Meaning: Controlling is the process of comparing actual performance with the standards, finding out deviations, if any and
taking corrective
actions to prevent the recurrence of these deviations in future.
Controlling Process
1 Setting Performance Standards: Standards
are the criteria against which actual
performance would be measured. Standards
can be in both quantitative & qualitative terms.
These should be flexible.
2 Measurement of Actual Performance:
Performance should be measured in an
objective and reliable manner. Performance
Ch-8 Controlling
should be measured in the same units in which
standards are set.
3 Comparing Actual Performance with
Standards: Such comparison will reveal the
deviation between actual and desired results.
4 Analysing Deviations: The deviations from
standards are analysed to find their causes.
Critical Point Control: Control should focus on
key result areas (KRAs) which are critical to
the success of an organisation.
Management by Exception: An attempt to
control everything results in controlling
nothing. Only significant deviations which go
beyond the permissible limit should be brought
to the notice of management
5 Taking Corrective Action: No corrective
action is required when the deviations are
within acceptable limits. But when the
deviations go beyond the acceptable range, it
demands immediate managerial attention so
that deviations do not occur again and
standards are accomplished.
Importance of Controlling
1 Accomplishing organisational goals: It
helps in accomplishing organisational goals by
bringing out deviations, if any and indicating
corrective action.
2 Judging accuracy of standards: It helps
in judging accuracy of standards in the light
of changes taking place in the organisation
and in the environment.
3 Making efficient use of resources: It
helps in making efficient use of resources by
ensuring that each activity is performed in
accordance with predetermined standards.
4 Ensuring order and discipline: It ensures
order and discipline among employees by
keeping a close check on their activities.
5 Improving employee motivation: It
improves employee motivation as the
employees’ know well in advance the
standards of performance on the basis of
which they will be appraised.
6 Facilitating coordination in action: It
facilitates coordination in action as each
employee and department in governed by pre-
determined standards which are well
coordinated with one another.
Relationship between Planning and
Controlling
1 Controlling is blind without Planning
because controlling take place on the basis
of standards made in planning. So when
there is no plan, mgnt have no basis for
controlling.
2 Planning without Controlling is
meaningless because controlling ensures
that the work is performed according to
the plans to find out deviations & taking
corrective actions.
3 Planning prescribe an appropriate course
of action for achieving objectives whereas
controlling checks whether decisions have
been translated into desired action.
4 Planning and Controlling both are
Forward-looking.
Planning is forward looking because Plans
are prepared for future and are based on
forecasts about future conditions.
Controlling is forward looking because the
corrective action initiated by control
function aims to improve future
performance.
5 Planning and Controlling both are
Backward-looking.
Planning is backward looking because
planning is guided by past experiences.
Controlling is backward looking as it
compares the actual performance with
standards. It is evaluation of past
activities to find out deviations.