Controlling: A Crucial Function in Management

Controlling, a pivotal function in management, involves systematically checking actual performance against predetermined standards or plans. Its primary purpose is to ensure progress towards organizational goals and make necessary adjustments along the way. This function is closely intertwined with planning, as it helps managers anticipate potential challenges and take proactive measures.

Characteristics of Controlling

1. End FunctionControlling comes into play once performances align with plans.
2. Pervasive FunctionIt is performed by managers at all levels and in all types of organizations.
3. Backward and Forward-LookingEffective controlling requires examining past performance while also considering future implications.
4. Dynamic ProcessControlling is an adaptable function that necessitates continuous monitoring and adjustment to changing circumstances.
5. Interrelation with PlanningControlling and planning are inseparable functions, with controlling succeeding planning and planning presupposing controlling.

Objectives of Controlling

1. Progress IdentificationTo assess the actual progress of work in the organization.
2. Efficiency ImprovementTo facilitate research and development (R&D) efforts aimed at enhancing efficiency.
3. Coordination FacilitationTo promote coordination among various organizational departments, reducing diversity and fostering collaboration.
4. Performance MeasurementTo evaluate actual performance against established standards, ensuring conformity with planned objectives.
5. Resource OptimizationTo minimize wastage of resources, such as time, money, and materials, by identifying and addressing inefficiencies.
6. Project Deadline AdherenceTo ensure timely completion of projects by monitoring progress and taking corrective actions as needed.

Advantages of Controlling

1. Effective Plan ImplementationControlling helps ensure that plans are executed effectively and efficiently.
2. Coordination and OrderIt facilitates coordination among different organizational units, reducing discrepancies and promoting order and discipline.
3. Employee Morale BoostEffective controlling creates a sense of accountability and encourages employees to strive for excellence.
4. Organizational Identity PreservationControlling helps organizations maintain their distinct identity and values amidst external environmental changes.
5. Resource Utilization OptimizationIt enables organizations to make efficient use of physical and human resources, maximizing productivity and achieving organizational goals.
6. External Environment ControlControlling allows organizations to monitor and respond to changes in the external environment, mitigating potential risks and capitalizing on opportunities.
7. Time and Energy SavingsEffective controlling enables managers to focus on critical tasks, saving time and energy that would otherwise be spent on resolving avoidable issues.
8. Managerial Resource OptimizationIt allows organizations to allocate managerial resources effectively, ensuring that managers can concentrate on high-priority tasks.

Limitations of Controlling

1. Qualitative Standard Setting DifficultyEstablishing qualitative standards can be challenging due to their subjective nature.
2. External Factor Control AbsenceControlling has limited influence over external factors, such as economic conditions and government regulations.
3. Employee Resistance to ChangeSome employees may resist changes implemented as a result of the controlling process.
4. Cost Implications for Small CompaniesImplementing comprehensive controlling systems can be costly for small organizations with limited resources.

Steps in the Controlling Function

1. Establishing StandardsDefining clear and measurable standards against which performance will be evaluated.
2. Performance MeasurementRegularly monitoring and measuring actual performance to identify deviations from established standards.
3. Performance ComparisonComparing actual performance with predetermined standards to assess whether objectives are being met.
4. Remedial ActionTaking corrective measures to address deviations from standards, ensuring progress towards organizational goals.

Types of Control

1. Post-Action/Feedback ControlThis involves collecting information about completed tasks, assessing the results, and using the findings to improve future performance.
2. Concurrent ControlAlso known as real-time control, this involves monitoring ongoing activities to identify and address problems before they escalate.
3. Steering ControlThis type of control allows managers to make adjustments during the execution of a plan to ensure that objectives are met.
4. Yes/No ControlThis control mechanism is used at various checkpoints to determine whether an activity should proceed to the next stage or be halted.
5. Predictive/Feed Forward ControlThis proactive approach involves anticipating potential problems and taking preventive measures to mitigate them.

Techniques of Controlling

Controlling techniques can be categorized into traditional and modern approaches:

Traditional Techniques

1. Personal ObservationDirect observation of employee performance by managers to assess adherence to standards.
2. BudgetingSetting financial limits for various organizational activities to control expenditures and ensure efficient resource allocation.
3. Break-Even AnalysisDetermining the point at which total revenue equals total costs to assess profitability and make informed decisions.
4. Financial StatementsAnalyzing financial statements, such as income statements and balance sheets, to evaluate financial performance and identify areas for improvement.
5. Statistical ControlUsing statistical methods to analyze data and identify trends, patterns, and deviations from standards.
6. Self-ControlEmpowering employees to monitor and regulate their own performance based on established standards.

Modern Techniques

1. Management Information Systems (MIS)Integrated systems that collect, process, and disseminate information to support decision-making and control.
2. Management AuditA comprehensive evaluation of an organization’s management practices, systems, and controls to identify areas for improvement.
3. Responsibility AccountingAssigning responsibility for specific costs and revenues to individuals or departments to promote accountability and control.
4. Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM)Project management techniques used to plan, schedule, and control complex projects.
5. Balanced ScorecardA performance measurement framework that considers financial and non-financial metrics to assess organizational performance.
6. Ratio AnalysisAnalyzing financial ratios to assess an organization’s financial health, profitability, and efficiency.
7. Economic Value Added (EVA)A measure of a company’s economic profit, calculated as the difference between net operating profit after taxes and the cost of capital.

In conclusion, controlling is a crucial management function that enables organizations to monitor progress, identify deviations, and take corrective actions to ensure alignment with organizational goals. By implementing effective controlling mechanisms, organizations can optimize resource utilization, enhance efficiency, and achieve sustainable growth.

References

1. Study.com: Controlling: Management Function, Principles & Examples: https://study.com/learn/lesson/controlling-management-function-principles-examples.html
2. Taxmann: Controlling – A Function of Management: https://www.taxmann.com/post/blog/controlling-a-function-of-management/
3. FHSU Pressbooks: Controlling: https://fhsu.pressbooks.pub/management/chapter/controlling/

FAQs

What is the controlling function of management?

The controlling function of management involves monitoring actual performance, comparing it to predetermined standards, and taking corrective actions to ensure progress towards organizational goals.

What are the key steps in the controlling function?

The key steps in the controlling function include establishing standards, measuring performance, comparing actual performance with standards, and taking remedial actions.

What are the different types of control?

Common types of control include post-action/feedback control, concurrent control, steering control, yes/no control, and predictive/feed forward control.

What are some traditional techniques of controlling?

Traditional controlling techniques include personal observation, budgeting, break-even analysis, financial statements, statistical control, and self-control.

What are some modern techniques of controlling?

Modern controlling techniques include management information systems (MIS), management audit, responsibility accounting, program evaluation and review technique (PERT) and critical path method (CPM), balanced scorecard, ratio analysis, and economic value added (EVA).

What are the advantages of effective controlling?

Effective controlling helps in effective plan implementation, facilitates coordination, boosts employee morale, ensures order and discipline, preserves organizational identity, optimizes resource utilization, enables better control over the external environment, saves time and energy, and allows managers to focus on important tasks.

What are the limitations of controlling?

Some limitations of controlling include difficulty in setting qualitative standards, lack of control over external factors, resistance to change from employees, and cost implications for small companies.

Why is controlling important in management?

Controlling is important in management as it helps ensure that organizational goals are achieved, resources are used efficiently, and progress is made in a timely manner. It also facilitates coordination among different departments, promotes accountability, and enables organizations to adapt to changing circumstances.