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

Definition of Controlling
Controlling can be defined as a function of making sure that actions of the employees of an
organization are directed towards the attainment of a common goal and the work is being
performed as planned by the management.

What is controlling?
Role of the management of an organization is to make sure that the goals of the organization are
achieved as planned and on time. Out of the many functions of management, control is one of the
most important functions of the organization.
Controlling means giving instructions to employees and making sure that the instructions are being
followed as desired by the management.
Controlling means the management of the organization is responsible for deciding predetermined
standards and making sure that performance of the employees match with the standards set by the

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management and in case if the performance of employees does not match with standards then
taking required corrective measures.
The management of the organization makes sure that the resources of the organization are being
used properly and are being used for the growth of the organization and are not being wasted in
any way. By controlling management, make sure the effective and efficient use of resources of the
organization.
Controlling employees of the organization is an important skill of a manager. A manager can’t
play his role efficiently if he is not good at controlling his team.
By controlling his team properly, he can make sure the coordination among his team members and
by having proper control on the team, he can plan effectively for the future projects.
Management control has different types so as to enable the management to choose the form of
control depending upon the situation at hand, as it is one of the most important functions of
management.

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 conformities 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.

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Features of Controlling in management - Explained
1) Controlling is a dynamic process
Controlling is a dynamic process. A manager is required to take a different course of actions when
an employee fails to match the standards of performance. A manager should have the skills to
decide how to react to a certain situation.
For example, if an employee is absent frequently, then the manger first should talk with him and
ask for the reason of his absenteeism and try to do something about the problem, and if the problem
persists then, he should take some strict action.
Similarly, the course of action would be different for the employee who does not perform as per
the standard frequently than the employee who has failed to meet the performance standards for
the first time.
2) Controlling is an end function
Controlling is an end function because it comes into action once the task is completed. The
performance standards are decided before the work is assigned to the employees and once the work
is complete the performance of employees is compared with the standard performance, and if the
performance of the employees is same as that of the standard performance then no actions are
required to be taken but in case the performance doesn’t match then the manager is required to
take the corrective actions.
Therefore, it is not wrong to say that controlling is an end function.
3) Planning and controlling go hand in hand
It is not wrong to say that planning and controlling works together. A manager is required to plan
so that he can control the actions of employees in order to achieve the desired outcome.
For example, if a sales manager makes a target to make the sales of 5 million in one quarter with
five salespersons working in his team, then he will give the target of 1 million to every salesperson
and will control their actions to achieve the desired results.
Now you understand that without planning, controlling is meaningless, and without controlling
planning can’t go as desired.
4) Controlling is a pervasive function
Controlling is a pervasive function because it can’t be escaped at any level of the management. All
management is required to control at all levels.

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For example, a top-level manager will control the actions of a middle-level manager and supervise
the performance of the manager and similarly, a low-level manager is answerable to a middle-level
manager.
In this way, the controlling is done at all levels. However, there might be a difference in the
methods of control, and different corrective actions are taken when the performance of the
employee is not as desired.
5) Controlling is looking forward
A manager can control the performance of an employee by controlling the past actions. A manager
keeps track of the performance of the employee, so that follow up can be made when the time
comes to compare the performance.

Process of Controlling
The process of controlling in management consists of four steps. All of these steps are necessary
to be followed in order to control effectively.
1) Formation of standards
The first step of the controlling process is the formation of standards. The manager first prepares
a report stating the standards expected from the project given to employees.
The standards are not decided by randomly picking a figure, but it is decided on the basis of the
past performance of employees and performance of last season and the condition of the market.
Before revealing the expected standards with employees and giving them the target, the standards
are approved from the senior management.
After getting the approval of the management, these standards are discussed with the team
members, and the target is given to each team member. A preformed standard gives a common
goal to employees to work towards.
2) Measurement of actual performance
Once the task is completed, it is the job of the manager to measure the performance of the
employees. The manager will analyze the performance of each employee and ask them to submit
their report of work.

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3) Comparison of actual performance with the standard performance
After the measurement of the actual report, a comparison is made between the actual performance
and the pre-decided standard performance and the difference is calculated between both the
performances and a report is generated after the analysis of the performance of all employees.
4) Taking corrective actions if required
After comparing the standard performance with the actual performance of employees. The
difference is calculated.
Then the performance of each employee is analyzed, and the difference between the target given
to them and the percentage of target achieved by them is observed, and the required actions are
taken as per the policy of the company and the past performance of the employee.
For example, no actions would be taken against the employee whose performance has been good
in the past few months. Taking corrective actions is important; otherwise, employees would start
taking their job lightly, and there are chances that you might lose business in the future.

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.

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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.

Types of Control
We have reviewed that control has a specific process to follow, and that process can be executed
at several stages during the execution of the gameplan. What needs to be further explored are the
types of control processes that managers have at their disposal. The basic definition of control is
that we want to make sure we are on track and to guide the plan. Most control processes under
this framework are formal mechanism, meaning management puts specific processes in place that
everyone can see and track. These would include bureaucratic and market control
processes. However, some control processes are considered informal, known as clan control.

Bureaucratic control is an official policy or rule implemented in the organization that is derived
from the legitimate authority of the manager. Bureaucratic controls would include examples such
as requiring daily reports on progress or inventory reconciliations. It could include establishing
sales revenues projections, and implementing reward systems around this metric. It would include
establishing protocols regarding the safety of heavy equipment operation or floor manufacturing
at a factory. Many of these safety processes are established by governmental organizations such
as OSHA or the EPA.

Market control is the use of external information to serve as a standard or metric against which
to measure internal progress. Consider the following example. The marketing firm of an
organization has designed a new product and the goal is to garner 15% market penetration in the
first year. Prior to launching the product, they decide to bring in a consumer focus group to provide
feedback on the design. This feedback compels the team to make some minor tweaks prior to
product launch. This team has used an external element, that being the opinions of consumers, to
make sure they progress towards their goal of a successful launch. Finance and trading
organizations regularly used external controls around which to make decisions on which assets to

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divest, and in which assets to invest. This would include a trading strategy that establishes a
standard that if the price of oil falls 25%, the company should liquidate their position in
commodities to minimize losses.

Clan control consists of any form of informal influence that an organization has on an individual
that directs them toward the goals of the organization. Clan control can derive from the cultural
values and beliefs of the organization that influence behavior. Clan control can also be a more
direct influence in the form of peer pressure. Consider the example of an organization that places
high value on integrity. Jane is an accounting professional within the organization that refuses to
violate a small section of the tax code in an area where the language of the tax code is gray. She
decides to act on the conservative side and behave with integrity because she knows that her
decision aligns with the personal values of her team leader, and if her integrity were questioned,
she would be less esteemed by her peers. One final note on clan control is that it can wield either
a positive or a negative influence on members of the organization.

Importance of controlling
1) Controlling Motivates Employees
Controlling doesn’t mean just giving orders to the employees. It means that the manager guides
his employees throughout the process and provide help to them where they need.
He also makes sure that each employee is doing his work with proper dedication and also scolds
them if they are not putting 100% efforts.
In addition to this, when a target is given to employees, it gives them a goal to work. The target
motivates them to go to work and work hard to achieve the target. A motivated employee ends up
performing much more than his actual capacity.
2) Controlling Makes the efficient use of resources
Controlling in management helps in the proper use of resources available in the organization.
Under controlled environment, employees make the proper use of resources and are careful while
using them. With control, management can make sure that the employees get maximum output out
of the available resources to them.

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3) Controlling creates discipline in the organization
Another importance of controlling in management is the discipline in the organization. Discipline
is necessary to attain the goal in the desired time and with available resources. People tend to
become careless if their actions are not controlled, and if they know that there is nobody to
questions them.
By controlling management not only control the actions of employees but also makes sure that
they do that maximum output can be obtained.
4) Controlling ensures coordination of action
In a large organization, there are hundreds of employees who work together. Different work is
going on different departments at the same time. If there is no coordination between the employees
of the organization, then they might end up losing a lot of resources which may cause loss to the
organization then causing profit.
Therefore, it is the role of the management to coordinate the actions of employees who work in a
different department, and there is little communication between them.
Management acts as a common thread between them and ensures that the actions of all the
employees working in different departments are directed towards one common direction that is the
direction towards achieving the common goal of the organization.
5) Controlling helps in deciding the right judgment about the standards
Standards cannot be decided over a hunch. It is management that makes sure that standards are
decided with proper analyses of the performance of past projects, the market condition, the
available resources, and the capacity of the organization.
This can all be possible if control the work in the organization, and with their expertise and skills
can make the right judgment of standards.
6) Controlling aids in the accomplishment of organizational goals
And last but not least important of controlling in management is the accomplishment of a goal.
The owner of the business or top management has put their money in the business with the
intentions to make more money out of it.
Therefore, their primary goal in every project is to make more profit, and a manager at a low level
is answerable for the performance of his team’s performance.

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Therefore, a manager always controls the actions of people working on his team by making the
effective use of the process of controlling.

Examples of control in the management

From the above reading, it is clear that how much controlling is important for the organization. In
this section, you will learn about the examples of work that require control of management.
1) Performance measurement
It is the role of management to assign a task to employees and then measure their performance. By
measuring the performance of each employee management can know-how about the efforts and
actions of each employee and using this information, they can take important decisions to give
promotion or salary hike or bonus, etc.
2) Strategy planning
Management plays an important role in strategic planning and deciding the goal for the
organization, and they also plan how these goals can be achieved within available resources.
3) Managing Finances
Management is responsible for managing the finances of the organization. They take important
decisions like how much funds should be allocated to a particular project, etc. They also make sure
that whether the project was profitable for the organization or not and take corrective actions
accordingly.
4) Supervising people
The role of management is to supervise the work of employees and increases the productivity
and efficiency of their employees. A manager makes sure that all his employees work at their
optimum capacity, and they work to achieve the objective of the organization.
5) Controlling risk
Management identifies and analyze the risks involved at an early stage and take precautionary
steps to avoid them or to minimize their impact.
6) Improving performance
Controlling in management is necessarily required to improve the performance of the whole team
continuously. The manager can analyze the performance of each employee and help or give them
instructions to improve their performance in order to attain the organizational goal.

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7) Inventory Management
The management is responsible for controlling the inventory so that there is never a shortage or
surplus of supply, and everything works without trouble.
8) Ensuring Quality
The control is important to ensure quality. Some organizations are known for their quality, and
they might face a blow to their business if they don’t take care of the quality. Therefore, in such
organizations, the manager does everything to keep up with the quality standards.

Requirements for Effective Control

The requirements for effective control are

a) Control should be tailored to plans and positions. This means that, all control techniques and
systems should reflect the plans they are designed to follow. This is because every plan and every
kind and phase of an operation has its unique characteristics.
b) Control must be tailored to individual managers and their responsibilities. This means that
controls must be tailored to the personality of individual managers. This because control systems
and information are intended to help individual managers carry out their function of control. If
they are not of a type that a manager can or will understand, they will not be useful.
c) Control should point up exceptions as critical points. This is because by concentration on
exceptions from planned performance, controls based on the time honored exception principle
allow managers to detect those places where their attention is required and should be given.
However, it is not enough to look at exceptions, because some deviations from standards have
little meaning and others have a great deal of significance.
d) Control should be objective. This is because when controls are subjective, a manager’s
personality may influence judgments of performance inaccuracy. Objective standards can be
quantitative such as costs or man hours per unit or date of job completion. They can also be
qualitative in the case of training programs that have specific characteristics or are designed to
accomplish a specific kind of upgrading of the quality of personnel.
e) Control should be flexible. This means that controls should remain workable in the case of
changed plans, unforeseen circumstances, or outsight failures.Much flexibility in control can be

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provided by having alternative plans for various probable situations.
f) Control should be economical. This means that control must worth their cost. Although this
requirement is simple, its practice is often complex. This is because a manager may find it difficult
to know what a particular system is worth, or to know what it costs.
g) Control should lead to corrective actions. This is because a control system will be of little
benefit if it does not lead to corrective action, control is justified only if the indicated or
experienced deviations from plans are corrected through appropriate planning, organizing,
directing, and leading.

Control Methods
Control methods are generally categorized into two types that include past-oriented controls and
future oriented controls.
Past-oriented controls: Past-oriented control measure results after the process. These are also
identified as post action controls. They scrutinize activities occurred in the past for a particular
period. Examples of past-oriented controls are accounting records, school grade reports etc. These
controls are used to plan future behaviour through reviewing post errors or successes. They can
also be used for rewarding, disciplining, training or promoting individuals.
Future-oriented controls: These are also recognized as feed-forward controls or steering
controls. These controls are intended to assess results during the process, so that action can be
taken before the task is completed or the period is over. Examples of such controls are cash flow
and funds flow analysis, network planning which assist managers to observe that they will have
problems in such areas of cash or on time delivery unless they take prior action.
Organizations use both these types. Future-oriented controls are vital because the information
feedback in them is at the input side of the system, so that improvement can be made before the
system output is affected.

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Current issues in control include rights that manager has to monitor employee behaviour, rights
that manager has to control private lives of employees; employers may be able to control employee
behaviour outside the work environment.
There are some limitations in controlling process. The first limitation is difficulty in setting
quantitative standards: Control system loses some of its effectiveness when standards cannot be
defined in quantitative terms. Employee confidence, job satisfaction and human behaviours are
such areas where this problem might arise. Second restriction of controlling is little control on
external factors. Generally an enterprise cannot control external factors such as government
policies, technological changes, and competition. Third limit is resistance from employees. Control
is often opposed by employees. They perceive it as restriction on their freedom. Lastly, it is quite
expensive as it involves a lot of expenditure, time and efforts.
It can be said that controlling is performed by managers to monitor current performance against
pre-set standards contained in the plans in order to ensure good progress and satisfactory
performance. Control involves three steps namely establishing standards, measuring and
comparing actual performance with standards and taking corrective action. Controlling assists to
maintain compliance with essential organizational rules and policies.

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