CONTROLLING MEANING OF CONTROLLING: Controlling is a process of monitoring actual performance, & terry, taking corrective measures, if required.

George Terry defines Controlling is determining what is being accomplished, that is, evaluating the performance, and if necessary, applying corrective measures so that the performance takes place according to the plans. NATURE AND CHARACTERISTICS OF CONTROLLING: The nature of controlling is explained as follows: 1. Systematic Process: Decision-making is a systematic process, which consists of the following steps:  Setting of targets.  Implementation of activities to achieve targets.  Measuring actual performance.  Comparing actual performance with targets to find out deviations.  Framing alternative measures to correct deviations.  Selecting and Implementing best corrective measures. 2. All pervasive: Controlling like other functions of management is all pervasive. It is required in all organizationlarge or small, business or non business. It is also required at all levels in the organization. 3. Focus on objectives: Controlling focuses on achievement of objectives. The actual performance is compared against the targeted performance. If there are deviations, corrective measures are taken, so as to attain the predetermined objectives. 4. Continuous process: Controlling is a continuous process. As long as the organization exists, there are activities. And as long as there are activities, there is need to control such activities. Therefore, controlling is a neverending process. 5. Suggestive in Nature: The control system must be suggestive in nature. It should indicate where the problem is, who is at a fault and what should be done to correct the faults, if any.

6. Critical Point Control: It may be neither desirable nor economical to control each and every activity. Therefore, an organization should be selective in control matters. A good control system should focus on critical factors or areas, where control is vital to ensure successful achievement of goals or targets. 7. Control by Exception: The control system should enable the managers to focus their attention on exceptional or significant deviations. The senior managers should control major or exceptional deviations. The junior managers should be allowed to control routine matters.

8. Forward Looking: A good control system should be forward looking in nature. It should help the managers to plan their activities for the future. 9. Requires Creativity: Controlling requires creativity on the part of managers. The managers must come up with new and innovative ideas to control the activities in organization. The innovative ways will help to achieve the objectives more effectively.

THE CONTROL PROCESS : The control process is a three step process : measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or inadequate standards. The control process assumes that performance standard already exist. These standards are the specific goals created during the planning process against which performance progress is measured. The Control Process Establish objectives and standards. Measure actual performance. Compare results with objectives and standards. Take necessary action.

Establishing standards The first step in the control process is the establishment of standards. A standard is a target against which subsequent performance is to be compared. As much as possible, standard established for control purposes should be derived from the organizations goals. On a broader level, control standards also reflect organizational strategy. A final aspect of establishing standards is to decide which performance indicators are relevant. When a new product is introduced, its manufacturer should have some idea in advance whether the first month s sale will take a while to gather momentum. The control process begins with planning and the establishment of performance objectives.

 Performance objectives are defined and the standards for measuring them are set. There are two types of standards: Output Standards- measures performance results in terms of quantity, quality, cost, or time. Input Standards- measures work efforts that go into a performance task.

Measuring performance The second step in the control process is measuring performance. Performance refers to that which we are attempting to control. The measurement of performance is a constant, ongoing activity for most organizations, and for control to be effective, relevant performance measures must be valid. When a manager is concerned with controlling sales, daily, weekly, or monthly sales figures represent actual performance. For a production manager, performance may be expressed in terms of unit cost, quality or volume. For employees, performance may be measured in terms of quality or quantity of output. Measurements must be accurate enough to spot deviations or variances between what really occurs and what is most desired. Without measurement, effective control is not possible.

Comparing performance against standards The third step in the control process is to compare measured performance against the standards developed in step 1. Performance may be higher than, lower than, or the same as the standards. The issue is how much leeway is permissible for remedial action is taken. In some cases comparison is easy. It is relatively simple to determine whether this standard has been met. In other settings, however, comparison is less clear-cut. Assume that each of three sales managers has a goal of increasing sales by 10% during the year. At the end of year, one manager has increased sales by 9.9%, another by 9.3% and the third by 8.7%. How do we decide whether each has met the standard? For the most part, this is a management decision that must be based on many relevant factors. Although none of the three sales managers attained the precise goal of 10%, one was very close. Another may have met with unexpected competition from a new company. These and other relevant factors must be considered. The comparison of actual performance with desired performance establishes the need for action. Ways of making such comparisons include: Historical / Relative / Engineering

Evaluation and Action The final step in the control process is to evaluate performance and then take appropriate action. This evaluation draws heavily on a manager s analytic and diagnostic skills. After evaluation, one of three actions is usually appropriate.

Maintain the status quo: One response is to do nothing, or maintain the statues quo. This action is generally appropriate when performance more or less measures up to the standard. Correct the deviation: It is more likely that some action will be needed to correct a deviation from the standard. If the cost-reduction standard is 4% and we have thus far managed only a 1% reduction, something must be done to get us back on track. We may need to motivate our employees to work harder or supply them with new machinery. Managers at sharper image saw a clear problem with their same store sales and took corrective action immediately. Change standards: A final response to the outcome of comparing performance to standards is to change the standards. The standard may have been too high or too low to begin with. The company may need to reassess its standard and adopt a lower one to better reflect the realities of its marketplace.

TYPES OF CONTROL SYSTEM Feed forward The most desirable type of control-feed forward control-prevents anticipated problems since it takes place before the actual activity. The key to feed forward controls is taking managerial action before a problem occurs. Feedforward controls are desirable because they allow mangers to prevent problems rather than having to correct them later after the damage has already been done. Unfortunately, these controls require timely and accurate information that often is difficult to get. As a result, managers end up using the other two types of controls. Eg: When McDonald opened its first outlet in Moscow , it sent company quality experts to help Russian Farmers learn techniques for growing high quality potatoes and bakers to learn processes for baking high quality breads. And at the Collins & Aikman automotive instrument panels plant, employees follow the rule of a place for everything and everything in its place . That way, they can find waht they need when they need it with no disruption to work flow. Concurrent As its name implies,it takes place while an activity is in progress. When control is enacted while the work is being performed, management can correct problems before theycome costly. The best is direct supervision. For ex when managers use management by walking around, which is a term used to describe a manager being out in the work area, interacting directly with employees they are using concurrent control. It is also known as real time control. The navigator of an aircraft who adjusts the aircraft s movements is an example of concurrent control.

Feedback control The most popular type of control relies on feedback. In feedback control the control takes place after the activity is done. For instance, when Mc Donald s executives learned that a suspected criminal ring had allegedly stolen millions of dollars in top prizes in their customer games, it was discovered with feedback control. Feedback controls do have two advantages. First, feedback provides managers with meaning full information on how effective their planning efforts were. Second, feedback control can enhance employee motivation. Cash budget is an example of this type where the finance manager is in a position to estimate the next year s flow of cash. FORMS OF ORGANIZATIONS CONTROL Bureaucratic Control Bureaucratic Control is a form of organizational control characterized by formal and mechanistic structural arrangements. The goal of bureaucratic control is to extract employee compliance. Organizations that use it rely on strict rules and a rigid hierarchy, concentrate on ensuring that people meet minimally acceptable levels of performance and have a tall structure. Moreover they focus their rewards on individual performance and allow only limited and formal employee participation. Clan Control Clan Control is an approach to organizational control based on informal and organic structural arrangements. Accordingly, it relies heavily on group norms, a strong corporate culture and self-control of behavior. The focus of performance is not so much on minimally acceptable levels, but rather on how people can enhance their levels of performance beyond minimal levels. Organizations using this approach are usually relatively flat and encourage shared influence. Rewards are often directed at group performance and participation is widespread. Strategic control Strategic control-the third level of control practiced by organization-is aimed at ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic control. Because the study of strategic control is still in its infancy, there are no generally accepted models or theories. In general, however, the implementation of strategy generally five basic areas: structures, leadership, technology, human resources, and information and control systems. Thus it follows that strategic control should focus on these five areas in order to ensure that strategy has been and is being effectively implemented. Cybernetic Control System One that is self-contained in its performance monitoring and correction capabilities. The control process practiced in organizations is not cybernetic, but it does follow similar principles.

Controlling consists of verifying whether everything occurs in conformities with the plans adopted, instructions issued and principles established. Controlling ensures that there is effective and efficient utilization of organizational resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actions. ESSENTIALS OF EFFECTIVE CONTROL SYSTEM Control is necessary in every organisation to ensure that everything is going properly. Every manager, therefore should have an effective and adequate control system to assist him in making sure that events conform to plans. 1) Reflecting organisational needs: All control systems and techniques should reflect the functions they are to perform. There may be several control techniques which have general applicability such as budgeting, costing, etc. However it should not be assumed that these may be utilised in all situations. The manager should choose an appropriate tool for control which helps him in controlling actions. 2) Forward looking: Control should be forward looking. Though many of the controls are instantaneous they must focus attention as to how future actions can be conformed with plans. In fact the control system should be such that it provides aid in planning process. 3) Promptness in reporting deviations: The success of a effective control system lies in the fact that it points the deviation promptly and takes corrective actions immediately. Similarly an ideal control system detects deviations promptly and informs the manager concerned to take prompt decisions. 4) Objective: Control should be objective, definite and determinable in a clear and positive way. The standards of measurement should be quantified as far as possible. If they are not quantifiable such as training effectiveness etc. They must be determinable and verifiable.

5) Flexible: Control system should be flexible so that it remains workable in the case of changed plans, unforeseen circumstances or outright failures. Much flexibility in control can be provided by having alternative plans for various probable situations. 6) Economical: Control should be economical and worth its costs. Economy is relative since the benefits vary with the importance of the activity, the size of the operation, the expense that might be incurred in the absence of control, and the contribution that the control system can make. The economy of a control system will depend a great deal on the manager selecting to control only critical actors in