Chapter 11 controlling function of management

CONTROLLING FUNCTION OF MANAGEMENT

CHAPTER-11

AUTHORS:DR. K IRAN NERKARDR. VILAS CHOPDE

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. ---- Henri Fayol

Control is checking current performance against pre-determined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance. ---- EFL Breach

DEFINE CONTROL

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• Helps in achieving the satisfaction of customers, which, in turn, improves the quality of the organizational processes.

Creating better quality

• Helps to incorporate necessary changes in organizational processes to respond to various threats and opportunities.

Coping with change

• Helps the manager to expedite the cycle of creating, implementing, and completing an organizational process within the stipulated time.

Creating faster cycles

• Refers to providing additional value to the organizational process.

Adding value

• Implies that the controlling process helps in creating a feeling of responsibility among the team members toward their tasks and duties.

Facilitating delegation and teamwork

PURPOSE OF CONTROLLING


1• Establishing performance standards

2• Measuring actual performance

3• Comparing actual performance with

standards

4• Taking corrective action

PROCESS OF CONTROLLING


• Refers to a preliminary or preventive control that attempts to identify and prevent deviations in the standards before their occurrence.

Feed forward control

• Regulates ongoing activities and ensures that they must follow the organizational standards.

Concurrent control

• Focuses on the output after project is completed. It is applied to check whether the actual information is as per the set standards.

Feedback control

TYPES OF CONTROL


Planning and controlling are closely linked to each other.

Planning is a process of setting organization’s objectives, goals, and standards, whereas controlling is a process of ensuring that the goals are achieved as per the set plan.

Planning should be done in such a way that it lays foundation for the establishment of controlling standards and keeps controlling in view.

Planning involves what an organization aspires to achieve in the future, whereas controlling includes what the organization has achieved in the past.


RELATIONSHIP BETWEEN PLANNING AND CONTROLLING

Control system is a set of mechanism that is designed to ensure the accomplishment of organizational goals.

The importance of the control system is: Enables the project manager to cope with future uncertainties by

monitoring and regulating specific activities Helps to detect undesirable irregularities, such as product

defects, cost overruns, or rising personnel turnover at the right time.

Alerts about possible opportunities by highlighting situations in which the actual performance of the project may exceed the expected performance

Enhances coordination among various activities and helps to deal with complex situations

Decentralizes authority by enabling managers to encourage decision making at lower levels in the organization while still remaining in central control

CONTROL SYSTEM


• Refers to the control system used by the top level management of the organization.

Strategic Control System

• Refers to the control system used by middle-level managers of the organization.

Tactical Control System

• Refers to the lower-level control system of an organizational hierarchy.

Operational Control System

TYPES OF CONTROL SYSTEMS


Provides information regarding the actual status of the organizational activities

Integrates techniques to collect and use information to facilitate the control function

Helps managers in regulating activities Helps managers to determine the corrective actions

to be takenBrings coordination among diff erent organizational

activities Helps managers to allocate resources effi ciently Evaluates the performance of employees, which, in

turn, motivates them to perform effi ciently

MANAGEMENT OF CONTROL SYSTEM


Controlling overall organizational performance is concerned with measuring the performance of all the systems, processes, and individuals of an organization as a whole and taking corrective actions, if any deviation.

The successful controlling of overall organizational performance depends on the proper utilization of the control tools and techniques.

The control techniques help managers to exercise control by providing required information in the right amount and at the right time.

An organization uses diff erent techniques in diff erent functional area as per its suitability.

CONTROLLING OVERALL ORGANIZATIONAL PERFORMANCE


•Refers to statement that contains details regarding the financial activities, such as total income, expenditures, and cash inflows and outflows, of the organization.

Financial Statements

•Contains information regarding the revenues generated, expenses, losses incurred by the organization.

Income Statement

• Provides information regarding the worth (assets) of the organization at a single point in time, and the extent to which those assets are financed through debt (liability), and owner's investment (equity).

Balance Sheet

•Shows the inflows and outflows of cash in an organization.

Cash Flow Statement

•Refers to the formal investigations to ensure that financial management practices follow accepted accounting procedures, policies, laws, and ethical guidelines.

Financial Audits

•Assesses the performance and status of the organization.

Ratio Analysis

TOOLS FOR FINANCIAL CONTROL


Budgetary control is a control technique that is used to compare the actual revenue and expenses of the organization with its actual budget.

In this technique, the budget of the previous year is used as a basis for eliminating the overrun costs that took place in the past.

This control gives management a clear idea of what is to be done to minimize the wastage of resources.

BUDGETARY CONTROL


Quality control refers to a process by which managers review the quality of all factors involved in production.

The three tools used for quality control are as follows:

QUALITY CONTROL


Inspection

• Refers to the method that detects quality problems at the end of the production process before they reach the final customer.

Quality Assurance

• Refers to the method that focuses the efforts on improving quality.

Total Quality Management (TQM)

• Refers to the process that ensures quality is being checked at every stage of the production process.

Marketing control is a control technique that helps managers to monitor the progress of set marketing goals, such as customer satisfaction, price study, market demand-supply, and speedy order-to-delivery cycle.

The market control tools used to evaluate an organization's marketing functions are:

MARKETING CONTROL


Market Research

• Refers to the process of gathering and analyzing data to assess the needs of customers.

Test Marketing

• Refers to an important marketing control tool before the launch of a new product.

Marketing Statistics

• Refers to the use of statistics to assess the success of marketing strategy.

Human resource control monitors and regulates the performance of human resource of an organization.

The performance of employees is evaluated by conducting performance appraisal method.

Some of the common control types include performance appraisals, disciplinary programs, observations, and training and development assessments.

The performance of human resource largely depends on the success or failure of the organization.

Therefore, it is necessary for managers to continuously improve the skills of team members by using techniques.

HUMAN RESOURCE CONTROL


Information technology has made the organizational control easy and relatively at a lower cost.

Information technology control helps in processing the data and making it meaningful and understandable by the receiver.

The development in information technology has promoted the development of Managerial Information System (MIS) and communication.

MIS provides timely internal and external information about technical aspects of various projects of an organization, so that the managers perform their jobs eff ectively and effi ciently.

Communication is an integral part to carry out the managerial functions and to link the organization with its external environment.

INFORMATION TECHNOLOGY CONTROL


Controlling can be defi ned as an ongoing process of comparing the actual performance with the standard performance, measuring variations, and taking corrective actions.

It helps the management in minimizing deviations in the performance and achieving goals and objectives in an effi cient manner.

It enables managers to monitor the performance of their subordinates, providing them feedback, and taking measures to improve their performance.

The eff ectiveness of the controlling function of an organization depends on the effi ciency of its planning process.

Planning involves defi ning the goals and objectives that an organization aspires to achieve, whereas controlling includes monitoring how well these goals and objectives are accomplished.

RECAP


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