- Corrective action is taken when deviations go beyond acceptable limits.
- No action is needed if deviations are within the allowed range.
- Corrective action may include training employees, increasing resources, or allowing overtime.
- If deviations cannot be corrected, performance standards may need to be revised.
Key Points
Key Points: Concept of Controlling
- Controlling means ensuring that organisational activities are performed according to planned standards.
- It ensures that resources are used effectively and efficiently to achieve predetermined goals.
- Controlling is required at all levels of management—top, middle, and lower levels.
- It measures actual performance, identifies deviations from standards, and takes corrective action.
- Controlling helps in improving future planning by identifying problems and completing the management cycle.
Key Points: Importance of Controlling
- Achieves Goals – Ensures work is done according to plans.
- Checks Standards – Reviews and improves performance standards.
- Reduces Wastage – Promotes efficient use of resources.
- Motivates Employees – Clarifies expectations and performance levels.
- Maintains Discipline – Prevents dishonesty and ensures order.
- Ensures Coordination – Aligns all activities toward common goals.
Key Points: Controlling Process> Measurement of Actual Performance
- After setting standards, actual performance is measured in an objective and reliable manner.
- Performance should be measured in the same units as the standards for easy comparison.
- Measurement can be done through personal observation, sample checking, and performance reports.
- Wherever possible, performance should be measured during the work process, not only after completion.
- Different areas use different measures, such as profit ratios, units sold, output produced, and quality checks.
Key Points: Controlling Process> Analysing Deviations
- Small deviations are normal, but acceptable limits must be fixed.
- Focus should be on key result areas (KRAs) that are critical to organisational success.
- Critical Point Control means giving special attention to important areas where major problems can affect the whole organisation.
- Management by Exception means only significant deviations beyond limits are reported to top management.
- Causes of deviations (such as unrealistic standards, lack of resources, or external factors) must be identified before taking corrective action.
Standards used in Functional Areas to Gauge Performance
| Production | Marketing | Human Resource Management | Finance and Accounting |
|---|---|---|---|
| Quantity | Sales volume | Labour relations | Capital expenditures |
| Quality | Sales expense | Labour turnover | Inventories |
| Cost | Advertising expenditures | Labour absenteeism | Flow of capital |
| Individual job | Individual | — | Liquidity |
| Performance | Salesperson’s performance | — | — |
Key Points: Controlling Process> Taking Corrective Action
Key Points: Advantages of Critical Point Control
- Saves managers’ time by focusing only on important deviations.
- Helps management concentrate on critical areas of the organisation.
- Allows routine problems to be handled by subordinates.
- Encourages delegation of authority and improves employee morale.
- Identifies serious problems quickly and keeps the organisation on the right track.
Key Points: Limitations of Controlling
- Difficulty in Setting Standards – Some areas like morale and job satisfaction cannot be measured in numbers.
- No Control over External Factors – Business cannot control government policies, technology changes, or competition.
- Employee Resistance – Workers may oppose control as they feel it limits their freedom.
- Costly Process – Control systems require time, effort, and money, which small firms may not afford.
- Cost–Benefit Concern – The cost of control should not be more than the benefits gained.
Key Points: Relationship between Planning and Controlling
- Planning sets standards; Controlling follows them.
- No planning = No controlling.
- Planning decides action; Controlling checks performance.
- Planning looks ahead; Controlling reviews results.
- Both support and improve each other.
Key Points: Controlling Process> Setting Performance Standards
- It is the first step in the controlling process.
- Standards act as benchmarks to measure actual performance.
- Standards can be quantitative (cost, revenue, output, time, etc.).
- Standards can also be qualitative (goodwill, employee motivation) but should be clearly defined.
- Standards must be flexible to suit changes in the business environment.
Key Points: Controlling Process> Comparing Actual Performance with Standards
Important Questions [7]
- 'A.S. Ltd' is a Large Company Engaged in the Assembly of Air-conditioners. to Find Out the Reason The Company Compared the Actual Performance of Each Worker and Observed Through C.C.T.V. that Some of the Workers Were Busy in Gossiping. 1) Identify the Function of Management Discussed Above. 2) State Those Steps in the Process of the Function Identified Which Are Discussed in the Above Paragraph
- Hina Sweets is a Renowned Name for Quality Sweets since 1935 Identify the Step Taken by Harsh that is Related to One of the Functions of Management.
- With the Help of a Diagram Explain 'Functional Foremanship' as a Technique of Scientific Management.
- State the Role of 'Speed Boss' in Functional Foremanship.
- Whether the decisions have been translated into desired actions or not' can be confirmed by performing which of the following functions of management?
- One of the functions of management completes one cycle of the management process and improves planning in the next cycle in light of the problems that were identified in the existing plans.
- Explain the relationship between planning and controlling.
