1. COURSE CODE:: MP101
Course ::Management theory
and Practice
Unit -7:: CONTROLLING FUNCTION OF MANAGEMENT

2. OBJECTIVES
 Explain the concept of controlling
 Discuss the procedure of designing a control system
 Elaborate on different types of control systems
 Detail upon the management control system
 Highlight the procedure of controlling overall organizational
performance

3. INTRODUCTION
Controlling constitutes one of the crucial functions of management. It involves verifying whether the organizational goals and
objectives are achieved as per the established standards. In other words, controlling can be defined as an ongoing process of
comparing the actual performance with the standard performance, measuring variations, and taking corrective actions. It helps
the management in minimizing deviations in the performance and achieving goals and objectives in an efficient manner. The
controlling function guides the management in successful accomplishment of the predetermined goals. It enables managers to
monitor the performance of their subordinates, providing them feedback, and taking measures to improve their performance.
This helps in reducing repetitive errors committed by individuals in an organization, which, in turn, increases their efficiency. The
effectiveness of the controlling function of an organization depends on the efficiency of its planning process. Planning and
controlling are closely related to each other. Planning involves defining the goals and objectives that an organization aspires to
achieve, whereas controlling includes monitoring how well these goals and objectives are accomplished.

4. DEFINE CONTROL
 Control of an undertaking consists of seeing that everything is being
carried out in accordance with the plan which has been adopted, the
orders which have been given, and the principles which have been laid
down. Its object is to point out mistakes in order that they may be
rectified and prevented from recurring. ---- Henri Fayol
 Control is checking current performance against pre-determined
standards contained in the plans, with a view to ensure adequate
progress and satisfactory performance. ---- EFL Breach

5. PURPOSE OF CONTROLLING
 Creating better quality: Helps in achieving the satisfaction of customers, which, in
turn, improves the quality of the organizational processes.
 Coping with change: Helps to incorporate necessary changes in organizational
processes to respond to various threats and opportunities.
 Creating faster cycles: Helps the manager to expedite the cycle of creating,
implementing, and completing an organizational process within the stipulated
time.
 Adding value: Refers to providing additional value to the organizational process.
 Facilitating delegation and teamwork: Implies that the controlling process helps in
creating a feeling of responsibility among the team members toward their tasks
and duties.

6. PROCESS OF CONTROLLING
 The steps involved in the control process are explained as follows:
1. Establishing performance standards: Refers to the first step of the control
process in which the standards for performance of all the departments of
an organization are defined.
2. Measuring actual performance: Involves determining the performance of
different departments.
3. Comparing actual performance with standards: Refers to the third step of
the control process in which the actual performance is compared with the
set standards.
4. Taking corrective action: Refers to the fourth and last step of the control
process. In this step, measures are taken to correct the performance, if
there are deviations in the performance identified in the third step.

7. RELATIONSHIP BETWEEN PLANNING AND
CONTROLLING
 Planning and controlling are closely linked to each other.
 Planning is a process of setting organization’s objectives, goals,
and standards, whereas controlling is a process of ensuring that
the goals are achieved as per the set plan.
 Thus, planning should be done in such a way that it lays
foundation for the establishment of controlling standards and
keeps controlling in view.
 Planning involves what an organization aspires to achieve in the
future, whereas controlling includes what the organization has
achieved in the past.

8. MANAGEMENT OF CONTROL SYSTEM
 The characteristics of management control system are as follows:
 Provides information regarding the actual status of the organizational
activities
 Integrates techniques to collect and use information to facilitate the control
function
 Helps managers in regulating activities
 Helps managers to determine the corrective actions to be taken
 Brings coordination among different organizational activities
 Helps managers to allocate resources efficiently
 Evaluates the performance of employees, which, in turn, motivates them to
perform efficiently

9. FINANCIAL CONTROL
 Financial control refers to a technique in which financial statements, financial audits,
and ratio analysis are used as control tools.
 The different types of tools used for financial control are as follows:
 Financial Statements: Refers to statement that contains details regarding the financial
activities, such as total income, expenditures, and cash inflows and outflows, of the
organization.
 Income Statement: Contains information regarding the revenues generated, expenses, losses
incurred by the organization.
 Balance Sheet: Provides information regarding the worth (assets) of the organization at a
single point in time, and the extent to which those assets are financed through debt (liability),
and owner's investment (equity).
 Cash Flow Statement: Shows the inflows and outflows of cash in an organization.
 Financial Audits: Refers to the formal investigations to ensure that financial management
practices follow accepted accounting procedures, policies, laws, and ethical guidelines.
 Ratio Analysis: Assesses the performance and status of the organization.

10. BUDGETARY CONTROL
 Budgetary control is a control technique that is
used to compare the actual revenue and expenses
of the organization with its actual budget.
 In this technique, the budget of the previous year is
used as a basis for eliminating the overrun costs
that took place in the past.
 This control gives management a clear idea of
what is to be done to minimize the wastage of
resources.

11. QUALITY CONTROL
Quality control refers to a process by which managers
review the quality of all factors involved in production.
These three tools are as follows:
 Inspection: Refers to the method that detects quality
problems at the end of the production process before
they reach the final customer.
 Quality Assurance: Refers to the method that
focuses the efforts on improving quality.
 Total Quality Management (TQM): Refers to the
process that ensures quality is being checked at every
stage of the production process.

12. MARKETING CONTROL
 Marketing control is a control technique that helps managers
to monitor the progress of set marketing goals, such as
customer satisfaction, price study, market demand-supply,
and speedy order-to-delivery cycle.
 The market control tools used to evaluate an organization's
marketing functions are as follows:
 Market Research: Refers to the process of gathering and analyzing
data to assess the needs of customers.
 Test Marketing: Refers to an important marketing control tool
before the launch of a new product.
 Marketing Statistics: Refers to the use of statistics to assess the
success of marketing strategy.

13. HUMAN RESOURCE CONTROL
 Human resource control monitors and regulates the
performance of human resource of an organization.
 The performance of employees is evaluated by conducting
performance appraisal method.
 Some of the common control types include performance
appraisals, disciplinary programs, observations, and training
and development assessments.
 The performance of human resource largely depends on the
success or failure of the organization.
 Therefore, it is necessary for managers to continuously
improve the skills of team members by using techniques.

14. INFORMATION TECHNOLOGY CONTROL
 Information technology has made the organizational control easy and relatively at
a lower cost.
 Information technology control helps in processing the data and making it
meaningful and understandable by the receiver.
 The development in information technology has promoted the development of
Managerial Information System (MIS) and communication.
 MIS provides timely internal and external information about technical aspects of
various projects of an organization, so that the managers perform their jobs
effectively and efficiently.
 Communication is an integral part to carry out the managerial functions and to
link the organization with its external environment.

15. SUMMARY
 Controlling can be defined as an ongoing process of comparing the actual
performance with the standard performance, measuring variations, and
taking corrective actions.
 It helps the management in minimizing deviations in the performance and
achieving goals and objectives in an efficient manner.
 It enables managers to monitor the performance of their subordinates,
providing them feedback, and taking measures to improve their performance.
 The effectiveness of the controlling function of an organization depends on
the efficiency of its planning process.
 Planning involves defining the goals and objectives that an organization
aspires to achieve, whereas controlling includes monitoring how well these
goals and objectives are accomplished.
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