Controlling: Nature and Scope of Control
Control is a primary goal-oriented function of management in an organisation. It is a process of comparing the actual performance with the set standards of the company to ensure that activities are performed according to the plans and if not then taking corrective action.
Every manager needs to monitor and evaluate the activities of his subordinates. It helps in taking corrective actions by the manager in the given timeline to avoid contingency or company’s loss.
Controlling is performed at the lower, middle and upper levels of the management.
Features of Controlling
- An effective control system has the following features:
- It helps in achieving organizational goals.
- Facilitates optimum utilization of resources.
- It evaluates the accuracy of the standard.
- It also sets discipline and order.
- Motivates the employees and boosts employee morale.
- Ensures future planning by revising standards.
- Improves overall performance of an organization.
- It also minimises errors.
Controlling and planning are interrelated for controlling gives an important input into the next planning cycle. Controlling is a backwards-looking function which brings the management cycle back to the planning function. Planning is a forward-looking process as it deals with the forecasts about the future conditions.
Nature of Controlling
Based on the above definitions the following natures or characteristics of controlling can be presented below:
- Control is a Function of Management
Actually control is a follow-up action to the other functions of management performed by managers to control the activities assigned to them in the organization.
- Control is based on Planning
Control is designed to evaluate actual performance against predetermined standards set-up in the organization. Plans serve as the standards of desired performance. Planning sets the course in the organization and control ensures action according to the chosen course of action in the organization.
Unless one knows what he wants to achieve in the organization, he cannot say whether he has done right or wrong in the organization. Control is said to be the Last step in management process but really speaking it begins with the setting up a plan in the organization. Control implies the existence of plans or standards in the organization.
- Control is a Dynamic Process
It involves continuous review of standards of performance and results in corrective action, which may lead to changes in other functions of management.
- Information is the Guide to Control
Control depends upon the information regarding actual performance. Accurate and timely availability of feedback is essential for effective control action. An efficient system of reporting is required for a sound control system. This requires continuing monitoring and review of operations.
- The Essence of Control is Action
The performance of control is achieved only when corrective action is taken on the basis of feedback information. It is only action, which adjust performance to predetermined standards whenever deviations occur. A good system of control facilities timely action so that there is minimum waste of time and energy.
- It is a Continuous Activity
Control is not a one-step process but a continuous process. It involves constant revision and analysis of standards resulting from the deviations between actual and planned performance.
- Delegation is the key to Control
An executive can take corrective action only when he has been delegated necessary authority for it. A person has authority to control these functions for which he is directly accountable. Moreover, control becomes necessary when authority is delegated because the delegator remains responsible for the duty. Control standards help a manger expand his span of management.
- Control Aims at Future
Control involves the comparison between actual and standards. So corrective action is designed to improve performance in future.
- Control is a Universal Function of Management
Control is a basic or primary function of management. Every manager has to exercise control over the subordinates’ performance, no manager can get things done without the process of controlling. Once a plan becomes operational, follow-up action is required to measure progress, to uncover deficiencies and to take corrective actions.
Therefore, control is an essential managerial function at every level. The process of management is incomplete without controlling.
- Controlling is Positive
The function of controlling is positive. It is to make things happen i.e. to achieve the goal with instead constraints, or by means of the planned activities. Controlling should never be viewed as being negative in character.
Scope of controlling in Management
The scope of control is very wide. A well designed plan of control (or control system) covers almost all management activities. According to Holden, Fish and Smith, the main areas of control are as follows:
(i) Control over policies
The success of any business organization to a large extent, depends upon, how far its policies are implemented. Hence the need of control over policies is self-evident. In many enterprises, policies are controlled through policy manuals.
(ii) Control over organization
Control over organization is accomplished through the development of organization chart and organization manual. Organization manual attempts at solving organisational problems and conflicts making long-range organisation planning possible, enabling rationalisation of organisation structure, helping in proper designing of organisation and department.
(iii) Control over personnel
The statement that ‘Management is getting the work done through people’ underlines sufficiently the importance of control of personnel.
All employees working at different levels must perform their assigned duties well and direct their efforts in controlling their behaviour. Personal Director or Personnel Manager prepares control plan for having control over personnel.
(iv) Control over wages and salaries
Such type of control is done by having programme of job evaluation and wage and salary analysis. This work is done either by personnel department or industrial engineering department. Often a wage and salary committee is constituted to help these departments in the task of controlling wages and salaries.
(v) Control over costs
Cost control is exercised by the cost accountant, by setting cost standards for material, labour and over heads and making comparison of actual cost data with standard cost. Cost control is supplemented by budgetary control systems.
(vi) Control over methods
Control over methods is accomplished by conducting periodic analysis of activities of each department. The functions performed, methods adopted and time devoted by every employee is studied with a view to eliminate non-essential motions, functions and methods.
(vii) Control over capital expenditures
It is exercised through a system of evaluation of projects, ranking of projects in terms of their rank power and appropriate capital to various projects. A capital budget is prepared for the whole firm. A capital budgeting committee reviews the project proposes and approves the projects of advantages to the firm. Capital budgeting, project analysis, break-even analysis, study of cost of capital, etc. are some popular techniques of control over capital expenditure.
(viii) Control over research and development
Such activities are highly technical in nature so no direct control is possible over them. By improving the ability and judgement of research staff through training programmes and other devices, an indirect control is exercised on them. Control is also exercised by having a research on the business.
(ix) Control over external relations
Public relations department is responsible for controlling the external relations of the enterprise. It may prescribe certain measures for other operating departments which are instrumental in improving external relations.
(x) Overall control
It is effected through budgetary control. Master plan is prepared for overall control and all the departments are made involved in this procedure. For effective control through the master plan, active support of the top management is essential.