Samir K Mahajan, M.Sc, Ph.D.,UGC-NET Assistant Professor (Economics) Department of Mathematics & Humanities Institute of Technology Nirma University _-eebm_even_2014/ CONTROLLING

Meaning Controlling is a process of monitoring performance and taking action to ensure desired results. In other words, controlling is the process of monitoring activities to ensure that they are being accomplished as planned,and of correcting any significant deviations. Controlling

Process of Control: Steps in Control Process Controlling implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. The major steps involved in the control process of an organisation or enterprise are as follows: Establishment of StandardsMeasurement of Performance Comparison of Actual Performance against Standards Correction of Deviation from Standards

 Establishment of Standards Standard means criteria for judging the performance. Standards are desired performance which include goals, objectives, targets to be achieved in quantitative/tangible and qualitative /non-tangible terms. Actual results are measured against them. The control process begins with planning and the establishment of performance objectives. Performance objectives are defined, and the standards for measuring them are set. Thus standards may be Quantitative (tangible, physical and monetary terms, easily and precisely measurable) such as: productivity, production units, profitability, growth in profits, sales or revenues, market share, product leadership, return on shareholders’ equity, worker performance, innovation, investment, costs. Qualitative (intangible, cannot be measured precisely) such: social responsibility, human relations say employee attitudes, personnel development, (measured through psychological tests, opinion surveys) Steps in Control Process contd.

 Measurement of Performance Performance is the end result of an activity. Performance must be measured in terms of standards. Measurements must be accurate enough to spot deviations or variances between what really occurs (actual accomplishment/performance) and what is most desired(standards) Methods of measuring performance may be quantitative as well as qualitative.  Comparison Actual Performance against Standards Determining the degree of variation/ deviation between actual performance and standard. It involves o finding out the extent of deviations (extent of variation may differ from case to case, depends upon the type of activity ) o identifying the causes of such deviations Steps in Control Process contd.

 Correction of Deviation from the Standards If deviation is judged to be insignificant, no further managerial action is necessary. Control process is complete. If required standards not achieved, managerial action is necessary. Corrective actions may includes: o Upholding the validity of the standard o Revising /review the standard to ascertain whether or not the standard is realistic, fair, and achievable. o Resetting goals that were initially set too low or too high. o Correcting actual (current) performance to locate and to correct the source of the deviation. o Change strategy, organization structure, compensation scheme, or training programs; redesign jobs; or fire employees

DESIRED PERFORMANCE (Standard) IMPLEMENTATION OF CORRECTIONS ACTUAL PERFORMANCE CORRECTIVE PLAN ACTION ANALYSIS OF CAUSES OF DEVIATION MEASUREMENT OF PERFORMENCE COMPARISON OF ACTUAL AND STANDARD IDENTIFICATION OF DEVIATION MANAGEMENT CONTROL PROCESS