Page 1
CHAPTER – 8
CONTROLLING
CONTROLLING 6 MARKS
CONCEPT MAPPING:
Process of Controlling
Page 2
CHAPTER – 8
CONTROLLING
CONTROLLING 6 MARKS
CONCEPT MAPPING:
Process of Controlling
Key Concepts in nutshell:
1. Meaning of controlling: Comparing actual performance with standards and finding
deviations if any and taking corrective action.
Actual Performance = Standards = No deviation
Features/Nature of Controlling:
• Controlling is pervasive
• Controlling is a primary function
• Controlling is a continuous process
• Controlling is a goal oriented function.
2. Process of Controlling:
1. Setting performance standards: Standards are the Criteria against which actual
performance would be measured. Standards serve as bench marks. They can be set in both
quantitative as well as qualitative.
2. Measurement of actual performance: Performance should be measured in an objective
and reliable manner.
3. Comparing actual performance with standards:
4. Analyzing deviations: Major deviation or minor deviation and analyzing the causes of
deviation.
a) Critical point control: Focus only on Key Result Areas (KRAs).
b) Management by Exception: Concentrate only on major deviations only.
5. Taking corrective action: When deviations go beyond the acceptable range, especially in
the important areas, it demands immediate managerial attention so that deviations do not
occur again and standards are accomplished.
Page 3
CHAPTER – 8
CONTROLLING
CONTROLLING 6 MARKS
CONCEPT MAPPING:
Process of Controlling
Key Concepts in nutshell:
1. Meaning of controlling: Comparing actual performance with standards and finding
deviations if any and taking corrective action.
Actual Performance = Standards = No deviation
Features/Nature of Controlling:
• Controlling is pervasive
• Controlling is a primary function
• Controlling is a continuous process
• Controlling is a goal oriented function.
2. Process of Controlling:
1. Setting performance standards: Standards are the Criteria against which actual
performance would be measured. Standards serve as bench marks. They can be set in both
quantitative as well as qualitative.
2. Measurement of actual performance: Performance should be measured in an objective
and reliable manner.
3. Comparing actual performance with standards:
4. Analyzing deviations: Major deviation or minor deviation and analyzing the causes of
deviation.
a) Critical point control: Focus only on Key Result Areas (KRAs).
b) Management by Exception: Concentrate only on major deviations only.
5. Taking corrective action: When deviations go beyond the acceptable range, especially in
the important areas, it demands immediate managerial attention so that deviations do not
occur again and standards are accomplished.
Conclusion: In case the deviation cannot be corrected through managerial action, the
standards may have to be revised.
IMPORTANCE OF CONTROLLING
Controlling ensures order and discipline by fixing standards in advance which leads to
improved employee motivation, it also facilitates efficient use of resources, judging the
accuracy of standards, facilitates coordination in action which will result into
accomplishment of organizational goals.
LIMITATIONS OF CONTROLLING:
Page 4
CHAPTER – 8
CONTROLLING
CONTROLLING 6 MARKS
CONCEPT MAPPING:
Process of Controlling
Key Concepts in nutshell:
1. Meaning of controlling: Comparing actual performance with standards and finding
deviations if any and taking corrective action.
Actual Performance = Standards = No deviation
Features/Nature of Controlling:
• Controlling is pervasive
• Controlling is a primary function
• Controlling is a continuous process
• Controlling is a goal oriented function.
2. Process of Controlling:
1. Setting performance standards: Standards are the Criteria against which actual
performance would be measured. Standards serve as bench marks. They can be set in both
quantitative as well as qualitative.
2. Measurement of actual performance: Performance should be measured in an objective
and reliable manner.
3. Comparing actual performance with standards:
4. Analyzing deviations: Major deviation or minor deviation and analyzing the causes of
deviation.
a) Critical point control: Focus only on Key Result Areas (KRAs).
b) Management by Exception: Concentrate only on major deviations only.
5. Taking corrective action: When deviations go beyond the acceptable range, especially in
the important areas, it demands immediate managerial attention so that deviations do not
occur again and standards are accomplished.
Conclusion: In case the deviation cannot be corrected through managerial action, the
standards may have to be revised.
IMPORTANCE OF CONTROLLING
Controlling ensures order and discipline by fixing standards in advance which leads to
improved employee motivation, it also facilitates efficient use of resources, judging the
accuracy of standards, facilitates coordination in action which will result into
accomplishment of organizational goals.
LIMITATIONS OF CONTROLLING:
1. Difficulty in setting quantitative standards: It is difficult to set standards for all types of
activities this makes measurement of performance and their comparison with standards a
difficult task.
2. Little control on external factors: Business environment is ever changing. The firm has
no control on external factors such as government policies, technological changes,
competition etc.
3. Resistance from employees: Employees oppose controlling measures taken by any
organisation.
4. Costly affair: It is a costly affair as it involves a lot of expenditure, time and effort.
Especially small organizations cannot afford.
RELATIONSHIP BETWEEN PLANNING AND CONTROLLING:
• Planning and controlling are inseparable twins of management. Planning initiates the
process of management and controlling completes the process. Plans are the basis of
control and without control the best laid plans may go astray.
• Planning is clearly a prerequisite for controlling. It is utterly foolish to think that
controlling could be accomplished without planning.
• Planning is prescriptive and controlling is evaluative
• It is often said that planning is looking ahead while controlling is looking back.
However, the statement is only partially correct. Plans are prepared for future and
involve looking ahead. On the contrary, controlling is like a postmortem of past
activities to find out deviations from the standards. In that sense controlling is a
backward looking function. However, it should be understood that planning is guided
by past experiences and the corrective action initiated by control function.
Page 5
CHAPTER – 8
CONTROLLING
CONTROLLING 6 MARKS
CONCEPT MAPPING:
Process of Controlling
Key Concepts in nutshell:
1. Meaning of controlling: Comparing actual performance with standards and finding
deviations if any and taking corrective action.
Actual Performance = Standards = No deviation
Features/Nature of Controlling:
• Controlling is pervasive
• Controlling is a primary function
• Controlling is a continuous process
• Controlling is a goal oriented function.
2. Process of Controlling:
1. Setting performance standards: Standards are the Criteria against which actual
performance would be measured. Standards serve as bench marks. They can be set in both
quantitative as well as qualitative.
2. Measurement of actual performance: Performance should be measured in an objective
and reliable manner.
3. Comparing actual performance with standards:
4. Analyzing deviations: Major deviation or minor deviation and analyzing the causes of
deviation.
a) Critical point control: Focus only on Key Result Areas (KRAs).
b) Management by Exception: Concentrate only on major deviations only.
5. Taking corrective action: When deviations go beyond the acceptable range, especially in
the important areas, it demands immediate managerial attention so that deviations do not
occur again and standards are accomplished.
Conclusion: In case the deviation cannot be corrected through managerial action, the
standards may have to be revised.
IMPORTANCE OF CONTROLLING
Controlling ensures order and discipline by fixing standards in advance which leads to
improved employee motivation, it also facilitates efficient use of resources, judging the
accuracy of standards, facilitates coordination in action which will result into
accomplishment of organizational goals.
LIMITATIONS OF CONTROLLING:
1. Difficulty in setting quantitative standards: It is difficult to set standards for all types of
activities this makes measurement of performance and their comparison with standards a
difficult task.
2. Little control on external factors: Business environment is ever changing. The firm has
no control on external factors such as government policies, technological changes,
competition etc.
3. Resistance from employees: Employees oppose controlling measures taken by any
organisation.
4. Costly affair: It is a costly affair as it involves a lot of expenditure, time and effort.
Especially small organizations cannot afford.
RELATIONSHIP BETWEEN PLANNING AND CONTROLLING:
• Planning and controlling are inseparable twins of management. Planning initiates the
process of management and controlling completes the process. Plans are the basis of
control and without control the best laid plans may go astray.
• Planning is clearly a prerequisite for controlling. It is utterly foolish to think that
controlling could be accomplished without planning.
• Planning is prescriptive and controlling is evaluative
• It is often said that planning is looking ahead while controlling is looking back.
However, the statement is only partially correct. Plans are prepared for future and
involve looking ahead. On the contrary, controlling is like a postmortem of past
activities to find out deviations from the standards. In that sense controlling is a
backward looking function. However, it should be understood that planning is guided
by past experiences and the corrective action initiated by control function.
Questions (with some hints wherever necessary)
Important questions are shown with * mark and the Most important questions are
shown with ** mark
*1. Give the meaning of Controlling. 1M
2. Define Controlling. 1M
Ans: It is a process of taking steps to bring actual results and desired results closer together.
3.. Which function of management ensures that actual activities confirm to planned
activities? 1M
Ans: Controlling
4.. Name the function of management which reviews the operations in a business unit.
1M
Ans: Controlling
5.. Why it is said that planning is meaningless without controlling? 1M
Ans. In the absence of controlling, actual performance will not be measured and compared.
So, how far plans are implemented cannot be known.
6.. Why it is said that controlling is blind without planning? 1M
Ans. Without laid standards actual performance cannot be compared.
**7. Explain the limitations of Controlling. 3M
**8. Planning is looking ahead whereas controlling is looking back. Discuss. 3M
9. Explain how controlling helps in ‘achieving better co-ordination’ and ‘better
planning’. 3M
Hint: Refer Importance of Controlling.
10. Controlling is a pervasive function. Explain 3M
Ans: It is a pervasive function, it is required every level and in any type of organisation.
11. Does control help in ‘judging the accuracy of standards’ and ‘improving motivation
of the employees’? Explain 3M
Hint: Refer importance of Controlling
**12. Explain the difference between Planning and Controlling. 3M
Hint: Refer Relationship between Planning and Controlling
Read More