CH 8 CONTROLLING.pdf
- 3. Controlling Controlling is the process through which management ensures that the actual performance conforms to the planned performance Planned Actual
- 4. Controlling Controlling discovers deviation from the results expected It also identifies the reasons for deviations and suggests suitable action to avoid their recurrence in future
- 6. Importance of Controlling 1. Accomplishing organizational goals It measures actual performance with standards and making corrective actions on deviations, so that the organization can achieve its goals smoothly
- 7. Importance of Controlling 2. Judging accuracy of standards Controlling helps to check the accuracy of standards in changing environment, which helps to revise the standards if needed
- 8. Importance of Controlling 3. Efficient use of resources Controlling seeks to reduce wastages of resources
- 9. Importance of Controlling 4. Improving employee motivation Controlling ensures employee awareness regarding what is expected to do and what is the standards fixed on him, so that he will be motivated to give better performance
- 10. Importance of Controlling 5. Ensures order and discipline There is a close watch on the activities of all employees
- 11. Importance of Controlling 6. Coordination To coordinate the activities of different persons and departments, an effective system of control is necessary
- 12. Importance of Controlling 7. Decision making The process of control is complete when corrective actions are taken It will lead to make better decisions in future
- 13. Importance of Controlling 1. Accomplishing organizational goals 2. Judging accuracy of standards 3. Efficient use of resources 4. Improving employee motivation 5. Ensures order and discipline 6. Coordination 7. DECISION MAKING
- 15. Limitations of Controlling 1. Difficulty in setting standards Controlling will be effective only when standards are fixed in quantitative terms Employee morale, job satisfaction, customer response etc. cannot be expressed quantitatively, so that controlling becomes less effective
- 16. Limitations of Controlling 2. Little control on external factors External factors such as Government policy, technological changes, competition etc. cannot be controlled by the organization
- 17. Limitations of Controlling 3. Resistance from employees Employees may oppose the control measures taken by the firm, because they may feel that it will reduce their freedom E.g., CCTV, Punching System, Feedback calls to customers etc.
- 18. Limitations of Controlling 4. Costly affair Small organizations cannot afford to install an effective control system as it is very costly
- 19. Importance of Controlling 1. DIFFICULTY IN SETTING STANDARDS 2. LITTLE CONTROL ON EXTERNAL FACTORS 3. RESISTANCE FROM EMPLOYESS 4. COSTLY AFFAIRS
- 20. Controlling Process (Steps in Controlling)
- 21. Controlling Process 1 2 4 5 3 1. Setting Standards 2. Measurement of Actual Performance 3. Comparison of Actual Performance 4. Analysing Deviations 5. Taking CorrectiveActions
- 22. Controlling Process 1. Setting performance Standards To achieve the goals, standards of performance have to be determined in planning itself
- 23. Controlling Process a) Quantitative Standards Standards must be in concrete and tangible forms which will make evaluation process easy Eg: Cost of production for one unit is Rs.100 etc.
- 24. Controlling Process b) Qualitative Standards Standards can also be in intangible forms Eg: The results expected from a training programme, loyalties of workers, Improving motivation level of employees, etc.
- 25. Controlling Process 2. Measurement of actual performance Actual performance of each activity in terms of quality and quantity should be measured
- 26. Controlling Process 3. Comparison of actual performance with standards Comparison of actual performance with the standards reveals the deviations between actual and desired results
- 27. Controlling Process 4. Analysing deviations The extent of deviations and causes of such deviations are to be found out It is important to ascertain whether deviations are within the expected range Deviations in key areas of business require urgent attention
- 28. Methods of Analysing Deviations in Key areas a) Critical Point Control The control measures should be focused on Key Result Areas (KRAs) which are critical in the success of an organization These KRAs are the Critical Points, if anything goes wrong at this critical point, the entire organization will suffer Eg: 5% increase in labour cost is a serious matter than 20% increase in postal charges
- 29. Methods of Analysing Deviations in Key areas b) Management by Exception (MBE) / Control by Exception All deviations need not be brought to the attention of top management Only those deviations which seem exceptionally high and which cannot be easily solved by lower level management alone should be reported to top management
- 30. Controlling Process 5. Taking corrective actions As soon as deviations are reported, it is the duty of the executives to take steps to correct the past action so that deviations may not occur again and the plans are properly executed If there is no deviation or if the deviation is within the permissible limit, let the situation remains as it is
- 31. Controlling Process 1. Setting performance Standards 2. Measurement of actual performance 3.Comparison of actual performance with standards 4. Analysing deviations 5. Taking corrective actions
- 32. Controlling Process Cause of deviation Corrective action to be taken Defective material Change the supplier or quality Defective machinery Repair or replace Obsolete machinery Undertake technological up gradation Increase in labour turnover Improve working conditions and provide better incentives Defective process Modify the existing process