Controlling: Meaning, Nature and Principles

After reading this article you will learn about:- 1. Meaning of Control 2. Nature of Control 3. Principles 4. Factors 5. Aims 6. Benefits 7. Limitations.

Meaning of Controlling:

Controlling is one of the managerial functions and it is an important element of the management process. After the planning, organising, staffing and directing have been carried out, the final managerial function of controlling assures that the activities planned are being accomplished or not.

So the function of controlling helps to achieve the desired goals by planning. Management must, therefore, compare actual results with pre-determined standards and take corrective action of necessary.

Control can be defined as the process of analysing whether actions are being taken as planned and taking corrective actions to make these to confirm to planning.

According to E.F.L. Brech:

“controlling is checking performance against predetermined standards contained in the plans with a view to ensuring adequate progress and satisfactory performance.”

Ernest. Dale defines as “the modern concept of control envisages system that not only provides a historical record of what has happened and provides data that enable the chief executive or the departmental head to take corrective steps if he finds he is on the wrong track.”

The managerial function of controlling is defined by Koontz and O’Donnell,” as the measurement and correction to the performance of activities of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished.”?

George R. Terry defined “controlling is determining what is being accomplished, that is evaluating the performance and, if necessary, applying corrected measures so that the performance takes place according to plans.”

Management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisation’s objectives. Further, it is defined as the process by which managers in the organisation assure that activities and efforts are producing the desired objectives in the organisation. These definitions imply three main points about management control.

First, management control is a process of some inter-related and sequential steps, secondly, management control in the organisation aims at effectiveness and efficiency in the acquisition and utilisation of resources such as money, materials, machinery and manpower. Thirdly, management control in the organisation is designed to further objectives of the organisation.

Nature of Controlling:

Based on the above definitions the following natures or characteristics of controlling can be presented below:

1. Control is a Function of Management:

Actually control is a follow-up action to the other functions of management performed by managers to control the activities assigned to them in the organisation.

2. Control is Based on Planning:

Control is designed to evaluate actual performance against predetermined standards set-up in the organisation. Plans serve as the standards of desired performance. Planning sets the course in the organisation and control ensures action according to the chosen course of action in the organisation.

Unless one knows what he wants to achieve in the organisation, he cannot say whether he has done right or wrong in the organisation. Control is said to be the Last step in management process but really speaking it begins with the setting up a plan in the organisation. Control implies the existence of plans or standards in the organisation.

3. Control is a Dynamic Process:

It involves continuous review of standards of performance and results in corrective action, which may lead to changes in other functions of management.

4. Information is the Guide to Control:

Control depends upon the information regarding actual performance. Accurate and timely availability of feedback is essential for effective control action. An efficient system of reporting is required for a sound control system. This requires continuing monitoring and review of operations.

5. The Essence of Control is Action:

The performance of control is achieved only when corrective action is taken on the basis of feedback information. It is only action, which adjust performance to predetermined standards whenever deviations occur. A good system of control facilities timely action so that there is minimum waste of time and energy.

6. It is a Continuous Activity:

Control is not a one-step process but a continuous process. It involves constant revision and analysis of standards resulting from the deviations between actual and planned performance.

7. Delegation is the key to Control:

An executive can take corrective action only when he has been delegated necessary authority for it. A person has authority to control these functions for which he is directly accountable. Moreover, control becomes necessary when authority is delegated because the delegator remains responsible for the duty. Control standards help a manger expand his span of management.

8. Control Aims at Future:

Control involves the comparison between actual and standards. So corrective action is designed to improve performance in future.

9. Control is a Universal Function of Management:

Control is a basic or primary function of management. Every manager has to exercise control over the subordinates’ performance, no manager can get things done without the process of controlling. Once a plan becomes operational, follow-up action is required to measure progress, to uncover deficiencies and to take corrective actions.

Therefore, control is an essential managerial function at every level. The process of management is incomplete without controlling.

10. Controlling is Positive:

The function of controlling is positive. It is to make things happen i.e. to achieve the goal with instead constraints, or by means of the planned activities. Controlling should never be viewed as being negative in character.

Principles of Controlling:

The followings are the principles of controlling:

1. Objectives:

Controls must positively contribute to the achievement of group goals by promptly and accurately detecting deviations from plans with a view to making corrective action possible.

2. Interdependence of Plans and Controls:

The principles of interdependence states that more the plans are clear, complete and integrated, and the more that controls are designed to reflect such plans, the more effectively controls will serve the need of managers.

3. Control Responsibility:

According to this principle, the primary responsibility for the exercise of controls rests in the manager charged with the performance of the particular plans involved.

4. Principal of Controls being in Conformity to Organisation Pattern:

Controls must be designed so as to reflect the character and structure of plans. If the organisation is clear and responsibility for work done is well defined, control becomes more effective and it is simple to isolated persons responsible for deviations.

5. Efficiency of Controls:

Control techniques and approaches are effectively detect deviations from plans and make possible corrective actions with the minimum of unsought consequences.

6. Future-oriented Controls:

It stresses that controls should be forward looking. Effective controls should be aimed at preventing present and future deviations from plans.

7. Individuality of Controls:

Control should be designed to meet the individual requirements of managers in the organisation. Although some control techniques and information can be utilised in the same form by various types of enterprises and managers as a general rule controls should be tailored to meet the specific requirements.

8. Strategic Point Control:

Effective and efficient control requires that attention to be given to those factors which are strategic to the appraisal of performance.

9. The Exception Principle:

The exception principles whereby exceptions to the standards are notified, should be adopted. Note must be taken of the varying nature of exceptions, as “small” exceptions in certain areas may be of greater significance than ‘larger’ exceptions elsewhere.

10. Principal of Review:

The control system should be reviewed periodically. The review exercise may take some or all the points emphasised in the above stated principles. Besides, flexibility and economical nature or controls, should not be lost sight of while reviewing controls.

The Factors to be Considered in the Significance of Controlling:

The following factors, which are common to all organisational situations:

1. Size of Business:

As the organisations grow in size and diversity, they become increasingly complex to manage and hence the need for an efficient system of controls which is required to coordinate activities and accomplish integration.

2. Uncertainty:

Control forms a basis for future action. Today’s world of rapid and sometimes unpredictable changes makes the future very uncertain. This makes planning very difficult. Hence, control points are necessary to check the progress of activities and plans and make the necessary and constructive adjustments so as to accommodate any environmental changes.

3. Decentralization Trends:

The current trends in decentralization have brought the decision making authority at lower level management while accountability for results remains with the upper management. Controls serve the purpose of monitoring and ensuring performance results while delegating authority to subordinates.

4. Control is Vital for Morale:

Workers are happier when things are under control. People make mistakes. Intuitive decisions can result in errors of judgments, especially when there are so many variables involved. Such wrong decisions can result in lowering of morale. Control techniques reduce the chances of errors in judgment thus making the organisational environment more stable. which is morale boosting.

Aims of Controlling:

The aims of controlling are listed as follows:

1. To find out the progress of the work—the work already completed and the work in progress.

2. To compare the actual performance of the work at different stages with the particulars indicated in the plans and policies.

3. To ascertain the time within which the work is completed.

4. To verify quantity and testing quality of the products.

5. To know the delays or interruptions, if any, in the performance of work and trace the cause of such delay or breakdown.

6. To see that causes of delay are eradicated and operations are suitably re-scheduled.

7. To ensure that variations in the contents and methodology of work are remedied by appropriate adjustments.

8. To assess the cost of materials and labour used and ensure that direct costs and indirect costs do not exceed the budget provisions.

9. To pinpoint the responsibility on individuals at different levels for slackness, indifference, or negligence, if any in the expected levels of performance.

10. To evaluate the value of the work performed and recognize the contributions of the staff towards realisation of the goals of the enterprise.

11. To maintain discipline and morale in the organisation.

Benefits of Controlling:

Following are the advantages of an effective s system of control:

1. Control provides the basis for future action in the organisation. Control will reduce the chances of mistakes being repeated in future by suggesting preventive methods.

2. Control facilities decision making in the organization. The process of control is complete only when corrective measures are taken in the organization. This requires taking a right decision as to what type of follow up action is to be taken while controlling.

3. An effective system of control facilities decentralization of authority only when corrective measures are taken. This requires taking a right decision as to what type of follow up action is to be taken regarding control.

4. Control and planning go hand in hand in the organisation. Control is the only means to ensure that the plans are being implemented in real sense and not some other else. Control points out the shortcomings of not only planning but also other functions of management such as organising, staffing and directing in the organisation.

5. The existence of a control system has a positive impact on the behavior of the employees in the organisation. They are cautious when performing the duties in the organization and they know that their supervisors in the organisation are observing them.

6. Control helps in coordination of the activities of the various departments in the organisation of the enterprise by providing them unity of direction.

Limitations of Controlling:

A control system may be faced with the following limitations:

1. An organisation cannot control the external factors such as government policy, technological changes, fashion changes etc.

2. Control is an expensive process because sufficient attention has to be paid to observe the performance of the subordinates in the organisation. This requires an expenditure of a lot of time and effort to be made.

3. Control system loses its effectiveness in the organisation when standards of performance cannot be defined in quantitative terms. For example, it is very difficult to measure human behavior and employee morale in the organization.

4. The effectiveness of control mainly depends on the acceptance of subordinates in the organisation. They may resist control because they may feel that it will reduce or curtail their freedom while in duty. It also loses its significance when it is not possible to fix the accountability of the subordinates.