CONTROLLING

Dr S Patnaik

Lecturer

Clothing & Textiles Department

Cape Peninsula University of Technology

Email – [email protected]

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 The purpose of control
• A control process is necessary for the following reasons:
• Linked with planning, organising and leading
• Helps companies adapt to environmental change
• Helps limit the accumulation of error
• Helps companies cope with increasing organisational size and complexity
• Helps minimise costs.

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The control process

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The control process (continued)
• Step 1: Establish standards *(setting standards)

• Performance or control standard is a planned target against which the actual

performance will be compared
• Appropriate performance standards:
• Profit standards
• Market-share standards
• Productivity standards
• Staff-development standards.

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The control process (continued)
• Step 2: Measure actual performance

• Collection of information and reporting on actual performance are continuous

activities
• Important requirement for reports to be absolutely reliable for the
measurement of actual achievements
• Control by exception – only important disparities reported to top management
in large organisations.

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 The control process (continued)
• Step 3: Evaluate deviations

• Determine the performance gap between the performance standard and actual
performance
• Important to know why a standard has only been matched, and not exceeded.
• Determine whether the deviations are large enough to justify further
investigation

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The control process (continued)
• Step 4: Take corrective action

• Corrective actions need to be taken to ensure that deviations do not recur

• If actual achievements match standards then no corrective action is needed
• If actual achievements do not match standards, three possible actions exist:
• Actual performance can be improved to reach the standards
• Strategies can be revised to accomplish the standards
• Performance standards can be lowered or raised to make them more
realistic.

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 Types of control
• Organisations control activities and processes in a number of different areas and at
different levels in the organisation.
• The four key areas of control include the following:
• Physical resources
• Human resources
• Information sources
• Financial resources.

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Types of control (continued)

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 Types of control (continued)
• The control of physical resources

• Inventory control
• Economic-ordering quantity (EQP)
• Material requirements planning (MRP) system
• Just-in-time (JIT) system
• Quality control
• Define the quality goals or standards
• Measure quality
• Rectify deviations and solve quality problems in an effort to keep the cost
of quality as low as possible.
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Types of control (continued)
• The control of financial resources

• Financial resources and abilities are vital to the success of the organisation,
and therefore need to be strictly controlled
• Financial control is concerned with the following:
• Resources as they flow into the organisation
• Financial resources that are held by the organisation
• Financial resources flowing out of the organisation.

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Types of control (continued)
• The control of financial resources

• The budget
• The budget contributes to financial control:
• Supports management in coordinating resources, departments and
projects
• Provides guidelines on application of the organisation’s resources
• Defines or sets standards that are vital to the control process
• Makes possible the evaluation of resource allocation, departments or
units.
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 Types of control (continued)
• The control of information resources

• Relevant and timely information made available to management during the

management process is vital in monitoring how well goals are accomplished
• The faster feedback is received, the more effectively the organisation’s control
systems function.

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 Types of control (continued)
• The control of human resources

• Control of human resources falls within the human resources management

• The main instrument used to control an organisation’s human resources is
performance measurement
• Other human resources control instruments can be applied to labour turnover,
absenteeism and the composition of the labour force.

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Characteristics of an effective control system
• Integration
• Flexibility
• Accuracy
• Timeliness
• Simplicity

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 Summary
• Control is a fundamental management function and is the final step in
the management process
• Control focuses on all the activities in the organisation
• Effective control systems characterised by the extent to which
planning and control are integrated
• Application of control system should not become so complex that it
costs more than it saves.

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