MODULE – VI: CONTROLLING AND

Concept, need, importance, types

of managerial control, Process and
Techniques of Managerial Control.

COORDINATION Concept, need and Importance of

Coordination, Coordination as an
essence to management
DEFINITION AND CONCEPT OF CONTROLLING
Knootz and O’Donnel, “Controlling is the measurement of accomplishment
against the standards and the correction of deviations to assure attainment
of objectives according to plans.”
Controlling is one of the important steps in management process. It is a final
step which ensures the attainment of objectives of the organisation. Control
is one of the most important functions of management.
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.
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.
Therefore, a manager always controls the actions of people working on his team
by making the effective use of the process of controlling.
TYPES OF MANAGERIAL CONTROL
There are three types of control as under:
1. Historical Control:
Under this type of control performance or results are measured and compered after happening of the event or after
accomplishing the performance. The management, thus, knows the extent to which the objectives or goals are achieved. This
is taken as a base for future or next performance and corrective measures are taken therefore. The performance is measured
with the help of budgetary control, financial ratios etc.
2. Predictive Control:
This type of control is concerned with the future. This predictive control attempts to anticipate problems before they actually
occur. For example problem of absenteeism, labour turnover, disputes among workers, financial budgets etc. Predictive
control is essential to keep the control on the above matter.
3. Concurrent Control:
Concurrent control is a flexible one which changes according to anticipated changes, based on observation and visualisation
of future. It is concerned with the adjustment of performance before any major damage, loss, destruction takes place in
manufacturing industry. Control chart is an example of concurrent control. Control charts in production department, selling
department are necessary to facilitate adjustments, corrections, etc. in case of changes, if any and according to needs.
PROCESS OF MANAGERIAL CONTROL
Process of Control:
1. Establish the Standards:
Within an organization’s overall strategic plan, managers define goals for organizational departments in specific, precise,
operational terms that include standards of performance to compare with organizational activities. However, for some of the
activities the standards cannot be specific and precise.
Standards, against which actual performance will be compared, may be derived from past experience, statistical methods and
benchmarking (based upon best industry practices). As far as possible, the standards are developed bilaterally rather than top
management deciding unilaterally, keeping in view the organization’s goals.
Standards may be tangible (clear, concrete, specific, and generally measurable) – numerical standards, monetary, physical, and
time standards; and intangible (relating to human characteristics) – desirable attitudes, high morale, ethics, and cooperation.
2. Measure Actual Performance:
Most organizations prepare formal reports of performance measurements both quantitative and qualitative (where
quantification is not possible) that the managers review regularly. These measurements should be related to the standards set
in the first step of the control process.
3. Compare Performance with the Standards:
This step compares actual activities to performance standards. When managers read computer reports or walk through their
plants, they identify whether actual performance meets, exceeds, or falls short of standards.
Typically, performance reports simplify such comparison by placing the performance standards for the
reporting period alongside the actual performance for the same period and by computing the variance—
that is, the difference between each actual amount and the associated standard.

[Link] Corrective Action and Reinforcement of Successes:

When performance deviates from standards, managers must determine what changes, if any,
are necessary and how to apply them. In the productivity and quality-centered environment,
workers and managers are often empowered to evaluate their own work. After the evaluator
determines the cause or causes of deviation, he or she can take the fourth step— corrective
action.
The corrective action may be to maintain status quo (reinforcing successes), correcting the
deviation, or changing standards. The most effective course may be prescribed by policies or
may be best left up to employees’ judgment and initiative. The corrective action may be
immediate or basic (modifying the standards themselves).
TECHNIQUES OF MANAGERIAL CONTROL
A) Financial Control:
1. Financial Statements:
Income statement (telling about expenses, segmental incomes, overall income and expenses, and the net profit/loss), and Balance Sheet
(shows the net worth at a single point of time and the extent to which the debt or equity finance the assets)
2. Financial Audits:
Financial audits, either internal or external are conducted to ensure that the financial management is done in line with the generally
accepted policies, procedures, laws, and ethical guidelines. Audits may be internal (by Organisation’s own staff), external (statutory
audit by chartered accountants), and management audit (by experts).
3. Ratio Analysis:
Ratio analysis monitors liquidity, profitability, debt, and activity related aspects.
4. Budgetary Controls:
Budgetary control is the process of constructing budgets, comparing actual performance with the budget one and revising budgets or
activities in the light of changed conditions.
5. Break-even Analysis:
It is a tool of profit planning and deals with cost-volume-profit relationships.
6. Accounting:
Accounting includes responsibility accounting, cost accounting, standard cost approach, direct costing, and marginal
costing.
B) Marketing Control:
In the field of marketing, to see that customer gets right product at the right price at the right place and through right
communication, the control is exercised through the following:
Market Research:
It is to assess customers’ needs, expectations and the delivery; and the competitive scenario.
Test Marketing:
To assess consumer acceptance of a new product, a small-scale marketing is done. HUL uses Chennai for most of its test
marketing.
Marketing Statistics:
Marketing managers control through marketing ratios and other statistics.
c) Human resource control:
Human resource control is required to have a check on the quality of new personnel and also to
monitor performances of existing employees so as to determine firm’s overall effectiveness.
Goal setting, instituting policies and procedures to guide them are to help them. Common controls
include performance appraisals, disciplinary programmes, observations, and development
assessments.
D) Information Control:
All organizations have confidential and sensitive information to be kept secret. How to control
access to computer databases is very important. This has become a key contemporary issue in
control. Organizations keep a watch on employee’s computer usage in general and internet in
particular.
E) Production Control:
To ensure quality production in right quantity at right time economically production controls are
required. Two of the important techniques include: Inventory control (ABC Analysis, Economic
Order Quantity, Just-in time inventory control), and quality control (through inspection, statistical
quality control).
F) Project Control:
Network analysis is most suitable for the projects which are not routine in minimizing cost and
completing project well in time. Network analysis makes use of two techniques – Programme
Evaluation and Review Technique (PERT), and Critical Path Method (CPM).
 COORDINATION MEANING
Coordination is the function of management which ensures that different
departments and groups work in sync. Therefore, there is unity of action among the
employees, groups, and departments.
Definition-Mooney and Reiley – ‘Coordination is an orderly arrangement of group
efforts to provide unity of action in the pursuit of common goals.‘
NEED FOR COORDINATION IN
MANAGEMENT
Co-ordination is an abstract of management. The purpose of coordination is to synchronize the functions of various sections
for achieving organizational goals with minimum effort. It is orderly management of group effort to provide unity of action in
the pursuit of a common purpose.
The need for co-ordination arises due to the following
1. In every organization, the nature of work is such that it requires to be divided into homogeneous and specialized sub-tasks
and then without Integration and coordination the output of the organization will be nil.
2. Co-ordination applies to group effort rather than to individual effort. It gives importance to the unity of effort and united
action. The outcome of coordinated group efforts will be much better than the sum results of various individuals.
3. Coordination motivates the employees to consider their work from the point of view of business and so the employees
will willingly contribute towards the success of the concern. Therefore, coordination is the heartbeat of an
organization that brings integration of efforts and action among employees in the organization.
3. Coordination ensures commitment on the part of divisions, groups, individuals toward organizational goals.
4. Coordination ensures efficiency and economy in the organization, enterprise to ensure smooth working. It also helps in
saving time by bringing efficiency and economy to the enterprise.
5. There may arise certain circumstances that may demand the sacrifice of the objective of one department in the welfare of
the enterprise as a whole. In such a situation, the need for coordination arises.
6. Coordination is directed towards channelizing the efforts, skills, energies of workgroups along organizationally established
lines. If the coordination is absent, group members may be pulled in different directions and work at cross purposes.
 IMPORTANCE OF COORDINATION
1. Unity of Direction
An organization needs to integrate the efforts and skills of different employees in order to achieve common
objectives. Coordination also eliminates duplication of work leading to cost-efficient operations.
2. Functional Differentiation
An organization has many departments or sections performing different functions. All these functions are important
for achieving the overall goals of the organization. If all departments work in isolation from the others, then they
might not work in tandem. Therefore, coordination is essential for integrating the functions.
3. Lesser Disputes
Many departments play an important role in helping the organization achieve its goals. They are also capable of
assessing the nature and scope of work they perform. However, they are usually unaware of the importance of
other department’s roles leading to disputes. Coordination can help solve such disputes.
4. Reconciliation of Goals
All individuals have their own goals which are more important to them than the organization’s goals. Coordination
helps to reconcile the employee’s goals with the departmental and organizational goals.
5. Differentiation and Integration
Usually, the activities of an organization are divided into two types of units – specialized and homogeneous. Also,
to achieve group efforts, authority is delegated to different levels in the organization. Coordination facilitates this
process.
6. Optimum Utilization of Resources CONTINUE..
Primarily, coordination ensures that employees do not engage in cross-purpose work since
it brings together the human and material resources of the organization. Therefore, there is
less wastage of resources which helps the organization utilize them optimally.
7. Encourage Team Spirit
In an organization, there exist many conflicts between employees, departments, etc.
Coordination encourages people and departments to work as one big team and achieve the
common objectives of the organization. Therefore, it encourages team spirit.

8. Unity in Diversity
Every large organization has a large number of employees, each with a different vision or ideas,
activities and background. Therefore, there are different functions in an organization. However,
all these activities would not be so effective without communication. Therefore, cooperation is
essential for unity in diversity.
COORDINATION AS AN ESSENCE TO MANAGEMENT
When the organisation structure is created and departments are designed, managers coordinate the activities of these
departments to achieve organisational goals. Top managers communicate organisational goals to departmental managers and
help them carry out the functions of planning, organising, staffing, directing and controlling for their respective departments.
They integrate objectives of the organisation with objectives of the departments and harmonies departmental goals with
organisational goals. Coordination, thus, helps to coordinate the work of different departments and within each department, it
integrates all the functions of management. Coordination is, therefore, rightly called the essence of management. It helps each
managerial function and each departmental activity contribute to organisational goals.

1. Coordination while Planning:

When plans are made, managers ensure that different types of plans (long-term and short-term, strategic and routine), policies,
rules and procedures operate in harmony and coordination with each other so that various departments effectively follow these
plans.
2. Coordination while Organising:
Division of work into departments on the basis of similarity of activities, appointing people to manage these departments,
defining their authority and responsibility and creating the organisation structure aim to coordinate departmental activities
with the organisational goals. If the activities are divided haphazardly without coordination, some activities may not be
assigned to people and some may be assigned to more than one person.
3. Coordination while Staffing:
The jobs having been created, managers ensure that people are placed on different jobs according to
their skills and capabilities. This ensures placing the right person at the right job in order to achieve
coordination amongst their work activities.
4. Coordination while Directing:
When a manager directs subordinates through motivation, leadership and communication, he attempts
to coordinate the organisational activities. It is also an attempt to harmonies individual goals with
organisational goals. Direction maintains unity and integrity amongst activities of members in the
organisation.
5. Coordination while Controlling:
Controlling ensures that actual performance is in conformity with planned performance. The purpose of
controlling through budgets or information systems is to coordinate the various organisational
activities. Every managerial activity is, thus, coordinated to contribute towards organisational goals.
Coordination is required throughout the organisation.
“Coordination is achieved by structuring the organisation in such a way as to ensure
vertical coordination between hierarchical levels of management and horizontal
coordination across individuals and work units at similar levels.” The principles of
management like unity of command and scalar chain ease the task of managers in
effectively coordinating the managerial functions.
Coordination as essence to management is, thus, intrinsic to management. Aligning
internal environment with external environment, human with non-human resources to
achieve organisational goals is the task of every person at every level in every
department. Coordination gives meaning and purpose to every task and promotes
group effort for goal accomplishment.

Coordination is neither department-specific nor function-specific. All managerial

functions (planning, organising, staffing, directing and controlling) for all departments
have to be coordinated to achieve the overall goals. However, the intensity of
managerial functions can vary at different points of time for different departments.