Controlling

Main Idea

Controlling is the management process of ensuring that organisational activities are performed according to planned standards and objectives. It involves measuring actual performance, comparing it with planned performance, identifying and analysing deviations, and taking corrective action. By providing feedback, controlling helps organisations achieve goals efficiently, detect mistakes, improve resource use, and strengthen future planning. Planning and controlling are closely connected because planning establishes the objectives and standards, while controlling evaluates whether they are being achieved.

Key Concepts and Definitions

• Controlling: The process of comparing actual performance with planned performance, finding deviations, and taking corrective measures.
• Standards: Measurable targets or benchmarks established during planning, such as sales targets, production quantity, cost limits, or quality levels.
• Actual Performance: The results that are actually achieved by an individual, department, or organisation.
• Measurement of Performance: Collecting information about actual results through reports, observation, records, budgets, and performance indicators.
• Comparison: Matching actual performance with planned standards to determine whether the organisation is performing as expected.
• Deviation: The difference between actual performance and planned performance.
• Analysis of Deviations: Studying the reasons, size, and importance of deviations to decide whether corrective action is required.
• Corrective Action: Steps taken to remove the causes of deviations and bring performance back towards the planned standard.
• Critical Point Control: Focusing control efforts on important areas where deviations can seriously affect organisational results.
• Management by Exception: Giving attention mainly to significant deviations while routine performance is allowed to continue without unnecessary interference.
• Planning and Controlling Relationship: Planning provides objectives and standards for control, while controlling provides feedback that helps improve future plans.

Supporting Arguments and Evidence

• The controlling process generally follows five stages: setting performance standards, measuring actual performance, comparing actual performance with standards, analysing deviations, and taking corrective action.

• Deviation can be expressed using the equation:

Deviation = Actual Performance - Planned Performance. If actual performance is lower than the standard, corrective action may be required. If actual performance is higher than the standard, management should examine the reasons and consider whether future standards should be revised.

• Controlling is a continuous process. Performance must be monitored regularly because deviations may arise at different stages and corrective action may be required before problems become serious.

• Controlling is also forward-looking. Although it evaluates past and present performance, the information obtained helps prevent future mistakes, improve future plans, and guide subsequent organisational action.

• Controlling is not limited to finding faults. It supports improvement, coordination, efficiency, and the better use of resources. A good control system identifies the causes of problems and supports corrective improvement rather than merely punishing employees.

• Controlling contributes to the achievement of organisational goals, helps managers judge the accuracy of standards, promotes efficient resource use, improves employee motivation, maintains order and discipline, and coordinates organisational activities.

• Control provides timely information about deviations, enabling managers to take action before problems lead to major losses. For this reason, control should be timely as well as accurate.

• An effective control system should be economical: the cost of operating the system should not exceed the benefits obtained from it. It should also depend on clear standards, reliable information, timely reporting, flexibility, and attention to important areas.

• Control should be flexible enough to respond to changes in the business environment and to revised organisational plans. Standards and corrective measures may need to be adjusted when circumstances change.

• Critical Point Control and Management by Exception ensure that control efforts focus on key result areas and significant deviations. Routine performance can continue without unnecessary interference, while management attention is directed towards differences that may seriously affect results.

• Controlling is a management function performed at all levels of the organisation. However, the nature and scope of control may differ between top managers, middle managers, and supervisory managers.

• Planning and controlling are interdependent. Without planning, there are no objectives or standards against which performance can be assessed. Without controlling, planning cannot be properly evaluated. Controlling therefore provides feedback that improves future planning.

What to Remember

Controlling is a continuous management process that compares actual results with planned standards, analyses deviations, takes corrective action, and uses feedback to improve organisational performance. The key sequence is setting standards, measuring performance, comparing results, analysing deviations, and correcting problems. Effective control should be timely, economical, flexible, focused on significant deviations, and closely integrated with planning.