[Commerce Class Notes] on Control Process Pdf for Exam

Controlling is the process of assessing and modifying performance to ensure that the company’s objectives and plans for achieving them are met.

Control is the final role of management. The controlling function will become obsolete if other management functions are properly carried out. If there are any problems in the planning or actual performance, control will be required.

Controlling ensures that the proper actions are taken at the appropriate times. Control can be thought of as a process through which management ensures that the actual operations follow the plans.

The company’s managers check the progress and compare it to the intended system through managing. If the planned and real processes do not follow the same path, the necessary corrective action can be implemented.

The control process is the careful collection of information about a system, process, person, or group of people which is required to make necessary decisions about each of the departments in the process. Managers in the company set up the control systems which consist of the four prior key steps which we will discuss in the later section. 

The performance of the management control function is important for the success of an organization. Management is required to execute a series of steps to ensure that the plans are carried out accordingly. The steps that are executed in the control process can be followed for almost any application, also for improving the product quality, reduction of wastage, and increasing sales.

What is Controlling?

The Controlling process assures the management that the performance rate does not deviate from its standards. 

The controlling Process consists of five steps: 

1. Setting the standards.

2. Measuring the performance.

3. Comparing the performance to the set standards 

4. Determining the reasons for any such deviations which is required to be paid heed to. 

5. Take corrective action as required. Correction can be made in regards to changing the standards by setting them higher or lower or identifying new or additional standards in the department. 

Elements and Steps of Control Process

1. Establishing Performance Measuring Standards and Methods

Standards are, by definition, nothing more than performance criteria. They are the predetermined moments in a planning program where performance is measured so that managers may receive indications about how things are doing and so avoid having to monitor every stage of the plan’s execution.

This simply means setting up the target which needs to be achieved to meet the organizational goals. These standards set the criteria for checking performance. The control standards are required in this case. 

Standard elements are especially useful for control since they help develop properly defined, measurable objectives.

2. Measuring the Performance

Performance against standards should be measured on a forward-looking basis so that deviations can be discovered and avoided before they happen. Appraising actual or predicted performance is relatively simple if criteria are properly drawn and methods for determining exactly what subordinates are doing are available.

The actual performance of the employee is then measured against the set standards. With the increase in levels of management, the measurement of performance becomes quite difficult.

3. Determining if the Performance is up to par with the Standard

In the control process, determining if performance meets the standard is a simple but crucial step. It entails comparing the measured results to previously established norms. Managers may assume that “all is under control” if performance meets the benchmark.

Comparing the degree of difference between the actual performance and the set standard.

4. Developing and Implementing a Corrective Action Plan

This phase becomes essential if performance falls short of expectations and the analysis reveals that corrective action is required. The remedial measure could include a change in one or more of the organization’s functions.

This is being initiated by the manager who corrects any sorts of defects in the actual performance.

Types of Control

There are five different types of control:

1. Feedback Control: This process involves collecting the information on which the task is being finished, then assessing that information and improvising the same tasks in the future.

2. Concurrent control (also known as real-time control): It investigates and corrects any problems before any losses arising. An example is a control chart. 

This is the real-time control, which checks any problem and examines the same to take action before any loss has been caused. 

3. Predictive/ feedforward control: This type of control assists in the early detection of problems. As a result, proactive efforts can be done to avoid a situation like this in the future. Predictive control foresees the problem ahead of its occurrence. 

4. Behavioral control: This is a direct assessment of managerial and staff decision-making rather than the consequences of those decisions. Behavioral control, for example, sets incentives for a wide range of criteria in a balanced scorecard.

5. Financial and non-financial controls: Financial controls refer to how a firm manages its costs and spending to stay within budgetary limits. Non-financial controls refer to how a company manages its costs and expenses to stay within budgetary constraints.

Features of Controlling

The features of controlling are discussed point-wise to give a clear insight into the concept. The features are as follows:

• The controlling process motivates the employees and boosts the employee morale, eventually, they strive and work hard in the organization.

Advantages of Controlling

The organization inculcates the process of controlling due to its undying advantages. The advantages of control are as follows:

In contrast to this, controlling suffers from the disadvantage that the organization has no control over the external factors that also affect the organization. The controlling Process becomes a costly affair, especially for small companies.