Process of Control (Controlling Process)
The process of control follows a series of steps in order to make a control system effective. It is necessary to consider some processes for making the right decision. It helps to effective measurement of performance to manager.
Following are the major steps in the process of controlling.
- Establishment of standard
- Measurement of actual performance
- Comparison of actual performance
- Analyze the cause of the deviation
- Taking remedial or corrective action
Step #1 Establishment of Standard
The process of control starts with the establishment of a standard of performance. The standard of performance must be practically attainable and should be the basis of comparison with actual performance. The standard of performance may either tangible or intangible.
The tangible standards can be expressed in numerical terms. Again, the tangible standards can be classified as quantitative standards, monetary standards, time standards, and financial standards, etc. E.g. monetary standards are like cost, revenue, profits, and quantitative standards are production units, sales units, etc.
Intangible standards are qualitative in nature and can not be expressed in numerical terms. Intangible standards involve competency of managers, employee morale, the reputation of enterprise, good public relation, and so on.
Thus, managers need to set both quantitative and qualitative standards of performance in the organization.
Step #2 Measurement of Actual Performance
The second step in the controlling process is the measurement of actual performance achieved with that of planned performance. The measurement of actual performance must be done in accordance with laid down standards. It makes measurement easier and meaningful.
Qualitative aspects of performance must be quantified as far as possible. There must a provision of regular and systematic measurement of actual performance. The measurement should be on a future basis and should also focus on future performance. This is helpful to predict deviation in future performance. Thus, there must be a provision of measurement from time to time even when the actual performance is still in operation.
#3 Comparison of Actual Performance
This step of the control process focuses on the detailed study of actual performance and comparison against standard performance. Such comparison shows the range of deviation of actual performance with that of the standard defined. The management needs to identify the standards deviation for various parts of activities.
If the range of deviation between actual and standard performance is within the standard deviation, it can be ignored. And, if the range of negative deviation is more than the standard, it is essential to note such deviation for necessary steps. Some range of deviation might be positive and needs to be encouraged. Therefore, the comparison of actual performance is helpful to identify weaknesses and strengths in any part of the performance.
Step #4 Analyze the Cause of Deviation
A detailed study of each and every part of performance guides in finding out the causes of deviation in actual performance. These causes gained against the standard defined might be from the external environment, internal environment, defects in planning, organizational defects, and others.
External factors involve a change in price, government rules, the strategy of competitors, intense competition, etc. Internal factors involve a shortage of raw materials, inappropriate production facilities, outdated technology, lack of coordination, etc. Organizational defects involve lack of job description, lack of span of control, the imbalance between authority and responsibility, etc.
Therefore, it is necessary to detect where the problem lies so that corrective action can be taken at the right time.
#5 Taking Remedial or Corrective Action
The last step of the control process is to take corrective action so that actual performance should come to the level of standard performance. The corrective action is taken when the actual performance is not in accordance with the standard performance. The management must have a strategy to remove limitations in the internal environment through modification and to adjust itself with the external environment.
External factors are beyond the control of the management. It has to develop a strategy to minimize losses due to the change in the external environment. Generally, remedial action might involve modification and improvement in the planning, the betterment of the internal environment, organizational restructuring, placement of the right person to the right job, and betterment in directing techniques.
The above-mentioned steps are the important parts of the control process. The study of these steps is essential to make controlling efficient, effective, and productive.