Fundamental of Controlling
Fundamental of Controlling
Why is control needed?
Adapting to change and uncertainty
Uncertainty arises because organisational goals are future oriented but set on the basis of present knowledge.
Detecting irregularities and errors
Controls can help managers detect undesirable irregularities such as product defects, cost overrun, staff turnover or customer complaints.
Reducing costs, increasing productivity or adding value
Control systems can reduce labour costs, eliminate waste, increase output, increase product delivery cycles and add value to a product.
Controls can help managers identify opportunities by highlighting situations such as competitive prices on materials, changing population trends, new overseas markets.
They help to alert managers to opportunities that might have otherwise gone unnoticed.
Dealing with complexities
As organisations grow larger or engage in more complex operations and projects, control enhance co-ordination
Decentralising decision-making and facilitating teamwork
Controls allow top management to decentralised decision-making at liner levels within the organisation and to encourage employees to work together in teams.
Areas of control
Physical Resources Control
This includes control over buildings, equipment and tangible products. For example, inventory control ensures stocking neither too few nor too many units in inventory.
Human Resources Control
This includes processes for regulating employee performance and behaviour.
Information Resources Control
This involves the generation and use of production schedules, sales and marketing forecasting, analyses of competition, environment.
Financial Resources Control
This is related to control of money and budgets. These are necessary for monitoring cost, expenses, profit & loss and are important because they can affect the three other types of resources.
Level of control
Involves positioning critical environmental factors that affect strategic plans, accessing the effects of organisational strategic actions, and ensuring that strategic plans are implemented as intended.
It is mainly under the domain of top management who generally take an organisation-wide perspective.
Characterised by long-term time frames ranging from quarterly.
A regulatory process that focuses on assessing the implementation of tactical plans at departmental level, monitoring periodic results and taking corrective action when necessary.
Involves monitoring specific internal & external forces that affect such tactical plans.
Sources of information in use for control purposes might include management and financial reports, monthly performance reports, performance reports or customer's satisfaction survey.
Involves overseeing the implementation of operating plans, monitoring day-to-day results, and taking corrective action when required.
Short-term timeframe. Usually done by first line managers or supervisors which provides short-term feedback, usually daily, hourly or weekly.
Generally concerned with budgets, standards, schedules, rules and other specific outputs normally associated with particular individuals.
Types of control
Feedforward Controls (Before)
They are future oriented, intended to prevent anticipated problems.
They are done by establishing rules, procedures and policies aimed at eliminating behaviour that cause undesirable work results.
The attempt to control the quality or quantity of financial, physical, human and information resources before they become part of the system.
Concurrent Controls (Currently)
They monitor on-going activities to ensure that all aspects of performance are consistent with established standards so that problems and errors can be corrected before they become too expensive or difficult.
Feedback Controls (After)
They are past oriented, intended to correct problems that have already occurred.
Control is making something happen the way it was planned to happen.
Controlling is defined as monitoring performance, comparing it with goals, and taking corrective action as needed.
Organisational control is the systematic process of regulating organisational activities to make them consistent with the expectations established in plans, targets and standard of performance.