CBSE Class 12 Business Studies - Controlling  

Management:

  • seeks to achieve organizational goals through people in a dynamic environment, once a plan is formed and implemented, the results are then compared to the planned performance so as to ensure things have gone to its place in the right manner. This function of scrutinizing in management is called controlling.
  •  It is a process of ensuring that activities are producing the desired results. It involves basic function like guiding and regulating the actual results with the planned goals.
  • According to Koontz and O'Donnell -

"Managerial control implies the measurement of accomplishment against the standard and the correction of deviations assure attainment of objective according to plans.”

NATURE/FEATURES OF CONTROLLING

  • Controlling is a universal process – control process is a universal/pervasive process as it is found with the same steps in all kind of organization. In government organisation, a proper procedure is followed for scrutinizing the work and same in private firms. It is the responsibility of each and every manager to foresee on-going activity and to keep the operation focused towards the goals of the organization.
  • Controlling is a continuous process – control is a continuous process after planning is done in each and every function of the organization whether it is organizing, staffing or maybe directing managers have to control them. So as long as management exists some sort of control is necessary.
  • Controlling is a forward-looking process – in management planning is considered as forward-looking because while planning manager foresees the future and predict the goals for the organization, but controlling is also forward-looking process because in controlling actual results are compared with planned results and managers analyses the point of deviation. This analysis suggests guidelines for a future course of action and that’s how the future planning will be better.
  • Controlling consists of measurement – control means to check the activities or to keep a watch on activities. Here actual performance and being compared to some pre-determined performance, this comparing is nothing but the measurement of actual with the target. Evaluation and measurement is the heat of the controlling process.
  • Management control is a system – control is often considered a watchdog or a judgment on behavior and performance. The management control system consists of certain independent elements as – goals or standard, the sensory device to monitor events, the mechanism to detect and analyze deviations, and corrective measures.
  • Controlling aims at corrective results not at people as such – controlling’s basic task is to measure the performance and take corrective action if any deviation is there rather than curtailing the rights and freedom of individuals.
  • Controlling is a goal-oriented process – controlling mainly measures the results and includes those activities which guide the activity towards predetermined goals. Its essence is determining whether the activity is achieving the desired result. Thus controlling is not an end but it is a means to achieve desired objectives.

PROCESS OF CONTROLLING

STEP 1. Establishment of standards: management, first of all, fixes some standards against which the results are then compared and measured. As standards serve as a benchmark because they reflect the desired level of results. Controlling standards may of the following kinds:

  1. Quantitative standards- these standards are the sets of standard which are made in monetary or physical terms. Such standard is set up in sales, production, finance, maintaining inventory and other areas where results can be measured in quantitative terms.
  2. Qualitative standards – areas where certain standards cannot be made in quantitative terms. Goodwill, motivation, industrial relation, etc. so under these are standards are made in intangible terms.

STEP 2 – Measurement of actual performance – actual performance must be measured in a reliable manner so that the correct result is produced. For this measurement should be done in the same units so that it is easily comparable.

STEP 3 – Comparing actual performance with standards – this comparison is made so as to find out deviations if any. Deviations mean a difference in actual performance with pre-determined standards performance.

STEP 4 – Analysing deviation – deviation derived after the measurement is made to identify their actual causes, an area where the performance lacks and the real reason behind it, that may be caused due to defective machinery or taking up of the wrong component in the production process. While analyzing it is important to determine an acceptable range of deviation and key results areas. The minor deviation is ignored and solved on the lower level itself but if there is any deviation which is beyond the acceptable range should be brought to the notice of the management.

STEP 5 - Taking corrective action – the final and the last step in controlling process are taking corrective action so that deviation may not occur again and the objective is achieved. Corrective actions might involve training off employees

  1. proper training of employees
  2. Improvement in the production process
  3. Improvement in the direction technique.

At this point a manager must avoid two mistakes:

  1. Taking corrective action when no action is required,
  2. Not taking any action when action is required.

The real test of a good control system is whether to take the right action at the right time.

RELATIONSHIP BETWEEN PLANNING AND CONTROLLING

There is a close relationship between planning and controlling. Planning is the basis of control. Control implies the existence of certain standards against which the performance may be evaluated, so that’s why control is blind without planning.

Planning is the very first step of management function where a manager plans every activity in detail, all other activities just support planning but control is that function which actually measures the performance and presents the actual report of management’s performance i.e where a manager analyzes the deviation and take corrective action and be prepared for future course of action. Hence due to this function of controlling it is clear that planning is meaningless without control and control is both backward and forward-looking process.

IMPORTANCE OF CONTROLLING

  • The accomplishment of an organizational goals-controlling function measures the performance analyzing deviations and taking corrective action on them, hence it is the main function which helps in achieving organizational goals.
  • Coordination in action – control helps to maintain a proper balance between ends and means. Control provides a unit of direction.
  • Boost employees morale – control creates an atmosphere of order and control in the organization in absence of control it leads to lowering in the morale of employee because they don’t know what will happen to them. They may become the victim of the bias and repression of the superior.
  • Optimum utilization of resource – with the help of control an organization can use its resources optimally. Manager will take care of wastage and spoilage of resources. Each and every activity will be measured against pre-determined standards and norms. Thus due to controlling firms resources can be used effectively and efficiently.
  • Policy verification – control enables the organization to verify the qualities of the various plan. It helps in redrawing policy and modifying the plans. Control helps to rate, review, revise and update the plans. It also judges the accuracy of standards i.e whether the standards set are accurate and objective are correct or not.