UNIT- 9 CONTROLLING

Controlling Function of Management

What is Controlling?
Controlling consists of verifying whether everything occurs in confirmities with the plans adopted,
instructions issued and principles established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned goals. Controlling measures the
deviation of actual performance from the standard performance, discovers the causes of such
deviations and helps in taking corrective actions

According to Brech, “Controlling is a systematic exercise which is called as a process of checking

actual performance against the standards or plans with a view to ensure adequate progress and also
recording such experience as is gained as a contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to
a planned action, so should a business manager continually take reading to assure himself that his
enterprise is on right course.”

Controlling has got two basic purposes

1. It facilitates co-ordination
2. It helps in planning

Features of Controlling Function

Following are the characteristics of controlling function of management-

1. Controlling is an end function- A function which comes once the performances are made in
confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all levels
and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past being
controlled. Controlling always look to future so that follow-up can be made whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal methods,
changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable functions
of management. Without planning, controlling is a meaningless exercise and without
controlling, planning is useless. Planning presupposes controlling and controlling succeeds
planning.

Steps in the Process of Controlling

Controlling as a management function involves following steps:

1. Establishment of standards- Standards are the plans or the targets which have to be

achieved in the course of business function. They can also be called as the criterions for
judging the performance. Standards generally are classified into two-
a. Measurable or tangible - Those standards which can be measured and expressed are
called as measurable standards. They can be in form of cost, output, expenditure,
time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured
monetarily. For example- performance of a manager, deviation of workers, their
attitudes towards a concern. These are called as intangible standards.
 Controlling becomes easy through establishment of these standards because controlling is
exercised on the basis of these standards.

2. Measurement of performance- The second major step in controlling is to measure the

performance. Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and sometimes difficult.
Measurement of tangible standards is easy as it can be expressed in units, cost, money
terms, etc. Quantitative measurement becomes difficult when performance of manager has to
be measured. Performance of a manager cannot be measured in quantities. It can be
measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly
reports.

3. Comparison of actual and standard performance- Comparison of actual performance with

the planned targets is very important. Deviation can be defined as the gap between actual
performance and the planned targets. The manager has to find out two things here- extent of
deviation and cause of deviation. Extent of deviation means that the manager has to find out
whether the deviation is positive or negative or whether the actual performance is in
conformity with the planned performance. The managers have to exercise control by
exception. He has to find out those deviations which are critical and important for business.
Minor deviations have to be ignored. Major deviations like replacement of machinery,
appointment of workers, quality of raw material, rate of profits, etc. should be looked upon
consciously. Therefore it is said, “ If a manager controls everything, he ends up controlling
nothing.” For example, if stationery charges increase by a minor 5 to 10%, it can be called as
a minor deviation. On the other hand, if monthly production decreases continuously, it is
called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led to
deviation. The causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the manager
has to detect those errors and take remedial measures for it. There are two alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in conformity
with plans, the manager can revise the targets. It is here the controlling process
comes to an end. Follow up is an important step because it is only through taking
corrective measures, a manager can exercise controlling.
Relationship between planning and
controlling
Planning and controlling are two separate fuctions of management, yet they are closely related. The
scope of activities if both are overlapping to each other. Without the basis of planning, controlling
activities becomes baseless and without controlling, planning becomes a meaningless exercise. In
absense of controlling, no purpose can be served by. Therefore, planning and controlling reinforce
each other. According to Billy Goetz, " Relationship between the two can be summarized in the
following points

1. Planning preceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseperable functions of management.
3. Activities are put on rails by planning and they are kept at right place through controlling.
4. The process of planning and controlling works on Systems Approach which is as follows :

Planning    →    Results    →    Corrective Action

5. Planning and controlling are integral parts of an organization as both are important for smooth
running of an enterprise.
6. Planning and controlling reinforce each other. Each drives the other function of management.

In the present dynamic environment which affects the organization, the strong relationship between
the two is very critical and important. In the present day environment, it is quite likely that planning
fails due to some unforeseen events. There controlling comes to the rescue. Once controlling is done
effectively, it give us stimulus to make better plans. Therfore, planning and controlling are inseperate
functions of a business enterprise.