What is Controlling?

Controlling is the measurement and correction of

performance in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished Planning and controlling are closely related

The Basic Control Process

The basic control process involves three steps:
establishing standards, measuring performance against these

standards, and correcting variations from standards and plans

Standards are criteria of performance

Principle of Critical-Point Control,

Effective control requires attention to those factors critical to evaluating performance against plans
Examples of critical-point standards
(1) physical standards, (2) cost standards, (3) capital

standards, (4) revenue standards, (5) program standards, (6) intangible standards, (7) goals as standards, and (8) strategic plans as control points for strategic control

What is Strategic Control?

Strategic control comprises systematic monitoring at

strategic control points as well as modifying the organization's strategy on the basis of this evaluation

What is Benchmarking?
Benchmarking is an approach for setting goals and

productivity measures based on best-industry practices Three types of benchmarking:

strategic, operational, and management

Control as a Feedback System

Management control is usually perceived as a feedback

system similar to that which operates in the common household thermostat

Real-Time Information and Control

Real-time information is information about what is

happening while it is happening

Feedforward Control
What managers need for effective control a system that will tell them potential problems, giving them time to take corrective action before problems occur
Feedforward systems monitor inputs into a process to ascertain if the inputs are as planned; if they are not, the inputs or the process is changed in order to obtain the desired results

Comparison of Simple Feedback and Feedforward Systems.

Requirements for Feedforward Control

1. Make a thorough and careful analysis of the planning and control system, and identify the more important input variables 2. Develop a model of the system 3. Take care to keep the model up to date; in other words, the model should be reviewed regularly to see whether the input variables identified and their interrelationships continue to represent realities 4. Collect data on input variables regularly, and put them into the system 5. Regularly assess the variations of actual input data from planned-for inputs, and evaluate the impact on the expected end result 6. Take action

10

Requirements for Effective Controls

Tailoring Controls to Plans and Positions Tailoring Controls to Individual Managers Making Sure That Controls Point Up Exceptions at

Critical Points Seeking Objectivity of Controls Ensuring Flexibility of Controls Fitting the Control System to the Organization Culture Achieving Economy of Controls Establishing Controls that Lead to Corrective Action
11