The Controlling Function of Management

What is Controlling?

Controlling is the process of ensuring that organizational activities align with plans, instructions,
and established principles. It involves monitoring performance, identifying deviations from
expected outcomes, and taking corrective actions to ensure efficiency and goal attainment.

According to Brech, “Controlling is a systematic exercise, a process of checking actual

performance against the standards or plans to ensure progress while recording experiences for
future needs.”

Similarly, Donnell compares controlling to navigation, stating that just as a navigator continually
checks position relative to a planned route, a manager should regularly assess organizational
performance to stay on course.

Purposes of Controlling

The controlling function serves two key purposes:

1. Facilitating Coordination: Ensuring that all departments and employees work toward
common goals.
2. Aiding Planning: Providing feedback that helps improve future strategies and decisions.

Definition of Controlling

Controlling can be defined as the management function that ensures employee actions align with
organizational goals, making sure that work is performed according to plan.

The Role of Controlling in Management

Among the various functions of management, control is one of the most critical for achieving
success.

 It involves setting predetermined standards and ensuring employee performance meets

those standards.
 If deviations occur, corrective measures are taken to realign progress with goals.
 Controlling ensures that resources are used effectively for the growth of the organization
and are not wasted.
Effective controlling requires managers to:

 Give clear instructions and ensure they are followed.

 Monitor and evaluate team performance.
 Improve coordination among employees.
 Plan effectively for future projects based on performance insights.

Management control comes in different forms, allowing managers to choose the most appropriate
control method based on the situation. As one of the core functions of management,
controlling plays a crucial role in maintaining efficiency, productivity, and organizational
success.

Key Features of the Controlling Function

The controlling function of management has several essential characteristics:

1. Controlling is an End Function: It takes place after performance is evaluated against

established plans and standards. Once tasks are completed, managers compare actual
performance with expected outcomes and take corrective measures if needed.
2. Controlling is a Pervasive Function: It is required at all levels of management and
across all departments. Top-level managers oversee middle-level managers, who in turn
supervise lower-level managers and employees.
3. Controlling is Forward-Looking: While it assesses past performance, the focus is always
on future improvements. Managers analyze past deviations to take proactive measures
and ensure better results moving forward.
4. Controlling is a Dynamic Process: The approach to controlling must adapt to different
situations. A manager adjusts strategies and responses based on employee performance
and organizational needs. Example: If an employee is frequently absent, a manager may
first discuss the issue before taking stricter measures if necessary.
5. Controlling is Closely Linked with Planning: Planning and controlling go hand in
hand—without one, the other is ineffective. Plans set performance standards, and
controlling ensures those standards are met. Example: A sales manager setting a quarterly
sales target for a team must control their activities to ensure the goal is achieved.
6. Controlling is Continuous: It is an ongoing function rather than a one-time task.
Managers must continuously monitor, assess, and adjust strategies to improve efficiency
and performance.
By incorporating these characteristics, controlling ensures that resources are used effectively,
deviations are minimized, and organizational goals are met efficiently.

The Process of Controlling

The controlling process in management consists of four essential steps, ensuring effective
monitoring and corrective action.

1) Establishing Performance Standards

The first step is setting clear performance standards based on past employee performance,
market conditions, and organizational goals.

These standards must be realistic and approved by senior management before being
communicated to employees.

Clear benchmarks provide a common goal for employees to work toward.

2) Measuring Actual Performance

Once tasks are completed, managers evaluate the actual performance of employees.

Employees may be required to submit reports or provide data reflecting their work progress.

This step helps identify trends and assess individual contributions to overall objectives.

3) Comparing Actual Performance with Standards

The next step involves analyzing deviations by comparing actual performance against pre-
established standards.

Managers identify gaps or differences between expected and actual results, preparing reports
based on the findings.

4) Taking Corrective Actions (If Necessary)

If performance does not meet expectations, corrective actions must be taken.

The response depends on the severity of the deviation and the past performance of employees.
Example: If an employee has consistently performed well but underachieved in one instance, they
may receive feedback rather than penalties.

Taking necessary corrective measures ensures that employees remain accountable and
committed to their responsibilities.

By following these four steps, managers maintain control over business operations, drive
efficiency, and ensure organizational success.

Relationship Between Planning and Controlling

Planning and controlling are distinct management functions, yet they are deeply interconnected
and mutually reinforcing. Their activities overlap, making one ineffective without the other.
Planning provides direction, while controlling ensures adherence to the set plans.

Key Aspects of the Planning-Controlling Relationship

1. Planning Precedes Controlling, and Controlling Follows Planning: Planning sets

objectives and expectations, while controlling ensures their achievement.
2. Planning and Controlling Are Inseparable Functions: Both functions work together to
ensure smooth operations in an organization.
3. Planning Sets the Path, While Controlling Keeps Things on Track: Planning outlines
the course of action, and controlling monitors progress to ensure deviations are corrected.
4. They Follow a Systematic Approach: The process follows a continuous cycle:
Planning → Results → Corrective Action
5. Both Are Essential for Organizational Success: Effective planning ensures proper goal-
setting, while controlling ensures proper execution.
6. Planning and Controlling Strengthen Each Other: Controlling identifies gaps in
planning, leading to better future strategies. Planning ensures that controlling has a clear
benchmark for comparison.

In today’s fast-changing business environment, unforeseen challenges can cause plans to fail. In
such cases, controlling helps managers adapt and take corrective measures. This dynamic
relationship makes both functions indispensable for business success.

Types of Control in Management

Control in management follows a structured process and can be applied at different stages of
execution. There are three main types of control mechanisms available to managers:
Bureaucratic control, Market control, and Clan control.

1. Bureaucratic Control

Bureaucratic control involves formal policies, rules, and procedures set by the organization. These
controls are enforced through legitimate authority and ensure compliance with company
standards.

Examples:

 Requiring daily reports on employee progress.

 Inventory reconciliations to track stock levels.
 Sales revenue projections and performance-based reward systems.
 Safety protocols mandated by regulatory bodies like OSHA or EPA.

2. Market Control

Market control relies on external benchmarks and industry trends to guide internal decision-
making. Organizations compare their performance against market standards to assess
progress and take corrective actions.

Examples:

 A company sets a goal to achieve 15% market penetration in a year. Before

launching a product, they gather consumer feedback and make necessary
adjustments.
 A finance firm uses market trends to decide when to buy or sell stocks. If oil
prices drop by 25%, they may liquidate their commodity investments to
minimize losses.

3. Clan Control

Clan control is an informal mechanism where organizational culture, values, and peer influence
guide employee behavior. It focuses on trust, shared values, and team dynamics rather than
formal rules.
Examples:

 An organization values integrity, and employees are encouraged to act

ethically, even when rules are unclear.
 A new employee adopts company work habits because they observe and learn
from experienced team members.
 Peer pressure can positively or negatively impact employees’ performance and
decision-making.

Importance of Controlling in Management

Effective control plays a crucial role in achieving organizational success. Here are some key
reasons why control is essential:

1. Motivates Employees: Control guides employees, helping them stay on track with their tasks.
Managers provide support and corrective feedback, ensuring employees give their best efforts.
Setting performance targets motivates employees to achieve and even exceed expectations.

2. Ensures Efficient Use of Resources: A controlled environment ensures optimal use of

resources without waste. Employees become more mindful of resource consumption, leading to
higher productivity.

3. Maintains Discipline in the Organization: Discipline is necessary to ensure tasks are

completed on time and within budget. Employees are held accountable for their actions,
reducing negligence and inefficiencies.

4. Promotes Coordination Among Employees: Large organizations require strong

coordination across different departments. Control mechanisms align employee efforts toward
the company’s overall objectives.

5. Assists in Setting Realistic Standards: Standards are set based on past performance, market
conditions, and organizational capacity. Proper control helps assess feasibility and ensure goals
are realistic and achievable.

6. Aids in Achieving Organizational Goals: Controlling aligns employees with business

objectives, ensuring company success. Managers monitor team performance, ensuring every
project contributes to profitability and growth.
By implementing effective control mechanisms, organizations can enhance productivity,
minimize risks, and drive long-term success.

Examples of Control in Management

Control is essential in organizations to monitor performance, ensure efficiency, and achieve

objectives. Below are some key examples of how management applies control in different areas:

1. Performance Measurement: Managers assign tasks to employees and assess their

performance. Performance evaluations help in decision-making regarding promotions, salary
increases, or bonuses.

2. Strategic Planning: Management sets goals for the organization and develops strategies to
achieve them efficiently. Planning involves allocating resources effectively while considering
market trends and competition.

3. Financial Management: Managers decide budget allocations for projects and assess their
profitability. They track expenses and revenues to ensure financial stability.

4. Supervising Employees: Management monitors employee work to improve productivity and

efficiency. Ensures that all team members contribute towards organizational objectives.

5. Risk Management: Managers identify and analyze risks early to take precautionary steps.
Helps in minimizing losses and ensuring smooth operations.

6. Performance Improvement: Control mechanisms allow continuous assessment and

improvement of team performance. Managers provide feedback and support to enhance
employee skills.

7. Inventory Management: Managers ensure that inventory levels are neither excessive nor
insufficient. Proper stock control prevents delays, shortages, and wastage.

8. Quality Assurance: Control ensures that products/services meet the required standards.
Organizations that prioritize quality maintain brand reputation and customer satisfaction.

Requirements for Effective Control

To be effective, control must meet the following key requirements:

1. Aligned with Plans and Positions

 Control measures should reflect organizational goals and operational plans.

 Every phase of an operation has unique characteristics that require tailored control
strategies.

2. Adapted to Managers and Responsibilities

 Control systems must suit the skills and responsibilities of individual managers.
 Managers must understand and use control mechanisms effectively.

3. Focus on Critical Exceptions

 Managers should concentrate on significant deviations from planned performance.

 This helps in identifying areas that need urgent attention and corrective actions.

4. Objectivity in Measurement

 Controls should be based on quantifiable data, such as costs, productivity, or deadlines.

 Qualitative aspects, like employee training effectiveness, should also be measurable.

5. Flexibility

 Controls should remain adaptable to changing conditions.

 Alternative plans should be available to handle unexpected situations.

6. Cost-Effectiveness

 Control mechanisms should be economically viable and not exceed their benefits.
 Managers should balance the cost of control with its impact on organizational
efficiency.

7. Lead to Corrective Actions

 The purpose of control is to identify deviations and take corrective actions.

 Control is valuable only if it improves planning, organizing, and decision-making.

By implementing effective control systems, organizations can enhance productivity, reduce

risks, and ensure sustainable growth.
Control Methods

Control methods in management are generally classified into two categories: past-oriented
controls and future-oriented controls.

1. Past-Oriented Controls

Also known as post-action controls, these methods assess results after a process has been
completed.

They analyze past activities over a specific period to evaluate performance and identify errors or
successes.

These controls help in future planning, rewarding, disciplining, training, or promoting

employees.

Examples: Accounting records, financial statements, school grade reports, and project completion
reviews.

2. Future-Oriented Controls

Also called feed-forward controls or steering controls, these methods monitor performance
during a process.

Their purpose is to detect and correct potential issues before completion to ensure smooth
operations.

Examples: Cash flow and funds flow analysis, network planning, and production tracking to
prevent bottlenecks.

Organizations utilize both types of controls. Future-oriented controls are particularly crucial
because they provide feedback early in the process, allowing managers to take preventive actions
before output is affected.

Current Issues in Control

Employee Monitoring and Privacy

Managers have the right to monitor employee behavior in the workplace, but ethical concerns
arise when privacy is compromised.

Employers may also try to control employee behavior outside of work, leading to legal and
ethical debates.

Limitations of the Control Process

Despite its importance, control has some challenges:

a. Difficulty in Setting Quantitative Standards: Some areas, such as employee motivation,

job satisfaction, and human behavior, are difficult to measure objectively. The absence
of clear numerical standards reduces the effectiveness of control systems.
b. Limited Influence on External Factors: Organizations cannot control external elements
like government policies, technological advancements, and market competition. These
external factors may disrupt plans despite strong internal control systems.
c. Employee Resistance: Employees may perceive control as restrictive, leading to
dissatisfaction or resistance. Excessive monitoring can demotivate workers and affect
productivity.
d. Costly and Time-Consuming: Implementing effective control systems requires
significant financial resources, time, and effort. Managers must ensure that the benefits
of control outweigh its costs.

Note:

Control is an essential management function that monitors performance against predefined

standards to ensure organizational success. The process involves:

1. Establishing standards
2. Measuring and comparing actual performance
3. Taking corrective actions

By effectively implementing control measures, organizations can maintain efficiency, ensure

compliance, and drive continuous improvement.