Controlling: Function of Management

Controlling, within the realm of management, involves overseeing whether activities align with adopted plans, issued instructions, and established principles. It aims to ensure efficient utilization of organizational resources to attain predetermined objectives.

The essence of controlling lies in gauging actual performance against anticipated benchmarks. It identifies deviations from these standards, delves into the causes behind such deviations, and facilitates corrective measures to be taken.

Brech characterizes controlling as a systematic process that entails comparing real-world performance to predefined standards or plans. This process ensures steady advancement and documents acquired insights for potential future requirements.

Analogous to a navigator continually checking their alignment with planned routes, business managers should consistently assess their endeavors to validate they're on the right track, as per Donnell.

Controlling serves dual fundamental objectives:

1. Co-ordination facilitation: By aligning actions with plans, controlling synchronizes operations.

2. Planning enhancement: Controlling provides feedback to augment future planning by integrating the lessons learned.

Key attributes of the controlling function are as follows:

• Terminal function: It materializes once activities are executed as per the plans.

• Ubiquitous function: Managers of all levels in various domains perform controlling.

• Future-oriented: As effective control is informed by past outcomes, it primarily focuses on the future, enabling necessary adjustments.

• Dynamic process: Controlling necessitates adaptable review methods, embracing changes when required.

• Interlinked with planning: Controlling and planning are inseparable. Planning presupposes control, while control flourishes with effective planning. The two functions are intertwined and mutually reinforcing.

Controlling, a fundamental goal-driven management function within organizations, involves comparing actual performance to set standards to ensure alignment with plans, with corrective actions taken if necessary.

To effectively monitor and assess activities at all levels, management engages in controlling. This proactive approach facilitates timely managerial intervention, preventing contingencies and losses. This process spans upper, middle, and lower management tiers.

1. Definition Brech defines controlling as a systematic process involving comparing actual performance to standards or plans to ensure satisfactory progress, with insights gained contributing to future needs.

2. Characteristics

• Controlling is a concluding function, executed once performances adhere to plans.

• It pervades all managerial levels and business types.

• Both backward and forward-looking, control is grounded in past experience while maintaining future orientation.

• A dynamic process, control necessitates adaptable methods and constant focus.

• Inseparable from planning, control complements and is complemented by planning.

3. Objectives

• Gauge actual progress within the company.

• Aid R&D in enhancing efficiency.

• Foster coordination in the organization.

• Measure performance against standards.

• Assess product quality and quantity.

• Minimize resource wastage.

• Adhere to project deadlines.

4. Advantages of Controlling

• Effective plan execution.

• Enhanced organizational coordination, reducing divergence.

• Boosted employee morale.

• Ensured discipline and compliance.

• Safeguarded organizational identity amid environmental changes.

• Optimized resource utilization.

• Strengthened external environmental monitoring.

• Aligned short-term and long-term goals.

• Time and energy conservation, enabling prompt corrective actions.

• Managerial focus on critical tasks.

• Improved managerial resource utilization.

5. Limitations

• Challenges in setting qualitative standards.

• External factors beyond control.

• Employee resistance to change.

• Higher costs, particularly for small firms.

6. Steps in Controlling Function

• Establishment of Standards: Tangible (measurable) and intangible (non-measurable) standards.

• Measurement of Performance: Quantitative and qualitative assessment, using reports.

• Comparison of Actual with Standard Performance: Identify deviations and take exception-based control.

• Taking Remedial Actions: Rectify deviations and revise targets if needed.

7. Types of Control

8. Post-Action-Control/Feedback Control: Reviewing completed tasks to enhance future activities based on deviations.

9. Concurrent Control: Real-time correction to prevent losses.

10. Steering Control: Early corrective action during ongoing tasks.

11. Yes/No Control: Sequential error prevention during processes.

12. Predictive/Feed Forward Control: Foreseeing issues before they arise.

13. Techniques of Controlling

• Traditional Techniques: Personal observation, budgeting, break-even analysis, financial statements, statistical control, self-control.

• Modern Techniques: MIS, management audit, responsibility accounting, PERT and CPM, balanced scorecard, ratio analysis, EVA.

In the dynamic business landscape, controlling remains an essential organizational element.

The controlling function of management is a crucial aspect of the management process that involves monitoring, evaluating, and regulating activities to ensure that organizational goals and objectives are being achieved effectively and efficiently. It's the final step in the management cycle and helps ensure that the plans, organizational structures, and processes that have been put in place are functioning as intended.

Key components and activities of the controlling function include:

1. Setting Performance Standards: This involves establishing benchmarks and criteria against which actual performance can be measured. These standards can be quantitative (such as sales targets or production quotas) or qualitative (such as customer satisfaction levels).

2. Measuring Performance: Once the standards are set, the next step is to measure actual performance against those standards. This requires collecting relevant data and information about the ongoing activities and processes.

3. Comparing Performance: Comparing actual performance with the established standards allows managers to identify any deviations or variations. This step involves analyzing the differences between what was planned and what has actually been accomplished.

4. Identifying Deviations: When deviations from the established standards are identified, managers need to determine the significance of these variations. Not all deviations are necessarily negative; some might be within acceptable limits or might even indicate positive changes.

5. Analyzing Causes: For deviations that are significant and negative, managers must investigate the underlying causes. This could involve factors such as faulty processes, inadequate resources, employee performance issues, or external factors beyond the organization's control.

6. Taking Corrective Actions: After identifying the causes of deviations, managers need to take appropriate corrective actions. These actions are aimed at bringing performance back in line with the established standards or, if possible, improving performance beyond those standards.

7. Adjusting Standards and Plans: In some cases, deviations might reveal that the original standards were unrealistic or that the initial plans need adjustment. This step involves revising standards, processes, or strategies based on the lessons learned from the controlling process.

8. Feedback and Learning: The controlling function provides valuable feedback to the planning function. The insights gained from the control process can help refine future plans and strategies, leading to a continuous improvement cycle.

Effective control systems help organizations:

• Ensure that resources are used efficiently and wastage is minimized.

• Prevent and detect errors and discrepancies in processes.

• Achieve consistent and desired outcomes.

• Adapt to changing circumstances and make timely adjustments.

• Enhance accountability and transparency within the organization.

• Improve decision-making by providing accurate and up-to-date information.

Overall, the controlling function of management ensures that organizations stay on track, remain aligned with their objectives, and continuously strive for improvement.

Thank You