Controlling and it's process

Hello guys, how are you? I hope you all are good. So from today, we will be starting in a new chapter of business studies class 12 that is controlling so without wasting time lets get started...

Controlling

Controlling function of management means ensuring that activities in an organisation are performed as per the plans.

Controlling process

Controlling is a systematic process and involves 5 steps

  1. Setting performance standards
  2. Measurement of actual performance
  3. Comparison of actual performance with standard performance
  4. Analysing deviation
  5. Taking corrective actions
Sometimes this process ends at the fourth step that is analysing division due to positive deviations. So now let's start discussing each of the step briefly

Setting performance standard


  • The first step of controlling process setting up performance standards. Standards are those criteria against which actual performance would be measured. Thus it acts as a benchmark.
  • There are two types of standards when is quantitative in another is qualitative. At the time of setting standards, a manager should try to set standards in a quantitative term as this would make their comparison with actual performance much easier. Here is an example of quantitative standard suppose a manager plans there will be 10 defected units per batch but the time of measurement he came to know there is only 5 defective units are produced in every batch. So it would be easier to compare. Note take the example of qualitative measure. A manager decides to enhance the Goodwill of the firm but I cannot compare the Goodwill properly because it is qualitative, not quantitative.

Measurement of actual performance


  • Once the performance standards are set, the next step is the measurement of actual performance. Performance should be measured in an objective & reliable manner.
  • Performance should be measured in the same units in which standards are set as this would make their comparison easier. Suppose a manager decided to produce 100 quintals of sugar but at the end tries to compare sugar in terms of grain so it would be not fair because he set it up a standard in a different unit and comparing them in a different unit.
  • There are several techniques for the measurement of performance. Some of them are listed below
  • Personal observation: By this technique, we can compare the actual performance is a standard performance by using a number of units sold, increasing market share etc. Whereas, the efficiency of production may be measured by counting the number of pieces produced a number of defective pieces in the batch.
  • Sample checking: In a small organisation, the workers can check each and every unit of the batch but it's harder to check-in big organisations use to take are and immunity from every day in check that. This is known as sample checking.


  • Performance report: Measurement of performance report of an employee may require preparation of a performance report by a superior.


  • Accounting ratio: Measurement of companies performance may involve the calculation of certain ratios like investment ratio, return on investment, net profit ratio, gross profit ratio etc.



Comparing actual performance with standards

This involves a comparison of actual performance standard performance. Such a comparison will reveal the division between actual and desired result.

Analysing deviations

some deviations in performance can be expected in all activities. So it is important to determine the acceptable ranges of the deviations.

Management by exception

Management by exception is a very important principle. In this principle manager set the acceptable limit of deviation in case workers crosses that deviations limit then it should be brought down to the notice of the management. For example, in a manufacturing organisation, the manager has planned that worker should produce 100 units per hour but up to 95 units for the worker is an acceptable range of deviation. In case the workers cross the deviations limit suppose they produce 90 units per hour so here this thing will be brought down to the notice of management.
Advantages of management by exception
It saves time effort of the manager  as they deal with only important derivations
The routine problem is left to the subordinates. Hence it will boost their morale and inspire them that they can do the work of the manager.

Taking corrective actions

This is the final step of this whole process. There will be three cases

  • No deviation
  • Positive deviation
  • Negative deviation
So in case of no deviations and positive deviation no corrective action is required.
In the case of negative deviation, corrective actions are required. In case the division cannot be corrected through managerial work, the standards may have to be revised.

So that's all for this day guys hope you like it if you have an enquiry you may come and down...... Thank you! Have a nice day!

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