Controlling
Meaning of Controlling
● Controlling is the process of monitoring performance, comparing it with set standards,
and taking corrective action if needed.
● It ensures that actual performance aligns with planned objectives, leading to efficient
resource utilization.
● It is a goal-oriented function and an integral part of management at all levels.
Importance of Controlling
1. Accomplishing Organisational Goals – Helps in measuring progress and deviations
from objectives, ensuring that goals are achieved.
2. Judging Accuracy of Standards – Allows management to evaluate whether set
standards are realistic, achievable, and relevant.
3. Ensuring Efficient Use of Resources – Reduces wastage and misuse of resources
by ensuring every activity follows planned standards.
4. Improving Employee Motivation – Clearly defined performance standards encourage
employees to perform better.
5. Ensuring Order & Discipline – Keeps employees accountable, reducing unethical
practices and fraud.
6. Facilitating Coordination – Ensures that all departments work towards common
objectives without conflicts.
Relationship Between Planning &
Controlling
● Planning and Controlling are interdependent and inseparable.
● Planning sets objectives and standards, while controlling ensures their
implementation.
● Without controlling, planning becomes meaningless as there is no way to track
progress.
● Controlling provides feedback for better planning in future cycles.
● Planning is forward-looking (deciding future actions), whereas controlling is
backward-looking (analyzing past performance).
Process of Controlling
Step 1: Setting Performance Standards
● Standards act as benchmarks for evaluating actual performance.
● Can be quantitative (sales target, production cost) or qualitative (brand reputation,
employee satisfaction).
● Example: A company sets a standard of producing 1,000 units per week.
Step 2: Measuring Actual Performance
● Performance is measured using personal observations, sample checking,
performance reports, financial ratios, etc.
● Measurement should be objective, accurate, and reliable.
● Example: A manager calculates the actual weekly production output to compare with
set targets.
Step 3: Comparing Actual Performance with Standards
● Deviation Analysis: If actual performance matches standards, no corrective action
is needed.
● If performance deviates significantly, managers investigate causes.
● Example: If actual production is only 900 units instead of 1,000, a deviation of 100
units needs investigation.
Step 4: Analyzing Deviations
● Not all deviations require action; only significant deviations are addressed.
● Critical Point Control (CPC): Focuses on key areas affecting overall performance.
● Management by Exception (MBE): Only major deviations are reported to top
management, avoiding micromanagement.
Step 5: Taking Corrective Action
● If deviations are beyond acceptable limits, corrective measures are implemented.
● Examples of corrective actions:
○ Training employees to improve performance.
○ Upgrading machinery to increase efficiency.
○ Changing strategies if market conditions demand it.
Conclusion
● Controlling ensures that actual performance meets planned objectives.
● It identifies deviations, analyzes their causes, and takes corrective measures.
● Traditional and modern techniques help in maintaining efficiency and accountability.
● Planning and Controlling are interlinked – Planning sets goals, and Controlling
ensures they are achieved.
