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~
Ashwin's Commerce World
-----..;;::;:,_.:_A::s::hw~in.'...'s~Co~m~m~e~r~ce~W~o~r~ld!..__ _ _ _ _ _ _ _ _ _ _ _7

CONTROLLING

_MEANING OF rnl\rTon, , 11\r~

.
ntrolling may be defined as the pro llillili. . . .~illliliiilliai
co forrnitv with the planned activities cess
d
throu h • • ••
g which managers assure that the act1v1t1es an
d results are in
0 th
' nns adopted, instructions issued and an results. It involves verifying whether activities undertaken conform to e
1
pa . . results expect d
rhe main obJect1ve of controlling is to che k e • d
ammes of the organisation c and ensure that performance of work is in accordance with the plans an
prog r •

IMPORTANr.F n~ rn1\TTDn1, 11\rr,

Achievement of Organisational Goals· . llallliallaii6iiliililill.ail . d
-he accomplishment of go I I .Jt is th rough controlling that managers ensure the execution of plans an
t d' I and
t b . a s. n the absen ce Of control. activities may not be carried out accor mg to Pans.
the ta~. e s;ac : ~1s:ed. There ma be dela in com letin the assi ned work and the desired results ma not
be ac 1eve • on ro eeps consta t d
n watch over performance so that mistakes are detected and correcte
promptIy. Th roug h controlling man k . f
agers eep the organisation on the right track and ensure attainment 0
planned results.
2• Optimum
.
Utilisation of Resources· c
.
. . . · 1
• ontrolling 1s essential for securing the best possible use of human, physica
and financial resources. It ensures th t k· ·
a wor 1s done as desired in terms of cost. quality and time. A good system
of control helps •
to prevent misus e an d wastage of resources. It helps to minimise the cost of operations d
. an to
improve quality.
3. Decentralisation of Auth0rity: An effective system of control facilitates delegation of authority. With the help of
feedback information, managers can ensure that decisions taken at lower levels are consistent with the policies
and intereSt s of the organisation. Control helps management in monitoring sales, finances, etc. and in minimising
errors.
4. Means of Coordination: Controlling facilitates coordination between different departments by laying down
standards of performance. All activities and efforts are directed towards the accomplishment of common
objectives. Managerial control at different levels of the organisation secures harmony in work efforts. Overlapping
and duplication of activities are avoided. Harmony between different parts of the organisation can be maintained.
5. Bette~r Employee Morale: Employees know well in advance what they are expected to do and the standard against
which their performance will be judged. Therefore, they are not likely to be careless or negligent. Their morale is
improved. Evaluation of performance against predetermined standards induces employees to perform well and
earn the rewards. Thus, control helps to improve employee performance.
6. Simplified Supervision: Controlling provides regular reports on performance and progress of work. Timely reports
help supervisors in identifying gaps between performance and standards. As a result, supervisors can take
appropriate actions to rectify deficiencies. Problems can be detected and solved before they become
uncontrollable. Controlling ensures order and discipline In the organisation.
7. Better Planning: Controlling reveals deficiencies in plans. It reveals whether the standards are accurate and
objective. It also provides useful information on the basis of which better plans can be formulated in future. Long-
term planning depends upon control information. Thus, controlling facilitates more realistic plans and
programmes in future.
8. Coping with Change and Complexity: The environment in which business organisations operate' keeps on
changing. control system helps managers to anticipate, monitor and respond to changing conditions. Similarly,
a good control system is required to cope with complexities arising out of expansion and diversification of business
activities.

(<?) @thecommerceworldl [c+J] @ashwinjll 1191Page

 - Ash w In,s Commerce World ~
. . , Ashw'1n's commerce World

LIMITATIONS OF CONTROLLING (READ ONLY)

Diffi . h standards are defined in quantitative t '
. . iculty In ~etting Standards: Control system is effective w en em loyee morale, job satisfaction e Ut
,tis not possible to set quantitative standards in some areas such as p d . and ii
beh . rement of performance an its comparl I\
av,our. In the absence of quantitative standards, measu Ith
standards becomes difficult. . .
2 c0stI d diture are involved rn controlling A
• Y and Time Consuming: Considerable time, effort an expen • s
cannot afford to install an expensive control system. . . .
3• Res,stance
• from Employees: Employees often resist contro I as they consider 1t a restrrct1on on .their fre edO
example, employees might object installation of Closed-Circuit Televisions (CCTVs) as they W[II be kept
strict watch.
4. External Forces: An organisation cannot generally control competition in the market, technological c
government policies and other external factors.

Planning and controlling are closely interrelated and interdependent functions of management.
1. Without planning, there lies no basis for controlling. Planning is a prerequisite for controlling. Controllln1
standards with which performance can be measured and evaluated. These standards or predetermined
laid down in planning. Plans provide the standards for controlling.
2. Similarly, planning serves no purpose in the absence of control. Planning sets the course, control 0
deviations from the course and initiates corrective actions to maintain the chosen course or to make apP.
changes in the course. Planning is fruitful when control is exercised. Once a plan is put into effect, c
necessary to ensure that the planned results are achieved. Planning is meaningless without controlling:
The two reinforce each other. This mutual relationship between planning and control is shown in Fig.

Is oijen said that plan

is_f~kln* •
',. '

conformt
' ,. ..
o far as
anceln
.- .
• ,

,... ·..
• •• 1

I
I ,,1

I.

(OJ @theCommer'C:8~0rldl
• I •
[8] @ashwin_jll • J. ''
 rshment of Performa' "[;i,/
Estab I tual results a t b e first step of th . h h standards with
J· • h the ac re O e eval e control process is to estabhs t e
wh'c '~~~ da b
ared, Different standards are USN n rd Is the Criterion against which actual performance can e
,ofl'lP t the desired performance Mana llleasurtng the performance of different individuals. Standards
refleC as the basis of control, th~y shoufde~ standards In the light of the organisational goals. As the standards
serve w very ef
he si. car ully.
(a)S~
(b) S
(c) s_
(d) St

Measurement ;f ~ rf ~ itce. standards of desired performance are fixed, the next step is to
2. rneasu_re thde aTchlua pllel formllltateance. Perfo~ -"ould be m~sured in same terms in which standards have been
bhshe • s w ac comparison P ~ •
esta . • euormance may be measured through personal observation or
l
:JJP'
throu
gh oral or written reports. Accurate I nd .
timely measurement of results, requires an effective system 0 f
reporting. Generally, performance Is measpred and reported at regular intervals. e.g .• a week. month or quarter·
continuous measureme~t Is preferable btlltmay Involve much time and expense besides disturbing the day-to-
daY operations. .. _ • •

3. corn arison of Actua ,.~ctual performance is compared with the standards or

. }planned targets. Such comparison reveals as to what extent the performance deviates from the standard. If
;(1' performance matches the standard, It may be assumed that everything is under control. When performance is not
!:!Q_to the standard, it becomes necessary to find out the extent of deviation.
4. Af)alysing Deviations: Some devtaiions In performance can be expected in most activities. It is neither feasible nor
economical to control all deviations. Therefore, It Is necessary to determine the acceptable range of deviations.
J)".i,- critical point control and contrai;biipg,-,Slon are useful for this purpose.
1
(a) Critical Point Control: Accordlncto this principle control should focus on Key Result Areas (KRAs) which are
l '/ ,
,tJ critical to the success of the orpnlsatlon. When anything goes wrong in these areas the entire organisation
suffers.
(bl Control by Exception: There Is a common saying, uif you try to control everything you may end up controlling
nothing". Therefore, It Is betterto concentrate on exceptional deviations than trying to control each and every
deviation from the standard.

5. Taking Corrective Actions; Controlling Is not confined to detecting errors and defects in performance. The process
of control is incomplete until remedial actions are taken to prevent deviations in future. Corrective actions are.
therefore. initiated on the basis of factors responsible for causing deviations between standards and actual results.
When the performance cannot be Improved, the standards may have to be revised downward. This may happen
where deviations occur due to reasons beyond the control of managers.

@@thecommerceworldl [&J] @ashwinjll 121 IP age

 G Ashwin's Commerce World

MANA GEME NT BY EXCEPTION

The activiti f
es o a large business enterprise are so innumerable that ·it ·is ne1t
· h f "bl
er eas1 e nor desirable «..
managem
ent to control all of them. Control will be more economical and effect·ive •'f t h •Qr to
concentr at e top mana p
r· d d d
es attention on exceptionally serious deviations from the plans an stan ar s. T h ltni,
is Is kn°"'" II llt
p •nclple of control by exception.
th,

R
&iii
liiirii I iiilli@ '
Control by exception has several benefits:
(i)
It saves executive time by applying it only on critical devotions and relieves, executives
(ii) of details.
It ensures better utilisation of managerial talent through selective application.
(iii)
It facilitates better delegation of authority by leaving details to subordinates.
(iv)
It speeds up decision making by reducing the frequency of decisions at the higher levels
of managen.e
M It forces managers to review past on which standards are based. ••, nt.
(vi)
It identifies crisis and critical problems so that timely action may be taken to overcome
them. .

Manager s should, however, be cautious while applying management by exception

. In some cases, critical anct~n-
critical areas may be crucial and may damage, the system before remedial action
is taken. Managers, should not
assume that no news is good news' because inconvenient and unpleasant informatio
n may be kept away from11)ern.
Moreove r, subordina tes may misuse the permissive atmosphere.

o• @the com [c+l] @ashwinjll

 B - DIRECT QUESTION BANK

.the steps Involved In C

' , ISC- 2019
ISC-2009
ISC-2007
'
ISC- 2002
MARKS
lishment of • first step of the control process is to establish s
6
• the standards wi r.are to be evaluated. A standard Is the criterion
against which ;!le compared. Standards reflect the desired
~ormance. IJ8ht of the organisational goals.
Measurement tpe standards of desired performance are fixed,
7 ance. Performance should be measured In
• the next step i
same terms In which sta bllshed. This will facllltate comparison.
performance may be measure t rsonal observation or through oral or written
repo •
com ual performance is compared with the
~ stan •;~ICI./- what extent t he performance
deviates from the standai --...~ to the standard it becomes
necessary to find out the .
Analysing Deviations; Some atfo Re rmance can be expected in most activities. It is
9
• -;ither feasible nor tc9flOI I all deviations. Therefore, it is necessary to
determine the accepta •
critical oint control a se.
(c) Critical Point Con us on Key Result Areas
(KRAs) which are fthe organisation. When anything goes wrong in
these areas the entlreo nsuffers. .
(d) Control by Exce~: CIOfflfflP,n saying, "If you try to control everything you may
end up controlllng _noth refore, It Is better to concentrate on exceptional
deviations than trying to control each and every deviation from the standard.
1o. Taking Correctlv; Adioil
Controlling Is not confined to detecting errors and defects in
performance. The process of control ls incomplete until remedial actions are taken to prevent
deviations in future. Corrective actions are. therefore, initiated on the basis of factors
responsible for causing deviations between standards and actual results.
11.
when the performance cannot be Improved, the standards may have to be revised downward.

COMMENTS: While a num IJ, ,, uf crnckl.1tc•, ,·:ere ..ible to answer this question well, a few candidates either
wrote incorrect sequence of ,t,·p, or wrote' Ju,t J couple of steps.

•
(auestion
• 2 ISC- 2017
2018

riiiF~~~~~:::~::::-~~-~-~-~--------r~M:ARKS
,-r,n
Explain any 5 Importance of Controlll

9. Achievement of It Is through controlling that managers ensure the S .

execution of plans and the accomplishment of goals. In the absence of control, activities may
not be carried out according to plaQL and the targets may be missed. There may be delay in
completing the assigned work and the desired results may not be achieved. Control keeps
constant watch over performan~ so ~hat mistakes are detected and corrected promptly.
Through controlling managerspe~ the ~rg~ni~atlon on the right track and ensure attainment
of planned results. • .

(§j @thecommercewortil1· [&J] @ash~injll 123 IP age

 ~ Ashwln', Comme« e Wo,ld O A,hwio'• comme«e Wo,ld
• ~~mum Utlllsatlo n of Resources: Controlling is essential for securing the b~st P?ssible use
man, physical and financial resources. It ensures that work is done as desired m terms
Qf
£Qst, quality and time. A good system of control helps to prevent misuse and wastage
r.tsource I h .Qf
11 •
..l, t elps to minimise the cost of operations and to improve qua I·t
I y.
• Rtcentralisatlon of Authority: An effective system of control facilitates delegation
of
auth0rlty. With the help of feedback information, managers can ensure that decisions taken
at lower levels are consistent with the policies and interests of the organisation. Control helps
management in monitoring sales, finances, etc. and in minimising errors._
12
• Means of Coordination: Controlling facilitates coordination between different departme
nts
by laying down standards of performance. Ail activities and efforts are directed towards
the
accompli shment of common objectives. Managerial control at different levels
of the
organisation secures harmony in work efforts. Overlapping and duplication of activities
are
avoided. Harmony between different parts of the organisation can be maintained.
13
• Better Emplovee Morale: Employees know well in advance what they are expected
th e standard to do and
against which their performance will be judged. Therefore, they are not likely to
be careless or negligent. Their morale is improved. Evaluation of performance
against
predeterm ined standards induces employees to perform well and earn the rewards.
Thus,
control helps to improve employee performance.

Span of control refers to the number of subordinates under the manager's direct
control. As an
example, a manager with five direct reports has a span of control of five.

OR
What is Control by Exception?

The activities of a large business enterprise are so innumerable that it is neither

feasible nor
desirable for top managem ent to control all of them. Control will be more
economical and
effective If the top managem ent concentrates attention on exceptionally serious
deviation s from
the plans and standard s. This is known as the principle of control by exception
.

Control bv exceptio n has several benefits:

(vii) It saves executive time by applying it only on critical devotions and relieves, executive
s
of details.
(viii) It ensures better utilisation of managerial talent through selective application.

O of a company , 'tried to control everything in his organisation but ended up

ing'. Also, he did not focus on certain crucial areas like productiv ity.
e two aspects of Controlli ng that were overlooked by Mr. Raj as the CEO of the

[c;J] @ashwinjll •
 Ashwln's Commerce World
MARKS
is Management or co·n
Ion (explained In the previous question). 4
ct is Critical Point Cont
:to this prlnclple, control should focus on Key Result
RAs) which are crltlcal the organisation. When anything goes wrong in
eas the entire organlsa

SQP-2025
he interplay between the 8 i:lurlng Planning phase and the use of these goals
arks for performance evalu rolling phase.
•' I • .
MARKS
lnterpla and Controlling 4

Planning and Controlling are lntertwlnjCl.;and complementary functions. They coexist in an

organisation. Planning specifies the goalsftcif.an organisation, while Controlling ensures the
acco mp Iish me nts of these goals. Plannlnjfafso ifetermines the process of control while Co ntro IIIng
provides the basis for planning. ''',~·.
As a process, planning Involves creatlvlllilnldng and Judgment. Controlling ensures that these
thoughts and decisions are converted Joie desired actions. • •
~ning and Controlling are both baclcwarit-looklng and forward-looking functions. Planning is
prescriptive, while controlling Is evaluative.
controlling provides feedback to planning by Identifying areas for Improvement. By assessing the
j;"rtormance against the plans, ~ provides a review and thus ensures that future performance
matches the planned performance. •

COMMENTS: Candidates are requ11l'c/ tn c!,scu,s the ways in which Planning and Controlling affect each other.
They must discuss the abov,· u11rlcr 1 , , ,.·u1•1t, to bnng out the interplay. Any other relevant idea that shows the
reciprocal nature of the two V✓tl! b , 1 t, o
-"~~· - - - - ~

-
@@thecommercewo rt.1 (tl] @ashwin_jll 125 IP age