Controlling

Content
Definition of Control Features of Controlling Importance of Controlling Process of Controlling

Control
Control is the process of comparing

actual performance with established standards, for the purpose of taking action to correct deviations. It is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization's objectives.

Control.
In an organization, control consists of

verifying whether everything occurs in conformity with the plan adopted, the instructions issued and the principles established
Henry Fayol

Features of Control
Control is a positive force

Control is a continuous Process

Control is forward looking Control process is universal Control process is Dynamic Control is Goal Oriented Delegation is the key to control Control is based on planning

Importance of Controlling
Achievement of goals

Execution and revision of plans

Brings order and discipline Facilitates decentralization of authority Promotes coordination Cope with uncertainty and change

Control Process:
Establishment of Standards

Measurement of Actual Performance

Comparison of Actual Performance with the Standards

Corrective Action where Required

Establishing the Standards:

Quantitative Standards: Time Standards Cost standards Productivity Standards Revenue Standards Qualitative Standards: Level of Perfection desired Check on Intangible Items: Goodwill, Employee Morale , Industrial Relations, etc. by help of Tests, Surveys etc.

Measurement of Actual Performance

To make the measurement effective, the

manager has to concentrate on following three key aspects of measurement:

Completeness

Objectivity
Responsiveness

Comparison of Actual with Standards

While comparing the performance with standards it is important to determine the acceptable range of variation. Deviations in excess of this range become significant and receive manager's attention. All such deviations may be due to errors in planning, defective implementation or careless performance of the operatives. Only major or exceptional deviations should be communicated to the management in the form of reports. This is known as management by exceptions

Taking Corrective Actions

Corrective steps are initiated by managers with a view to rectify the defects in actual performance. If actual performance fall short of standards due to non-availability of material, manager try to procure these materials and thus sets things in order. If it is due to poor results shown by the employees, it could be rectified through the introduction of attractive incentive plans.

Characteristics of Effective Control System

Suitable Simple

Selective
Sound and economical Flexible

Forward-Looking
Reasonable Objective

Responsibility for failure

Acceptable

Types of Control
Feedback Control: It is a post mortem

examination of events, the purpose of which is to improve performance (Example: Pizza Hutt with Mr. Aman Rawat) Concurrent Control: Control that consists of monitoring ongoing activities to ensure they are consistent with standards. Feedforward Control: It is the intelligent anticipation of problems and their timely prevention, rather than after the fact reaction.

Requirements for Feedforward Control by Harold Koontz

1. Make a through and careful analysis of the

planning and control system, and identify the more important input variables. 2. Develop a model of the system. 3. Take care to keep the model up to date; in other words, the model should be reviewed regularly to see whether the input variables are identified and their interrelationships continue to represent realities. 4. Collect data on input variables regularly and put them into the system

Requirements cont.
5. Regularly assess the variations of actual input data from planned-for inputs and evaluate the impact on expected end results. 6. Take action. Like any other technique of planning and control, all that the system can do is indicate problems; people must obviously take action to solve them.

Dimensions of Control
Critical or strategic point control: Strategic

point control puts emphasis on measuring the performance and checking deviations in respect of key results areas which are highly critical to the success of a firm.
Management by exception: It tries to focus

attention on exceptionally serious deviations from the plans and standards.

Preventive Controls: Preventive controls are

measures to reduce errors and thereby minimize the need for corrective action.

Resistance to Control
Over-Control

Inappropriate Controls
Unachievable Standards Unpredictable Standards Rewards for Inefficiency Uncontrollable Variables

Overcoming Resistance to Control

Employee participation Justifiable controls Precise and Understandable standards: Realistic Standards:

Timely communication of findings

Accurate Findings Assuring Support Positive Reinforcement

Techniques of Controlling:
Break-even

Analysis: (Cost Volume Profit Analysis) It is a method of presenting and studying the inter-relationships between costs, sales volume and profits. Budgetary Control: A statement of planned allocation of resources expressed in financial or numerical terms. It is the establishment of budgets, relating the responsibilities of executive to the requirements of a policy and the continuous comparison of actual with budgeted results either to secure by individual action, the objective of that policy or to provide a firm basis for its revision.

Types of Budgets
Zero Base Budgeting: The system of budgeting

that requires managers to justify their entire budget request, in detail rather than simply to refer to budget amounts established in previous years. Programme or Performance Budgeting: it is not only a financial plan but also a work plan in terms of work done or products produced. A performance budget is an input/output budget or costs and results budget. Responsibility Accounting: It is a system of accounting in which each departmental head is made responsible for the performance of his department.

Techniques..
Human Resource Accounting: It is a

process of identifying and measuring data about human resources and communicating this information to interested parties. According to Eric G Flamholtz: HRA is accounting for people as an organizational resource. It involves measuring the costs incurred by organizations to recruit, select, hire, train and develop human assets. It also involves measuring the economic value of people to the organisation.

Techniques
Standard Costing: It is the preparation and

use of standards costs, their comparison with actual costs and the analysis of variances to their causes, and points of incidence. Management Audit: It is an independent and critical evaluation of entire management process. It is the systematic appraisal of the overall performance o the management.

Techniques
Social Audit: Social audit is concerned with

social performance of an organization more specifically the contribution of an organization to the society.

PERT and CPM (Network Techniques)

PERT

(Programme Evaluation and Review Technique): It is scheduling tool that is essentially a network of project activities showing estimates of time necessary to complete each activity and the sequential relationship of activities that must be followed to complete the project. (Critical Path Method): It shows the sequence of events and activities within a programme evaluation and review technique network that requires the longest period of time to complete.

CPM

Techniques
Kaizen: Kaizen is a Japanese word which

means continuous and never-ending improvement involving everyone in an organisation

Management-Oriented Kaizen

Group-Oriented Kaizen
Individual Oriented Kaizen

Techniques ..
MIS (Management Information System): A

computer-based system that information and support for managerial decision making.

provides effective

Total Quality Management: Organisational

Philosophy and strategy that makes quality a responsibility of all employees.

Techniques..
Six Sigma: (99.99966%): Six Sigma is a business

management strategy originally developed by Motorola, USA in 1981. It is originated as a set of practices designed to improve manufacturing processes and eliminate defects.
Zero Defect Concept: It is the technique in which

the organisations try to achieve the level of Zero Defect in production with help of continuous improvement.

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