢When standards are not met managers must carefully assess the reason why and
take corrective action.
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➢ During this evaluation, they often personally check the standards and the related
performance measures to determine whether these are still realistic.
 Cont..
7. Adjust Standards and Measures as Necessary:

➢ Control is dynamic process.

➢ As a result, managers need to check standards periodically to ensure that the standards and the
associated performance measures are still relevant for the future.
❑Types of Controls
➢ In addition to determining the areas that they want to control, managers need to consider the
types of controls that they wish to use.
❑Major Control Types by Timing
➢ The three types of controls based on timing are feed forward, concurrent, and feedback .
1. Feed Forward (before)
➢ Feed forward control focuses on the regulation of inputs to ensure that they meet the standards12
necessary for the transformation process.
 Feedforward control Cont..

➢ A control that prevents anticipated problems before actual occurrences of the

problem. That way, problems can be prevented rather than having to correct
them after any damage( poor- quality products, lost customers, lost revenue,
etc.) has already been done.

❖ Building in quality through design.

❖ Requiring suppliers conform to International Organization for Standardization(ISO

9002.)

➢ However, these controls require timely and accurate information that isn’t
always easy to get. Thus, managers frequently end up using the other two types
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of control
 Cont..

2. Concurrent Control(during)
➢Concurrent control involves the regulation of ongoing activates that are part of
the transformation process to ensure that they conform to organizational
standards.
➢ The emphasis here is on identifying difficulties in the productive process that
could result in faulty output.
➢Concurrent control is sometimes called screening or yes-no control, because
it often enables checkpoints at which determinations are made about whether
to continue progress, take corrective action, or stop work altogether on a
product or service.
➢Since concurrent control involves regulating ongoing tasks, its use requires 14

clearly specified standards regarding how various activities are to be

conducted.
 Cont..
3. Feedback Control (after)
➢ Feedback control is regulation exercised after a product or service Types of Control
has been completed to ensure that the final output meets
organizational standards and goals .
➢ Feedback control, sometimes called post action control or output
control, fulfills a number of important functions.
➢ For one thing, it is often used when feed forward and concurrent
controls are not feasible or are too costly.
➢ For example, a sales manager will likely find it difficult to use
concurrent control to regulate the daily activities of various
salespeople who visit customers in the field.
➢ Instead, the sales manager will probably emphasize feed forward
control by carefully selecting new hires and then use feedback
control by periodically comparing sales quotas (standards) with 15
actual sales.
 Controlling Organizational Performance

❑Balanced scorecard
▪ The balanced scorecard approach is a way to evaluate organizational performance
from more than just the financial perspective.
▪ It is a measurement tool that uses goals set by managers in four areas to measure
a company's performance:
❖Financial
❖Customers
❖Internal processes
❖People/ innovation/growth assets
▪ It is intended to emphasize that all of these areas are important to an organization's
success and that there should be a balance among them.
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▪ These four legs encompass the vision and strategy of an organization and require
active management to analyze the data collected.
 Cont..
❑Balance scorecard
▪ Looks at organizational performance from various
perspectives.
▪ Perspectives are the performance dimensions, or
lenses, that put a strategy in context.
▪ It takes several perspectives usually four to
understand an organization as a system made up of
elements that work together, like the gears in a clock
or fine watch. Together, these elements create value,
leading customer and stakeholder satisfaction, and
good financial performance.
 Cont..
Characteristics of the Balanced Scorecard Model (BSC)
❑Information is collected and analyzed from four aspects of a business:
▪ Learning and growth are analyzed through the investigation of training and
knowledge resources. This first leg handles how well information is captured and how
effectively employees use that information to convert it to a competitive advantage
within the industry.
▪ Business processes are evaluated by investigating how well products are
manufactured. Operational management is analyzed to track any gaps, delays,
bottlenecks, shortages, or waste.
▪ Customer perspectives are collected to gauge customer satisfaction with the quality,
price, and availability of products or services. Customers provide feedback about their
satisfaction with the current products.
▪ Financial data, such as sales, expenditures, and income are used to understand 18
financial performance. These financial metrics may include dollar amounts, financial
ratios, budget variances, or income.
 Benchmarking of Best Practices

❑Benchmark
➢The standard of excellence against which to measure and compare.
❑Benchmarking
➢It is the search for the best practices among competitors or non-
competitors that lead to their superior performance.
➢Is it a control tool for identifying and measuring specific performance
gaps and areas for improvement.
➢As a tool for monitoring and measuring organizational performance.
But best practices aren’t just found externally.
➢Sometimes those best practice can be found inside the organization and
just need to be shared. One fertile area for finding good performance 19
improvement ideas is an employee suggestion box.
Steps to successfully implement an internal Benchmarking best
practices program

1. Connect best practices to strategies and goals.

2. Identify best practices throughout the organization.
3. Develop best practices reward and recognition systems.
4. Communicate best practices throughout the organization.
5. Create best practices knowledge-sharing system.
6. Nurture best practices on an ongoing basis.

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 Benchmarking of Best Practices

❑ Benefits of benchmarking your performance

❑How to benchmark your business performance
▪ Benchmarking allows you to:
▪ Follow these steps to benchmark your business
▪ Identify and priorities parts of your business that against your competitors:
could improve.
1. Identify what you’re going to benchmark
▪ Understand your customers’ needs better.

▪ Identify your strengths and weaknesses. 2. Identify your competitors

▪ Set goals and performance expectations 3. Look at trends

▪ Monitor your performance and manage change 4. Outline your objectives

more effectively.
5. Develop an action plan for your objectives
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▪ Understand your competitors to become more
competitive 6. Monitor your results
 The End
for this course
but not
the end for
Further studying

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