What is Controlling? Definition, Characteristics, Process, and Importance

Controlling

Sterling courier is the same-day delivery services provider. In late 1990 and early 1991, various deliveries are lost in transport.

Later the packages are discovered. In this situation, customers are faced with economic losses. In this time, there are two choices one is to pay overall customer losses or the second one is to no charge for product shipments.

But the president Smoak choose the second one. He solves this big problem simply without pay any charges for the shipments. It creates a loss of up to $30000 for a five years old $5 million company in a quarter.

In this way, the customers have remained, and sterling sustains the growth of their company.

This case of Sterling clearly reveals what is the importance of a manager to settle down an unfavorable business situation. A manager needs to take some necessary steps before any damage happens in an organization.

Controlling plays a major role to save an enterprise from various failure-inducing markets slow down, economic depression, etc. It does not only help to track the pre-determined objectives or activities but also it helps to perform activities in a standard manner wherein organizational goals or activities will be accomplished.

Before we get to the nitty-gritty of controlling, let us first clarify what controlling really is.

So, without any further do, let’s dive in.

What is Controlling?

What is Controlling?
What is Controlling?

Controlling is one of the major important managerial functions which imply the process of ensuring that actual activities conform to planned activities.

It will pursue planned activities and results from workers. It ensures the effective and efficient utilization of inputs to achieve pre-planned organizational goals. So, it is a goal or a vision-oriented approach.

The controlling function of managers is the extending process in the management sector of an organization. It is one of the main functions of every level of the manager (such as – top, middle, low level) to control the operations of their place.

Every well-established educational organization, army base, hospital as well as a business organization needs controlling to perform well and encourage fulfilling the organizational objectives.

As controlling is the last managerial function, It will ignore and misunderstand many times from various great managers or leaders. But it retracts the whole management cycle back to planning.

This function also clears a few questions like – what are the causes of companies’ deviations and how to take appropriate actions in this situation. It helps in implementing future plans in the real world in the presence of obstacles, which helps in determining future plans.

Hope you get an idea of controlling. Now we are ready to move ahead to know the characteristics or features of controlling.

Characteristics of Controlling:

Every managerial function has some unique features, controlling is not different from them. There are some major characteristics or features of controlling which are given below.

1. Managerial Function:

Controlling is one of the essential managerial functions of an organization. It is not only a CEO (Chief Executive Officer) activity but also each manager of the organization activity.

A manager has a responsibility of which work is set to his subordinates. He controls the activity of workers to the better use of resources to achieve organizational goals.

The well-known proverb is ‘all’s well that ends well’. Controlling is the final foundation of managerial functions which helps to fulfill the objectives of an organization.

2. Onwards Process:

This managerial function is an onwards process. Past activities are not controlled in the controlling phase, because it is inflexible. It only focuses on future activities.

Previous activities help to perform well in future activities and reduce the risk of failure. Managers will monitor and analyze the past performance for the better utilization of three factors of production (like – land, labor, capital).

3. Continuous Activity:

Controlling is the ever-green or continuous process. It is not performed in the place of solitude.

In an organization, managers will monitor the workers’ actions towards the pre-determinate plans at every point in time.

Therefore, controlling is the approach of regular exercise.

4. Controlling is Related to Planning:

Planning is the fore managerial function, on the other hand controlling is the final function of management in an organization. The primary step is to select the goals or objectives, and then perform according to the planned activities to see whether these are achieved or not.

So, planning creates the playground for controlling.

5. Essence of Control is Action:

If the planned actions are not performed well, it encourages taking the necessary steps to fix the things. If appropriate actions are not taking at the right time, then the vision of controlling function is ruined.

So, taking quick actions is the abstract of controlling.

Now we all know the characteristics of controlling, then the next important question is, how to implement the controlling function in an organization. The answer lies down in the process of controlling.

To be great in controlling function, you have to understand the controlling process.

So, let’s cover up all the steps of the controlling process.

Controlling Process:

Controlling is a methodical process or function. It has five important steps which are given below.

(1) Setting performance standards,

(2) Measurement of actual performance,

(3) Comparison of actual performance with standards,

(4) Analyzing deviations,

(5) Taking corrective action.

1. Setting Performance Standards:

The primary step of the controlling process is setting performance standards. Standards are the stage of ideal, which is versus the surveyed real performance.

It can be fixed in both quantitative and qualitative terms. For example – the term cost, revenue, produced product, sales, etc imply quantitative standard and sometimes standards also fix the qualitative terms including the organization’s goodwill and motivation levels of sub-ordinates.

Standards should be flexible to change when it requires. In the changes of the internal and external business environment, standards need some changes according to the business environment.

2. Measurement of Actual Performance:

When performance standards are fixed, the second step is the measurement of actual performance. Performance should be measured according to the goals or objectives.

There are various tricks to measure actual performance including personal observance, performance report, sample checking, and many more.

Measuring occurs after the work is done. For example – in the assembly line, every part will be checked before assembling.

To measure the performance of staff, it requires the preparation of a performance seat by his supervisor.

3. Comparing Actual Performance with Standards:

After measuring the actual performance, the next step is comparing actual performance with standards. It involves the dislocation between both real and desired outcomes.

When standards fix in qualitative terms, the comparison will more easy. For example – in terms of unit production is easier than counting the standard output to check the performance of the employee in the week.

4. Analyzing Deviations:

Every activity has some deviations in the stage of performance. It is necessary to find out the admissible extent of deviations.

In the business world, a deviation is one of the important terms. In the situation of deviation, managers use two techniques to overcome deviation. These two techniques are (a) Critical Point Control, (b) Management by Exception.

5. Taking Corrective Action:

The finishing line of controlling is taking corrective action. When the deviation is to an acceptable extent, the requirement of taking corrective action is none. But when deviations are up to the acceptable range in the essential sector, it demands corrective action wherein deviations don’t arrive again to accomplish the standards.

If the production goals are not accomplished then corrective action employs employees’ training.

Hope you get the knowledge of how to do controlling in an organization. Then you have to understand why controlling is so important for success in business.

Importance of Controlling:

Controlling is an inevitable managerial function of an organization. Without controlling, other managerial functions are corrupted.

Controlling is not only helped managers to perform well in an enterprise but also it helps to achieve the organizational goals or objectives timely and smoothly.

There is some major importance of controlling in an organization that is given below.

1. Accomplishing Organizational Goals:

The controlling process measures the approaches to organizational goals. It also helps to stop the deviations by corrective action.

It leads and keeps the organization on the correct path to fulfill the goals or objectives of the organization effectively and efficiently.

2. Judging Accuracy of Standards:

An effective controlling helps to make out the fixed standards are proper or not. It helps to monitor the changes in the organization, and it also investigates or reconsiders the standards in the canopy of changes.

3. Making Efficient Use of Resources:

Managers are exercised controlling to control the sub-ordinates of their organization. Exercising controlling helps managers to get rid of the wastage or misuse of capital and resources.

Controlling confirms the better utilization of resources effectively and efficiently.

4. Improving Employee Motivation:

Controlling helps to improve the motive of employees. It also confirms that workers clearly know what they work to do and what the standards of performance are on the basis of their skills and knowledge.

It inspires every individual in the organization and forced to come out in their best various.

5. Ensuring Order and Discipline:

Controlling builds an environment of ensuring order and discipline in an enterprise. It also helps to get rid of the salary oriented approach of employees to give their best effort to accomplish the organizational goals.

6. Facilitating Coordination in Action:

Controlling gives a point of the compass to all operations to fulfill the organizational objectives. It provides coordination between individuals, groups and departments.

It confirms that the whole organization’s purposes are completed.

Conclusion:

Hope it helps you clarify your confusion regarding controlling and build a better understanding of it.

What did you think of this? Do I miss something? Come on! Let us know if you want to add something to the list.

Controlling FAQ:

What is controlling?

Controlling is one of the major important managerial functions which imply the process of ensuring that actual activities conform to planned activities.

What are the major characteristics of controlling?

These are the 5 major characteristics of controlling which are – (1) Managerial Function, (2) Onwards Process, (3) Continuous Activity, (4) Controlling is Related to Planning, (5) Essence of Control is Action.

What are the major 5 steps of controlling process in management?

There are the major 5 steps of the controlling process in management which are – (1) Setting performance standards, (2) Measurement of actual performance, (3) Comparison of actual performance with standards, (4) Analyzing deviations, (5) Taking corrective action.

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