Controlling is the management function that balances the function of management circle. It is the navigational device that connects other management functions – organizing, staffing, and leading to the set planning goals. Planning determines the goals and objectives which becomes the nucleus of control where in hinges the control.
The connectivity between the management functions is demonstrated in the link below:
Control can effect an organization in both positive and negative ways. A manager must be able to access if the controls are more like constraints or a guide for the organization. The manager must ask questions to ensure that the controls are relevant.
1. Process of Control
Control process involves measuring actual performance, comparing actual performance, and taking managerial action to correct deviations or inadequate standards. What is measured is of critical value to control process than the method used to measure it. What is measured determines what individuals in the organization put excellent effort into to be distinguished.
Standards are the plans or the targets which have to be achieved in the course of business function. They are called criterions for judging the performance. Standards generally are classified into measurable or tangible and non-measurable or intangible. The second major step in controlling is to measure the performance. Measurement of tangible standards is easy as it can be expressed in units, cost, or productivity. Qualitative measurements become difficult when the performance of manager has to be measured. Once the deviation is identified, a manager has to think about the cause which has led to deviation. Once the causes and extent of deviations are known, the manager has to detect those errors and take remedial measures to rectify the situation.
2. Types and Systems of Control
Physical resources: Includes inventory management, quality control and equipment control.
Human resources: Includes selection and placement, training and development, performance appraisal and compensation.
Information resources: Includes sales/marketing, forecasting, environmental analysis, public relations, production scheduling and economic forecasting.
Financial resources: Involves managing the organizations debt, cash flow and receivables/payables.
3. Operational Control
In contrast to strategic control, operational control serves to regulate the day-to-day output relative to schedules, specifications, and costs, by the formulation of policies and execution of corresponding procedures. Is the output of product or service the proper quality and is it available as scheduled? Are inventories of raw materials, goods-in-process, and finished products being purchased and produced in the desired quantities? Are the costs associated with the transformation process in line with cost estimates? Is the information needed in the transformation process available in the right form and at the right time? Is the energy resource being utilized efficiently?
Operational controls are focused on the near term goals and should not affect the overall survival of an organization.
4. Nature of Effective Controls
A key factor in the effectiveness of a control system is the quality of the information it receives. Control system information must be accurate and up to date. The best controls get their information from the points where operations generate it. In many cases, control systems can supply data in real time, but systems still have to process a lot of data, leading to delays.
Raw control system information is not useful to management unless a comparison to established benchmarks and targets is possible. To allow such a comparison, a tight integration of the control system with the planning process is essential. The focus of the control system must match the focus of the strategic or operational plan.
An effective control system is highly flexible. If the data collected from one source are no longer reflective of the actual situation, management must be able to identify other, better sources of data and adapt the system.
Managers must be able to make decisions and act on the basis of control system results. They can do so credibly only when the decisions are seen to be based on objective data and evaluations. To achieve such objectivity, control systems must be transparent and relevant to the business.
The cost of a control system must be reasonable compared to the business it controls. The purpose of the system is to reduce unexpected costs and reach competitive goals, and an expensive or intrusive control system increases costs and reduces competitiveness.
5. Behavioral Control
Managers monitor employee behaviors, directing and evaluating based on subjective measures of abilities and activities; not just outcomes. The manager makes sure that employee input and behavior reflects his expectations. Managers make decisions to increase or decrease salaries, promote or sanction employees’ using more complex, subjective evaluations not based on measurable outcomes. Managers dictate the level of performance required. Management cost increases because more monitoring is required, which allows for consistent, perpetual updates to strategy, whereas output-control only allows for periodic assessment.
Behavior-systems afford managers more control over employees through interaction and relationships, employee participation and corporate culture. Managers impose their own ideas of what salespeople should be and do to achieve results. Managers can have employees’ focus on the firm’s long-term strategy as opposed to their individual goals. Emphasis is placed on enhanced customer service, goodwill and reputation, and pioneering new product lines instead of focusing on the products that are easier to sell.
6. Monitor Control
Identifying the Factors to Monitor
A basic rule is to monitor those aspects of the business that are most critical in fulfilling the managers’ long term goals. In selecting which factors to monitor, the manager will want to guard against too many or few factors. There is no reason to monitor something that has no significant impact on whether the business reaches its goals. On the other hand, inadequate monitoring may result in potential problems being overlooked.
Specifying a Range of Performance
A performance standard is a goal that, when fulfilled, assures the organization is on track to fulfill the managers’ long-term goals. These benchmarks serve as criteria against which current performance can be compared to determine whether changes are needed. They should offer a challenge, as well as a focal point for the resources and efforts of the organization. Using a standard that reflects historical performance allows the manager to assess the long-term trends of the business.
Who Should Monitor
Monitoring will not occur if not assigned to someone (laborer, manager, or advisor). If the task of monitoring is assigned to someone other than the individuals who developed the monitoring process, these individuals need to be educated on the process and the outcomes.
When to Monitor
An effective monitoring system provides information to the decision makers in a timely manner. The information needs to be available when it can still be used. The information needs to be gathered at the correct time, not too early as to indicate failure before completion.
How is Performance Measured
The procedure for measuring performance can vary; it could be subjective, or objective. For each factor that will be monitored, a sensor or trigger should be identified. The sensor or trigger will have to reflect the specific task being monitored.
Maintaining a Record of Performance
The control system must include a system for maintaining a record of performance. Keeping track of inputs and outputs as part of the monitoring process also may serve as a means of collecting the detailed information necessary to analyze the organization’s business process.
Compare the observed performance to the range of satisfactory performance established for the organization. The comparison should be quantitative and qualitative.
Correct what is causing performance to be outside the expected range. The factor will influence the response of the decision maker; and therefore, developing a detailed response ahead of time may not be effective. The response needs to be timed and appropriate to scale so it will not be disruptive to other functions of the organization.
Review and Revise the Monitoring Process
Like the entire business, the monitoring process will need to be revised over time. Changes occur at a more rapid pace and an effective manager must be able to notice change in his profession.
By Anthony Esochagi