NCERT Textbook - Controlling | Business Studies (BST) Class 12 - Commerce PDF Download

 Page 1


CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying this chapter, 
you should be able to:
n Explain the meaning of 
controlling;
n State the importance of 
controlling;
n Describe the relationship 
between planning and 
controlling;
n Explain the steps in the 
process of controlling; and
n Describe the techniques of 
controlling.
A Departure Control System (DCS) 
automates processing an airlines airport 
management operations which includes 
managing the informant required for airport 
check-in, printing boarding pass, baggage 
acceptance, boarding load control and 
aircraft checks. Today almost 98% of DCS 
manage e-ticket using interface from a 
number of devices including check-in kiosks, 
online check-in, mobile boarding pass and 
baggage handling. DCS are able to identify 
and capture updated reservations from an 
airline computer reservation system for 
passengers called passenger name record 
(PNR). A DCS is used to update reservations 
typically as ckecked-in, boarded, and 
flown or another status. Additionally and 
increasingly a DCS or some city fare sectors 
may also interface with immigration control 
for visa, immigration and passenger no fly 
watch list.
It is quite clear from the example 
that all managers need to manage 
situations intelligently and take 
corrective action before any damage 
is done to the business. Controlling 
function of management comes to 
the rescue of a manager here. It not 
only helps in keeping a track on 
the progress of activities but also 
ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
Departure Control Systems (DCS)
Ch_08.indd   201 08-08-2022   16:39:15
Reprint 2024-25
Page 2


CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying this chapter, 
you should be able to:
n Explain the meaning of 
controlling;
n State the importance of 
controlling;
n Describe the relationship 
between planning and 
controlling;
n Explain the steps in the 
process of controlling; and
n Describe the techniques of 
controlling.
A Departure Control System (DCS) 
automates processing an airlines airport 
management operations which includes 
managing the informant required for airport 
check-in, printing boarding pass, baggage 
acceptance, boarding load control and 
aircraft checks. Today almost 98% of DCS 
manage e-ticket using interface from a 
number of devices including check-in kiosks, 
online check-in, mobile boarding pass and 
baggage handling. DCS are able to identify 
and capture updated reservations from an 
airline computer reservation system for 
passengers called passenger name record 
(PNR). A DCS is used to update reservations 
typically as ckecked-in, boarded, and 
flown or another status. Additionally and 
increasingly a DCS or some city fare sectors 
may also interface with immigration control 
for visa, immigration and passenger no fly 
watch list.
It is quite clear from the example 
that all managers need to manage 
situations intelligently and take 
corrective action before any damage 
is done to the business. Controlling 
function of management comes to 
the rescue of a manager here. It not 
only helps in keeping a track on 
the progress of activities but also 
ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
Departure Control Systems (DCS)
Ch_08.indd   201 08-08-2022   16:39:15
Reprint 2024-25
202 Business Studies
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management— top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their 
areas. Moreover, controlling is as 
much required in an educational 
institution, military, hospital, and a 
club as in any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (i) Accomplishing organisational 
goals: The controlling function 
measures progress towards the 
organisational goals and brings 
to light the deviations, if any, 
and indicates corrective action. 
It, thus, guides the organisation 
and keeps it on the right track so 
that organisational goals might 
be achieved.
 (ii) Judging accuracy of standards: 
A good control system enables 
management to verify whether 
the standards set are accurate 
and objective. An efficient control 
system keeps a careful check 
on the changes taking place 
in the organisation and in the 
environment and helps to review 
and revise the standards in light 
of such changes.
Managerial Control implies the measurement of accomplishment against the standard and 
the correction of deviations to assure attainment of objectives according to plans.
Koontz and O’ Donnel
Ch_08.indd   202 08-08-2022   16:39:15
Reprint 2024-25
Page 3


CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying this chapter, 
you should be able to:
n Explain the meaning of 
controlling;
n State the importance of 
controlling;
n Describe the relationship 
between planning and 
controlling;
n Explain the steps in the 
process of controlling; and
n Describe the techniques of 
controlling.
A Departure Control System (DCS) 
automates processing an airlines airport 
management operations which includes 
managing the informant required for airport 
check-in, printing boarding pass, baggage 
acceptance, boarding load control and 
aircraft checks. Today almost 98% of DCS 
manage e-ticket using interface from a 
number of devices including check-in kiosks, 
online check-in, mobile boarding pass and 
baggage handling. DCS are able to identify 
and capture updated reservations from an 
airline computer reservation system for 
passengers called passenger name record 
(PNR). A DCS is used to update reservations 
typically as ckecked-in, boarded, and 
flown or another status. Additionally and 
increasingly a DCS or some city fare sectors 
may also interface with immigration control 
for visa, immigration and passenger no fly 
watch list.
It is quite clear from the example 
that all managers need to manage 
situations intelligently and take 
corrective action before any damage 
is done to the business. Controlling 
function of management comes to 
the rescue of a manager here. It not 
only helps in keeping a track on 
the progress of activities but also 
ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
Departure Control Systems (DCS)
Ch_08.indd   201 08-08-2022   16:39:15
Reprint 2024-25
202 Business Studies
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management— top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their 
areas. Moreover, controlling is as 
much required in an educational 
institution, military, hospital, and a 
club as in any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (i) Accomplishing organisational 
goals: The controlling function 
measures progress towards the 
organisational goals and brings 
to light the deviations, if any, 
and indicates corrective action. 
It, thus, guides the organisation 
and keeps it on the right track so 
that organisational goals might 
be achieved.
 (ii) Judging accuracy of standards: 
A good control system enables 
management to verify whether 
the standards set are accurate 
and objective. An efficient control 
system keeps a careful check 
on the changes taking place 
in the organisation and in the 
environment and helps to review 
and revise the standards in light 
of such changes.
Managerial Control implies the measurement of accomplishment against the standard and 
the correction of deviations to assure attainment of objectives according to plans.
Koontz and O’ Donnel
Ch_08.indd   202 08-08-2022   16:39:15
Reprint 2024-25
Controlling 203
 (iii) Making efficient use of 
resources: By exercising control, 
a manager seeks to reduce wastage 
and spoilage of resources. Each 
activity is performed in accordance 
with predetermined standards 
and norms. This ensures that 
resources are used in the most 
effective and efficient manner.
 (iv) Improving employee motivation: 
A good control system ensures 
that employees know well in 
advance what they are expected 
to do and what are the standards 
of performance on the basis of 
which they will be appraised. It, 
thus, motivates them and helps 
them to give better performance.
 (v) Ensuring order and discipline:  Controlling creates an atmosphere 
of order and discipline in the 
organisation. It helps to minimise 
dishonest behaviour on the part 
of the employees by keeping a 
close check on their activities. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
efforts for achieving organisational 
goals. Each department and 
employee is governed by pre-
determined standards which 
are well coordinated with one 
another. This ensures that 
overall organisational objectives 
are accomplished.
Limitations of Controlling
Although controlling is an important 
function of management, it suffers 
from the following limitations.
 (i) Difficulty in setting quantitative 
standards: Control system loses 
some of its effectiveness when 
standards cannot be defined in 
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach 
Control Through Computer Monitoring
Ch_08.indd   203 08-08-2022   16:39:15
Reprint 2024-25
Page 4


CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying this chapter, 
you should be able to:
n Explain the meaning of 
controlling;
n State the importance of 
controlling;
n Describe the relationship 
between planning and 
controlling;
n Explain the steps in the 
process of controlling; and
n Describe the techniques of 
controlling.
A Departure Control System (DCS) 
automates processing an airlines airport 
management operations which includes 
managing the informant required for airport 
check-in, printing boarding pass, baggage 
acceptance, boarding load control and 
aircraft checks. Today almost 98% of DCS 
manage e-ticket using interface from a 
number of devices including check-in kiosks, 
online check-in, mobile boarding pass and 
baggage handling. DCS are able to identify 
and capture updated reservations from an 
airline computer reservation system for 
passengers called passenger name record 
(PNR). A DCS is used to update reservations 
typically as ckecked-in, boarded, and 
flown or another status. Additionally and 
increasingly a DCS or some city fare sectors 
may also interface with immigration control 
for visa, immigration and passenger no fly 
watch list.
It is quite clear from the example 
that all managers need to manage 
situations intelligently and take 
corrective action before any damage 
is done to the business. Controlling 
function of management comes to 
the rescue of a manager here. It not 
only helps in keeping a track on 
the progress of activities but also 
ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
Departure Control Systems (DCS)
Ch_08.indd   201 08-08-2022   16:39:15
Reprint 2024-25
202 Business Studies
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management— top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their 
areas. Moreover, controlling is as 
much required in an educational 
institution, military, hospital, and a 
club as in any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (i) Accomplishing organisational 
goals: The controlling function 
measures progress towards the 
organisational goals and brings 
to light the deviations, if any, 
and indicates corrective action. 
It, thus, guides the organisation 
and keeps it on the right track so 
that organisational goals might 
be achieved.
 (ii) Judging accuracy of standards: 
A good control system enables 
management to verify whether 
the standards set are accurate 
and objective. An efficient control 
system keeps a careful check 
on the changes taking place 
in the organisation and in the 
environment and helps to review 
and revise the standards in light 
of such changes.
Managerial Control implies the measurement of accomplishment against the standard and 
the correction of deviations to assure attainment of objectives according to plans.
Koontz and O’ Donnel
Ch_08.indd   202 08-08-2022   16:39:15
Reprint 2024-25
Controlling 203
 (iii) Making efficient use of 
resources: By exercising control, 
a manager seeks to reduce wastage 
and spoilage of resources. Each 
activity is performed in accordance 
with predetermined standards 
and norms. This ensures that 
resources are used in the most 
effective and efficient manner.
 (iv) Improving employee motivation: 
A good control system ensures 
that employees know well in 
advance what they are expected 
to do and what are the standards 
of performance on the basis of 
which they will be appraised. It, 
thus, motivates them and helps 
them to give better performance.
 (v) Ensuring order and discipline:  Controlling creates an atmosphere 
of order and discipline in the 
organisation. It helps to minimise 
dishonest behaviour on the part 
of the employees by keeping a 
close check on their activities. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
efforts for achieving organisational 
goals. Each department and 
employee is governed by pre-
determined standards which 
are well coordinated with one 
another. This ensures that 
overall organisational objectives 
are accomplished.
Limitations of Controlling
Although controlling is an important 
function of management, it suffers 
from the following limitations.
 (i) Difficulty in setting quantitative 
standards: Control system loses 
some of its effectiveness when 
standards cannot be defined in 
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach 
Control Through Computer Monitoring
Ch_08.indd   203 08-08-2022   16:39:15
Reprint 2024-25
204 Business Studies
quantitative terms. This makes 
measurement of performance and 
their comparison with standards  
a difficult task. Employee morale, 
job satisfaction and human 
behaviour are such areas where 
this problem might arise.
 (ii) Little  control on external 
factors:  Generally an enterprise 
cannot control external factors 
such as government policies, 
technological changes, 
competition etc.
 (iii) Resistance from employees: 
Control is often resisted by 
employees. They see it as a 
restriction on their freedom. 
For instance, employees might 
object when they are kept under 
a strict watch with the help 
of Closed Circuit Televisions 
(CCTVs).
 (iv) Costly affair: Control is a costly 
affair as it involves a lot of 
expenditure, time and effort. A 
small enterprise cannot afford 
to install an expensive control 
system. It cannot justify the 
expenses involved. Managers 
must ensure that the costs of 
installing and operating a control 
system should not exceed the 
benefits derived from it.
The box on Control System at 
FedEx gives an overview of the 
control system used by FedEx and 
how it helped FedEx to increase its 
profits.
Remain level headed  
even when things go wrong
Ch_08.indd   204 08-08-2022   16:39:16
Reprint 2024-25
Page 5


CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying this chapter, 
you should be able to:
n Explain the meaning of 
controlling;
n State the importance of 
controlling;
n Describe the relationship 
between planning and 
controlling;
n Explain the steps in the 
process of controlling; and
n Describe the techniques of 
controlling.
A Departure Control System (DCS) 
automates processing an airlines airport 
management operations which includes 
managing the informant required for airport 
check-in, printing boarding pass, baggage 
acceptance, boarding load control and 
aircraft checks. Today almost 98% of DCS 
manage e-ticket using interface from a 
number of devices including check-in kiosks, 
online check-in, mobile boarding pass and 
baggage handling. DCS are able to identify 
and capture updated reservations from an 
airline computer reservation system for 
passengers called passenger name record 
(PNR). A DCS is used to update reservations 
typically as ckecked-in, boarded, and 
flown or another status. Additionally and 
increasingly a DCS or some city fare sectors 
may also interface with immigration control 
for visa, immigration and passenger no fly 
watch list.
It is quite clear from the example 
that all managers need to manage 
situations intelligently and take 
corrective action before any damage 
is done to the business. Controlling 
function of management comes to 
the rescue of a manager here. It not 
only helps in keeping a track on 
the progress of activities but also 
ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
Departure Control Systems (DCS)
Ch_08.indd   201 08-08-2022   16:39:15
Reprint 2024-25
202 Business Studies
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management— top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their 
areas. Moreover, controlling is as 
much required in an educational 
institution, military, hospital, and a 
club as in any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (i) Accomplishing organisational 
goals: The controlling function 
measures progress towards the 
organisational goals and brings 
to light the deviations, if any, 
and indicates corrective action. 
It, thus, guides the organisation 
and keeps it on the right track so 
that organisational goals might 
be achieved.
 (ii) Judging accuracy of standards: 
A good control system enables 
management to verify whether 
the standards set are accurate 
and objective. An efficient control 
system keeps a careful check 
on the changes taking place 
in the organisation and in the 
environment and helps to review 
and revise the standards in light 
of such changes.
Managerial Control implies the measurement of accomplishment against the standard and 
the correction of deviations to assure attainment of objectives according to plans.
Koontz and O’ Donnel
Ch_08.indd   202 08-08-2022   16:39:15
Reprint 2024-25
Controlling 203
 (iii) Making efficient use of 
resources: By exercising control, 
a manager seeks to reduce wastage 
and spoilage of resources. Each 
activity is performed in accordance 
with predetermined standards 
and norms. This ensures that 
resources are used in the most 
effective and efficient manner.
 (iv) Improving employee motivation: 
A good control system ensures 
that employees know well in 
advance what they are expected 
to do and what are the standards 
of performance on the basis of 
which they will be appraised. It, 
thus, motivates them and helps 
them to give better performance.
 (v) Ensuring order and discipline:  Controlling creates an atmosphere 
of order and discipline in the 
organisation. It helps to minimise 
dishonest behaviour on the part 
of the employees by keeping a 
close check on their activities. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
efforts for achieving organisational 
goals. Each department and 
employee is governed by pre-
determined standards which 
are well coordinated with one 
another. This ensures that 
overall organisational objectives 
are accomplished.
Limitations of Controlling
Although controlling is an important 
function of management, it suffers 
from the following limitations.
 (i) Difficulty in setting quantitative 
standards: Control system loses 
some of its effectiveness when 
standards cannot be defined in 
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach 
Control Through Computer Monitoring
Ch_08.indd   203 08-08-2022   16:39:15
Reprint 2024-25
204 Business Studies
quantitative terms. This makes 
measurement of performance and 
their comparison with standards  
a difficult task. Employee morale, 
job satisfaction and human 
behaviour are such areas where 
this problem might arise.
 (ii) Little  control on external 
factors:  Generally an enterprise 
cannot control external factors 
such as government policies, 
technological changes, 
competition etc.
 (iii) Resistance from employees: 
Control is often resisted by 
employees. They see it as a 
restriction on their freedom. 
For instance, employees might 
object when they are kept under 
a strict watch with the help 
of Closed Circuit Televisions 
(CCTVs).
 (iv) Costly affair: Control is a costly 
affair as it involves a lot of 
expenditure, time and effort. A 
small enterprise cannot afford 
to install an expensive control 
system. It cannot justify the 
expenses involved. Managers 
must ensure that the costs of 
installing and operating a control 
system should not exceed the 
benefits derived from it.
The box on Control System at 
FedEx gives an overview of the 
control system used by FedEx and 
how it helped FedEx to increase its 
profits.
Remain level headed  
even when things go wrong
Ch_08.indd   204 08-08-2022   16:39:16
Reprint 2024-25
Controlling 205
Relationship between Planning 
and Controlling
Planning and controlling are 
inseparable twins of management. 
A system of control presupposes the 
existence of certain standards. These 
standards of performance which 
serve as the basis of controlling are 
provided by planning. Once a plan 
becomes operational, controlling is 
necessary to monitor the progress, 
measure it, discover deviations and 
initiate corrective measures to ensure 
that events conform to plans. Thus,  
planning without controlling is 
meaningless. Similarly, controlling 
is blind without planning. If the 
standards are not set in advance, 
managers have nothing to control. 
When there is no plan, there is no 
basis of controlling. 
Planning is clearly a prerequisite 
for controlling. It is utterly foolish 
to think that controlling could be 
accomplished without planning. 
Without planning there is no 
predetermined understanding of the 
desired performance. Planning seeks 
consistent, integrated and articulated 
programmes while controlling seeks  
to compel events to conform to plans.
Planning is basically an intellectual 
process involving thinking, articulation 
and analysis to discover and prescribe 
an appropriate course of action for 
achieving objectives. Controlling, 
on the other hand, checks whether 
decisions have been translated into 
desired action. Planning is thus, 
prescriptive whereas, 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 are based on forecasts 
about future conditions. Therefore, 
planning involves looking ahead and 
is called a forward-looking function. 
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 
aims to improve future performance. 
Thus, planning and controlling are 
both backward-looking as well as a 
forward-looking function.
Thus, planning and controlling are 
interrelated and, in fact, reinforce 
each other in the sense that
 1. Planning based on facts makes 
controlling easier and effective; 
and
 2. Controlling improves future 
planning by providing information 
derived from past experience.
Controlling Process
Controlling is a systematic process 
involving the following steps.
 1. Setting performance standards
 2. Measurement of actual 
performance
Ch_08.indd   205 08-08-2022   16:39:16
Reprint 2024-25