Through
controlling function we measure actual performance against predetermined
standards. Controlling helps to check errors and to take corrective action to
improve performance. Controlling means to look back while planning is to look
ahead.
Process of Controlling
1. Establishing standards:
The first
step in controlling process is to establish standards. Standards are the plans
which tell us what should be done. Usually, there are two types of standards,
measurable and non-measurable. Measurable standards are those that can be
measured such as cost, time, profit etc. Non-measurable standards are those
that cannot be measured such as goodwill, market image, quality of products, moral
etc. By establishment of these standards the process of controlling becomes
easy because they provide basis for measuring actual performance.
2. Measuring performance:
The second
step in controlling process is to measure performance. In this step actual
performance is measured against predetermined standards. Measuring of performance
may be easy or difficult dependent upon standards. If standards are of tangible
nature, such as production units, sales, profit etc. they can be easily
measured. While measuring of intangible standards such as goodwill, moral,
behavior etc. become difficult because they cannot be measured in numerical
terms.
3. Compare actual performance with standards:
It is an
important step to compare actual performance with standards in order to find
out deviations. Deviations are the difference between actual performance and
standards established. The manager must find out those deviations that can adversely
affect the business and as well reasons for such deviations. If there is any
minor deviation, it may be ignored but a major deviation must be noted for
taking corrective action.
4. Correction of deviations:
After
finding out major deviations among standards and actual performance, the
manager must take corrective action to improve performance. By taking
corrective action, the management will get benefit of matching actual
performance with standards in future. The corrective action must be taken
promptly, otherwise it can be more difficult to correct deviations.
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