The process of control follows a series of steps in order to make a control system effective. It is necessary to consider some processes for making the right decision. It helps to effective measurement of performance to manager. Show Following are the major steps in the process of controlling.
The process of control starts with the establishment of a standard of performance. The standard of performance must be practically attainable and should be the basis of comparison with actual performance. The standard of performance may either tangible or intangible. The tangible standards can be expressed in numerical terms. Again, the tangible standards can be classified as quantitative standards, monetary standards, time standards, and financial standards, etc. E.g. monetary standards are like cost, revenue, profits, and quantitative standards are production units, sales units, etc. Intangible standards are qualitative in nature and can not be expressed in numerical terms. Intangible standards involve competency of managers, employee morale, the reputation of enterprise, good public relation, and so on. Thus, managers need to set both quantitative and qualitative standards of performance in the organization. The second step in the controlling process is the measurement of actual performance achieved with that of planned performance. The measurement of actual performance must be done in accordance with laid down standards. It makes measurement easier and meaningful. Qualitative aspects of performance must be quantified as far as possible. There must a provision of regular and systematic measurement of actual performance. The measurement should be on a future basis and should also focus on future performance. This is helpful to predict deviation in future performance. Thus, there must be a provision of measurement from time to time even when the actual performance is still in operation. #3 Comparison of Actual PerformanceThis step of the control process focuses on the detailed study of actual performance and comparison against standard performance. Such comparison shows the range of deviation of actual performance with that of the standard defined. The management needs to identify the standards deviation for various parts of activities. If the range of deviation between actual and standard performance is within the standard deviation, it can be ignored. And, if the range of negative deviation is more than the standard, it is essential to note such deviation for necessary steps. Some range of deviation might be positive and needs to be encouraged. Therefore, the comparison of actual performance is helpful to identify weaknesses and strengths in any part of the performance. Step #4 Analyze the Cause of DeviationA detailed study of each and every part of performance guides in finding out the causes of deviation in actual performance. These causes gained against the standard defined might be from the external environment, internal environment, defects in planning, organizational defects, and others. External factors involve a change in price, government rules, the strategy of competitors, intense competition, etc. Internal factors involve a shortage of raw materials, inappropriate production facilities, outdated technology, lack of coordination, etc. Organizational defects involve lack of job description, lack of span of control, the imbalance between authority and responsibility, etc. Therefore, it is necessary to detect where the problem lies so that corrective action can be taken at the right time. The last step of the control process is to take corrective action so that actual performance should come to the level of standard performance. The corrective action is taken when the actual performance is not in accordance with the standard performance. The management must have a strategy to remove limitations in the internal environment through modification and to adjust itself with the external environment. External factors are beyond the control of the management. It has to develop a strategy to minimize losses due to the change in the external environment. Generally, remedial action might involve modification and improvement in the planning, the betterment of the internal environment, organizational restructuring, placement of the right person to the right job, and betterment in directing techniques. The above-mentioned steps are the important parts of the control process. The study of these steps is essential to make controlling efficient, effective, and productive.
Learning Outcomes
The proper performance of the management control function is critical to the success of an organization. After plans are set in place, management must execute a series of steps to ensure that the plans are carried out. The steps in the basic control process can be followed for almost any application, such as improving product quality, reducing waste, and increasing sales. The basic control process includes the following steps:
Consider a situation in which a fictional company, The XYZ Group, has suffered a decrease in the profits from its high-end sunglasses due to employee theft. Senior executives establish a plan to eliminate the occurrence of employee theft. It has been determined that the items are being stolen from the company warehouse. The executives establish a goal of zero thefts ($0) within a three-month period (Step 1). The company currently loses an average of $1,000 per month due to employee theft. To discourage the undesired behavior, XYZ installed cameras in the warehouse and placed locks on the cabinets where the most expensive sunglasses are stored. Only the warehouse managers have keys to these cabinets. After three months, XYZ managers contact the bookkeeper to get the sales and inventory figures for the past three-month period (Step 2). The managers then compare the figures with the previous period, taking into account orders for deliveries, returns, and defective merchandise (Step 3). It has been determined that the company lost $200 the first month, $300 the second month, and $200 the third month due to theft, which is an improvement but short of the goal. Managers then come up with suggestions for making adjustments to the control system (Step 4). XYZ senior executives approve of the suggestion to institute a zero-tolerance policy for employee theft. Now, if there is evidence that an employee has stolen a pair of sunglasses, that employee’s job will be terminated. The employee handbook is updated to include the change, and XYZ executives hold a meeting with all warehouse employees to communicate the policy change (Step 5). Timing of ControlsControls can be categorized according to the time in which a process or activity occurs. The controls related to time include feedback, proactive, and concurrent controls. Feedback control concerns the past. Proactive control anticipates future implications. Concurrent control concerns the present. FeedbackFeedback occurs after an activity or process is completed. It is reactive. For example, feedback control would involve evaluating a team’s progress by comparing the production standard to the actual production output. If the standard or goal is met, production continues. If not, adjustments can be made to the process or to the standard. An example of feedback control is when a sales goal is set, the sales team works to reach that goal for three months, and at the end of the three-month period, managers review the results and determine whether the sales goal was achieved. As part of the process, managers may also implement changes if the goal is not achieved. Three months after the changes are implemented, managers will review the new results to see whether the goal was achieved. The disadvantage of feedback control is that modifications can be made only after a process has already been completed or an action has taken place. A situation may have ended before managers are aware of any issues. Therefore, feedback control is more suited for processes, behaviors, or events that are repeated over time, rather than those that are not repeated. Proactive controlProactive control, also known as preliminary, preventive, or feed-forward control, involves anticipating trouble, rather than waiting for a poor outcome and reacting afterward. It is about prevention or intervention. An example of proactive control is when an engineer performs tests on the braking system of a prototype vehicle before the vehicle design is moved on to be mass produced. Proactive control looks forward to problems that could reasonably occur and devises methods to prevent the problems. It cannot control unforeseen and unlikely incidents, such as “acts of God.” Concurrent controlWith concurrent control, monitoring takes place during the process or activity. Concurrent control may be based on standards, rules, codes, and policies. One example of concurrent control is fleet tracking. Fleet tracking by GPS allows managers to monitor company vehicles. Managers can determine when vehicles reach their destinations and the speed in which they move between destinations. Managers are able to plan more efficient routes and alert drivers to change routes to avoid heavy traffic. It also discourages employees from running personal errands during work hours. In another example, Keen Media tries to reduce employee inefficiency by monitoring Internet activity. In accordance with company policy, employees keep a digital record of their activities during the workday. IT staff can also access employee computers to determine how much time is being spent on the Internet to conduct personal business and “surf the Web.” The following diagram shows the control process. Note that the production process is central, and the control process surrounds it.  The control process Contribute!Did you have an idea for improving this content? We’d love your input. Improve this pageLearn More |
What is the process of controlling?
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