CONTROLLING

CONCEPT OF CONTROLLING

CONCEPT OF CONTROLLING
Controlling completes the cycle of management process i.e.
planning

control

organizing

leading

staffing

Controlling checks whether the resources have been used as visualized in the plan or not.

Controlling process gathers information about actual results & planned results so that gap if any can be detected & corrective actions can be taken if needed.

Effective control systems allow supervisors to know how well implementation is going. Control facilitates delegating activities to employees. Since supervisors are ultimately held accountable for their employees' performance, timely feedback on employee activity is necessary.

Definitions
Henry Fayol, Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring.

Robert J. Mockler presented a more comprehensive definition of managerial control: Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

Characteristics of Control
Control is a continuous process Control is a management process Control is embedded in each level of organisational hierarchy Control is forward looking Control is closely linked with planning Controlling is tool for achieving organisational activities

Importance of control
Adjustments in operations Policy verification Creation of managerial responsibility Psychological pressure for better performance Coordination in Action Organizational efficiency

Types of Control
Controls are most effective when they are applied at key places. Supervisors can implement controls before the process begins (feed forward), during the process (concurrent), or after it ceases (feedback). Feed forward controls focus on operations before they begin. Their goal is to prevent anticipated problems. An example of feed forward control is scheduled maintenance on automobiles and machinery. Regular maintenance feeds forward to prevent problems. Other examples include safety systems, training programs, and budgets.

 Concurrent controls apply to processes as they are happening. Concurrent controls enacted while work is being performed include any type of steering or guiding mechanism such as direct supervision, automated systems (such as computers programmed to inform the user when they have issued the wrong command), and organizational quality programs. Feedback controls focus on the results of operations. They guide future planning, inputs, and process designs. Examples of feedback controls include timely (weekly, monthly, quarterly, annual) reports so that almost instantaneous adjustments can be made.

Control Process
The control process is a continuous flow between measuring, comparing and action. There are four steps in the control process: establishing performance standards, measuring actual performance, comparing measured performance against established standards, and taking corrective action.

1. 2. 3. 4.

Step 1. Establish Performance standards

Standards are created when objectives are set during the planning process. A standard is any guideline established as the basis for measurement. It is a precise, explicit statement of expected results from a product, service, machine, individual, or organizational unit. It is usually expressed numerically and is set for quality, quantity, and time. Tolerance is permissible deviation from the standard. What is expected? How much deviation can be tolerated?

Step 2. Measure Actual Performance

Supervisors collect data to measure actual performance to determine variation from standard. Written data might include time cards, production tallies, inspection reports, and sales tickets. Personal observation, statistical reports, oral reports and written reports can be used to measure performance. Management by walking around, or observation of employees working, provides unfiltered information, extensive coverage, and the ability to read between the lines. While providing insight, this method might be misinterpreted by employees as mistrust. Oral reports allow for fast and extensive feedback.

Step 3. Compare Measured Performance Against Established Standards Comparing results with standards determines variation. Some variation can be expected in all activities and the range of variation - the acceptable variance - has to be established. Management by exception lets operations continue as long as they fall within the prescribed control limits. Deviations or differences that exceed this range would alert the supervisor to a problem.

Step 4. Take Corrective Action

The supervisor must find the cause of deviation from standard. Then, he or she takes action to remove or minimize the cause. If the source of variation in work performance is from a deficit in activity, then a supervisor can take immediate corrective action and get performance back on track. Also, the supervisors can opt to take basic corrective action, which would determine how and why performance has deviated and correct the source of the deviation. Immediate corrective action is more efficient, however basic corrective action is the more effective.

An example of the control process is a thermostat Standard

Standard: The room thermostat is set at 28 degrees. Measurement: The temperature is measured. Compare: The actual temperature compared with 28 degrees. Corrective Action: If the room is too cold, the heat comes on. If the room is too hot, the heat goes off.

Stages of Control Process

Desired performance

Actual performance

Measurement of actual performance

Comparison of actual performance against standards

Implementation of corrections

Programs of Corrective action

Analysis of corrective action

Identification of deviation

Designing an effective control system

Managers need an effective control system to assist them in making sure that events conform to plans. 1. Integrating strategic planning and control system. 2. Identifying strategic control points. 3. Organizational communication system for flow of information. 4. Understanding of the motivational dynamics of people. 5. Objectivity of controls. 6. Flexibility of control. 7. Fitting the control system to the organizational climate. 8. Economy of controls.

Types of Controls
Control may be grouped according to three general classifications: (1) the nature of the information flow designed into the system (that is, open- or closed-loop control), (2) the kind of components included in the design (that is man or machine control systems), and (3) the relationship of control to the decision process (that is, organizational or operational control).

Open- and Closed-Loop Control

The difference between open-loop control and closed-loop control is determined by whether all of the control elements are an integral part of the system being regulated, and whether allowable variations from standard have been predetermined. In an open-loop system, not all of the elements will be designed into the system, and/or allowable variations will not be predetermined. A street-lighting system controlled by a timing device is an example of an open-loop system. At a certain time each evening, a mechanical device closes the circuit and energy flows through the electric lines to light the lamps. If control is exercised as a result of the operation rather than because of outside or predetermined arrangements, it is a closed-loop system. The home thermostat is the classic example of a control device in a closed-loop system

Organizational and Operational Control

The direction for organizational control comes from the goals and strategic plans of the organization. General plans are translated into specific performance measures such as share of the market, earnings, return on investment, and budgets. The process of organizational control is to review and evaluate the performance of the system against these established norms. In contrast to organizational control, operational control serves to regulate the day-to-day output relative to schedules, specifications, and costs.

Other Types
Time controls relate to deadlines and time constraints. Material controls relate to inventory and material-yield controls. Equipment controls are built into the machinery, imposed on the operator to protect the equipment or the process. Cost controls help ensure cost standards are met. Employee performance controls focus on actions and behaviors of individuals and groups of employees. Examples include absences, tardiness, accidents, quality and quantity of work. Budgets control cost or expense related standards. They identify quantity of materials used and units to be produced. Financial controls facilitate achieving the organization's profit motive. One method of financial controls is budgets. Budgets allocate resources to important activities and provide supervisors with quantitative standards against which to compare resource consumption. They become control tools by pointing out deviations between the standard and actual consumption.

 Operations control methods assess how efficiently and effectively an organization's transformation processes create goods and services. Methods of transformation controls include Total Quality Management (TQM) statistical process control and the inventory management control.

Statistical process control is the use of statistical methods and procedures to determine whether production operations are being performed correctly, to detect any deviations, and to find and eliminate their causes.
A control chart displays the results of measurements over time and provides a visual means of determining whether a specific process is staying within predefined limits. As long as the process variables fall within the acceptable range, the system is in control. Measurements outside the limits are unacceptable or out of control. Improvements in quality eliminate common causes of variation by adjusting the system or redesigning the system.

Control Techniques
Budgets Special Reports Operational Audits Personal Observations Internals Audits Program Evaluation and Review Technique Information Technology: MIS