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Controlling is an important function of management that ensures organisational activities are performed according to plans. It measures actual performance, compares it with standards, identifies deviations, and takes corrective action so that organisational objectives are achieved effectively and efficiently. Check the updated CBSE Class 12 BST syllabus for the current academic session.
Controlling brings the management cycle back to planning and helps improve future plans.
Meaning of Controlling
Controlling refers to the process of monitoring organisational activities to ensure that performance matches the planned targets. It involves setting standards, assessing actual work, finding deviations, and taking corrective action.
According to Harold Koontz and Cyril O'Donnell:
“Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans.”
Thus, controlling is:
- Goal-oriented
- Pervasive
- Continuous
- Closely linked with planning
Features of Controlling
Controlling involves measuring performance, comparing it against set standards, and taking corrective action. It is both backward-looking (analyzing past performance) and forward-looking (improving future results).
- Goal Oriented: The main purpose of controlling is to ensure that planned goals are successfully achieved.
- Pervasive Function: Controlling is performed by managers at every level, whether top, middle, or lower level.
- Continuous Process: It does not happen only once. It is ongoing and continues as long as the organisation is operating.
- Forward Looking: Although controlling uses past performance data, it focuses on improving the future by guiding corrective actions.
- Involves Comparison: Actual performance is always compared with predetermined standards.
- Based on Planning: Planning provides the standards. Without planning, controlling has no direction.
Importance of Controlling
Controlling is vital for ensuring organizational activities align with plans, ensuring goals are met through efficient resource usage, and corrective action. Some important points to keep in mind:
- Accomplishing Organisational Goals: Measures progress and takes corrective action to stay on track
- Judging Accuracy of Standards: Helps revise unrealistic or outdated standards
- Making Efficient Use of Resources: Minimises wastage and ensures efficiency
- Improving Employee Motivation: Clear standards improve accountability and performance
- Ensuring Order and Discipline: Prevents dishonest behaviour and maintains discipline
- Facilitating Coordination: Ensures all departments move in the same direction.
Limitations of Controlling
Primarily, controlling in management faces difficulties in certain tasks.
- Difficulty in Setting Quantitative Standards: Qualitative areas like morale or job satisfaction are difficult to measure
- Little Control on External Factors: Government policy, competition, technological changes are uncontrollable
- Resistance from Employees: Employees may see control as interference
- Costly Affair: Installation of control systems involves time, effort and expense
Relationship b/w Planning and Controlling
Both planning and controlling are closely connected managerial functions that depend on each other.
- Planning sets objectives and standards, while controlling ensures those plans are implemented properly.
- Planning without controlling is meaningless. Controlling without planning is blind.
Planning is prescriptive (decides what to do).
Controlling is evaluative (checks whether it is done).
Controlling completes one cycle and improves planning for the next cycle. Together, planning and controlling ensure systematic and goal-oriented management.
The Process of Controlling
The controlling process takes place in a series of systematic steps.
1. Setting Performance Standards
These standards become the basis for comparison. They may be quantitative such as cost, output, time, or qualitative such as attitude and behavior.
2. Measurement of Actual Performance
Managers collect data through observation, reports, charts, samples, or management information systems.
3. Comparison of Performance and Standards
Actual work is compared with the predetermined standards to find deviations.
4. Analyzing Deviations
Here managers find the reasons behind any gap between planned and actual performance. Two important tools used in this step are:
- Critical Point Control, which focuses on the most important results.
- Management by Exception, where only major issues are brought to top management.
5. Taking Corrective Action
Finally, managers take action to remove the causes of deviation. They may change methods, give training, create new standards, or improve supervision.
Techniques of Managerial Control
Controlling uses both traditional and modern techniques to ensure effective functioning.
A. Traditional Techniques
Personal Observation - Managers personally observe employees to get direct information and immediate feedback.
Statistical Reports - Charts, graphs, diagrams, and tables help analyze data and spot trends.
Break Even Analysis - It helps find the point where total cost equals total revenue and shows the output needed to avoid loss.
Budgetary Control - Budgets act as financial plans. Different budgets include:
- Sales budget
- Production budget
- Cash budget
- Capital budget
B. Modern Techniques
Return on Investment (ROI) - Indicates how efficiently capital is being used. ROI = (Net Income divided by Investment) multiplied by 100
Ratio Analysis - Analyses liquidity, solvency, efficiency, and profitability of the business.
Responsibility Accounting - Allocates costs and revenues to different responsibility centers such as:
- Cost center
- Revenue center
- Profit center
- Investment center
Management Audit - Systematic review of managerial efficiency and planning effectiveness.
PERT and CPM - Tools for project scheduling and management:
- PERT is used when activity time is uncertain.
- CPM is used when time and cost are known with accuracy.
Management Information System (MIS) - A computerized system that provides timely and accurate data to help in planning and controlling.
Conclusion
Controlling ensures that organisational activities move in the desired direction. It measures performance, identifies deviations and takes corrective steps to achieve goals efficiently. Planning and controlling work together to complete the management cycle.
An effective control system improves coordination, discipline, efficiency and future planning.
FAQs
Q1. What is controlling in management?
Ans. It is the process of ensuring that actual performance conforms to planned performance.
Q2. What is management by exception?
Ans. Only significant deviations beyond permissible limits are brought to the notice of top management.
Q3. Why is controlling important?
Ans. It ensures goals are achieved, resources are used efficiently and coordination is maintained.
Q4. What are the steps in the controlling process?
Ans. Setting standards, measuring performance, comparing, analysing deviations and corrective action.
Q5. Name two modern techniques of control.
Ans. Ans. ROI and Management Information System.
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