Business Studies I Chapter 8 Controlling

According to Philip Kotler, “Control is the process of taking steps to bring actual results and desired results closer together”.

Meaning: It refers to bring actual results closer to the desired results.

Importance:
(i) Accomplishing Organisational Goals: The controlling process is implemented to take care of the plans. With the help of controlling, deviations are immediately detected and corrective action is taken. Therefore, the difference between the expected results and the actual results is reduced to the minimum. In this way, controlling is helpful in achieving the goals.

(ii) Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.

(iii) Making Efficient Use of Resources: Controlling makes it possible to use human and physical resources efficiently. Under controlling, it is ensured that no employee deliberately delays his work performance. In the same way, wastage in all the physical resources is checked.

(iv) Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

(v) Ensuring Order and Discipline: Controlling ensures order and discipline. With its implementation, all the undesirable activities like theft, corruption, delay in work and uncooperative attitude are checked. As a result, discipline is established in the organisation.

Importance:

(i) Accomplishing Organisational Goals: The controlling process is implemented to take care of the plans. With the help of controlling, deviations are immediately detected and corrective action is taken. Therefore, the difference between the expected results and the actual results is reduced to the minimum. In this way, controlling is helpful in achieving the goals.

(ii) Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.

(iii) Making Efficient Use of Resources: Controlling makes it possible to use human and physical resources efficiently. Under controlling, it is ensured that no employee deliberately delays his work performance. In the same way, wastage in all the physical resources is checked.

(iv) Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

(v) Ensuring Order and Discipline: Controlling ensures order and discipline. With its implementation, all the undesirable activities like theft, corruption, delay in work and uncooperative attitude are checked. As a result, discipline is established in the organisation.
(vi) Facilitating Coordination in Action: Coordination among all the departments of the organisation is necessary in order to achieve the organisational objectives successfully. All the departments of the organisation are interdependent. For example, the supply of orders by the sales department depends on the production of goods by the production department. Through the medium of controlling, an effort is made to find out whether the production is being carried out in accordance with the orders received. If not, the causes of deviation are found out and corrective action is initiated and hence, coordination between both the departments is established.

(i) Achieving Coordination: Coordination among all the departments of the organisation is necessary in order to achieve the organisational objectives successfully. All the departments of the organisation are interdependent. For example, the supply of orders by the sales department depends on the production of goods by the production department. Through the medium of controlling an effort is made to find out whether the production is being carried out in accordance with the orders received. If not, the causes of deviation are found out and corrective action is initiated and hence, coordination between both the departments is established.

(ii) Better Planning: The controlling function helps in formulation of future plans in the light of the problems that were identified and hence, helps in better planning for the future period.

Yes, I do agree with this statement. Following are the reasons of it:
(i) Accomplishing Organisational Goals: The controlling process is implemented to take care of the plans. With the help of controlling, deviations are immediately detected and corrective action is taken. Therefore, the difference between the expected results and the actual results is reduced to the minimum. In this way, controlling is helpful in achieving the goals.

(ii) Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.

(iii) Making Efficient Use of Resources: Controlling makes it possible to use human and physical resources efficiently. Under controlling, it is ensured that no employee deliberately delays his work performance. In the same way, wastage in all the physical resources is checked.

(iv) Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

No, I do not agree with this statement. In spite of following planning and other functions of management, controlling is must for better results. Following are the reasons of it:
(i) Accomplishing Organisational Goals: The controlling process is implemented to take care of the plans. With the help of controlling, deviations are immediately detected and corrective action is taken. Therefore, the difference between the expected results and the actual results is reduced to the minimum. In this way, controlling is helpful in achieving the goals.

(ii) Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.

(iii) Making Efficient Use of Resources: Controlling makes it possible to use human and physical resources efficiently. Under controlling, it is ensured that no employee deliberately delays his work performance. In the same way, wastage in all the physical resources is checked.

(iv) Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

(v) Ensuring Order and Discipline: Controlling ensures order and discipline. With its implementation, all the undesirable activities like theft, corruption, delay in work and uncooperative attitude are checked. As a result, discipline is established in the organisation.

(i) Accomplishing Organisational Goals: The controlling process is implemented to take care of the plans. With the help of controlling, deviations are immediately detected and corrective action is taken. Therefore, the difference between the expected results and the actual results is reduced to the minimum. In this way, controlling is helpful in achieving the goals.

(ii) Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.

(iii) Making Efficient Use of Resources: Controlling makes it possible to use human and physical resources efficiently. Under controlling, it is ensured that no employee deliberately delays his work performance. In the same way, wastage in all the physical resources is checked.

(iv) Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

The controlling is a pervasive function of the management as it is performed in all organisations (business and non-business) and at all managerial levels. It is that function of management under which every manager at every level assures that the actual progress is in conformity with the plans.

Judging Accuracy of Standards: While performing the function of controlling, a manager compares the actual work performance with the standards. He tries to find out whether the laid down standards are not more or less than the general standards. In case of need, they are redefined.
Improving Employee Motivation: Through the medium of controlling, an effort is made to motivate the employees. The implementation of controlling makes all the employees to work with complete dedication because they know that their work performance will be evaluated and if the progress report is satisfactory, they will have their identity in the organisation.

It is controlling.

Controlling function.

Controlling is a continuous activity as it involves constant review of actual performance for taking timely corrective action.

The relationship between planning and control can be divided into the following two parts:

1. Interdependence between Planning and Controlling.
2. Difference between Planning and Controlling.

Interdependence: 
One of the famous management experts had said that, “Planning is meaningless without controlling and controlling is blind without planning.”
Planning provides the base for controlling. It means that planning sets the objectives, decide the future course of action for the firm. It provides the basic framework for all other activities of management including controlling. In the same way, controlling process cannot be performed, until and unless we have planned something in advance. If the standards are not determined, there is no justification left for controlling.

Difference:
Planning and Controlling both are opposite looking functions because plans are always made for future, whereas controlling is a backward-looking function in which at the completion of process, manager tries to find whether it has been done according to plan or not. Planning is the first function of management. All the other function follows it, whereas controlling is the last function, which follows all the other functions of management.

Difference between Planning and Controlling: It is correct that planning and controlling are incomplete and ineffective without each other and hence, dependent on each other. But it does not mean that both are not independent. The following points are helpful to clarify their independent character:

(a) Planning is Looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determines the future course of action for the achievement of objectives laid down. On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not. It is thus clear that planning looks ahead and controlling looks backward or in the past.

This difference between planning and control can be stated in the reverse position also. It means planning is looking back whereas controlling is looking ahead. Planning is called looking back because the plans are formulated on the basis of the happenings of the past or on the basis of experience. On the other hand, controlling evaluates the work done in the past but under it corrective action is taken in respect of future. Hence, there should not be any hesitation in saying that planning looks backward while controlling looks ahead.

(b) Planning is the First Function and Controlling is the Last Function of Managerial Process: The managerial process moves in a definite sequence like planning, organising, staffing, directing, and controlling. This sequence shows that planning is the first step in the managerial process and controlling happens to be the last step.

Controlling is called a process of looking back because under it the actual results are compared with the expected results. On this basis, this is true that controlling means looking back. But it will be wrong to say that controlling does not include looking forward. Under controlling, when the actual results are compared with the expected results to find out deviations and corrective action is initiated, this corrective action is taken with reference to future. On this basis, it can be said that controlling looks forward also.

Under controlling, actual results are compared with the expected results and deviations are find out. Then corrective action is initiated to improve the performance. The corrective action is taken with reference to future on the basis of past experience. On this basis, it can be said that controlling looks forward.

Controlling is called a process of looking back as under it actual results are compared with the standards decided in the past. After that, a corrective action is initiated. In other words, if the standards are not decided in the past, controlling is not at all possible. Hence, it is true that ‘controlling is backward looking’.

Because in the absence of controlling nobody will take it seriously to work according to the plans and hence, the plans will fail.

Because in the absence of planning nothing will be there to monitor.

Because plans are always made for future.

Because under it, a manager tries to find out whether the work has been done according to the standards or not.

Because the planning is done on the basis of the happening of the past.

Because under it corrective action is taken for future.

Following are the steps of controlling process:

(i) Setting Performance Standards: The first step of controlling is to set performance standards. Standards are those criteria on the basis of which the actual performance is measured. Only standards tell individuals and departments about their destination. A manager evaluates the actual performance on the basis of these standards and finds out the deviations.

(ii) Measurement of Actual Performance: The second step in the controlling process is the measurement of actual performance. The measurement of actual performance is done on the basis of predetermined standards. The measurement of actual performance tells the manager whether the work has been done according to the plan or not.

(iii) Comparison of Actual Performance with Standards: At this step, actual performance is compared with the standards and deviations are found out.

(iv) Analysing Deviations: At this stage, deviations are analysed. In the analysis of deviations, following things are studied:

(a) Is standard being attained? If yes, nothing is needed to be done. The work will continue as usual, the actual performance will be measured and remaining process will be completed. Contrary to this, if the standard could not be achieved, answer to the next question will have to be found.

(b) Is deviation acceptable? If the actual performance is below the standard, but the deviation is acceptable (meaning thereby that the deviation is not so serious that it needs corrective action) nothing is to be done and the work will go on as usual. Contrary to this, if the deviation is not acceptable, answer to the next question will have to be found.

(c) Is standard acceptable? If the standard is acceptable which means that nothing is wrong with it, the cause of deviation will be located. After this, corrective action will be taken and the work will progress. Contrary to this, if the standard already fixed is found to be wrong, answer to the next question will have to be found.

(d) Revising the standard: If the standard is found to be wrong, it will have to be refixed. Thus, a new standard will be set, actual performance will be measured and process will continue.

(v) Taking Corrective Action: The last but the most important step in the controlling process is taking corrective action. By now the deviations and their causes are known. Now is the turn of removing the hurdles in the actual work progress. The purpose of corrective action is to bring the actual work progress to the level of expected progress.

Standards Used in Various Functional Areas

Following facts should be kept in mind while setting standards:

(i) Standards should be easily obtainable.

(ii) Standards should be measurable.

(iii) Standards should be flexible so that changes can be introduced according to the changing situations.

(iv) Standards should be simple and clear so that the people for whom they are laid down should understand them easily.

(a) It is controlling.

(b) Following are the steps of controlling process:

(i) Setting Performance Standards: The first step of controlling is to set performance standards. A manager evaluates the actual performance on the basis of these standards and finds out the deviations.

(ii) Measurement of Actual Performance: The second step in the controlling process is the measurement of actual performance. The measurement of actual performance tells the manager whether the work has been done according to the plan or not.

(iii) Comparison of Actual Performance with Standards: At this step, actual performance is compared with the standards and deviations are found out.

(iv) Analysing Deviations: At this stage, deviations are analysed.

There are chiefly four basis for setting standards: (i) Quantity, (ii) Quality, (iii) Time, and (iv) Cost.

Quantity Standards are related to production, sales, stock, etc. Quality Standards are related to raw material finished goods, customers’ service and employees’ morale. Time Standards refer to the time consumed in the production of goods. Similarly, Cost Standards refer to labour, material and other expenses.

Deviations can be of two types — (i) Negative Deviation and (ii) Positive Deviation. In the controlling process, it is important to know the causes of negative deviation but it is not less important to know about the causes of positive deviations. Positive deviation means that the actual performance is more than the standard work. If the information received regarding the actual performance being more than the standard, the corrective action can help in improving the efficiency in future.

This statement is absolutely right. Here, the ‘principle of critical point control’ is applicable.

According to this principle, those points or activities should be determined in the very outset which have an important role to play in ensuring the actual work progress in accordance with the plans. These are known as Key Result Areas (KRAs). It means that the managers should not be involved in small insignificant activities but should pay more attention to those activities where unfavourable results can cause heavy loss to the enterprise.

'Principle of critical-point control’: It refers to that concept of management which holds only important activities instead of all activities, the management should focus its attention on.

‘Principle of management by exception’: It refers to that principle of organizational control which holds that only significant deviations (i.e., exceptions) should be brought to the top management attention.

Cause of deviations:

1. Human causes: The efficiency of the employees is the chief cause among the human cause.
2. Uncertain Events: It includes strikes lockouts, shortage of raw material, entry of many competitors in the market, etc.

Corrective Action:

1. Corrective action should be taken only after a careful inquiry into the causes of deviations.
2. If the wrong standards had been determined, they should be modified.

They are the standards which are shown with the help of figures, e.g., production of 10 units by a labourer in a day.

(i) Quality (ii) Quantity.

In case of negative deviation.

(i) Zero Deviation (ii) Positive Deviation.

 By taking care of important deviations both time and efforts are saved.

Deviation refers to the difference between actual performance and standard work.

(i) Setting performance standards and (ii) Taking corrective action.

While analysing deviations, it is important to consider the ‘deviation tolerance limit.’

Focus point for a manager while controlling should be the ‘Key Result Areas’.

(i) Increase in the morale of the employees

(ii) Improving the quality of production.

(i) Fear and frustration/disappointment amongst employees.

(ii) Increase in the employee/labour turnover rate.

(i) Production of inferior quality goods.
(ii) Exploitation of consumers.

(i) To show respect to elderly employees.

(ii) Should not use ugly language/bad words.

(iii) Without enquiring, scolding is bad/not to be done.

(i) Wastage of time.

(ii) Union not to make unnecessary pressure on officials.

(iii) Threatening to strike on small matters is unhealthy practice.

If the firm choose to diversify from a textile company to a steel manufacturing plant, its fixed capital requirement increase because the investment in fixed capital of a  steel manufacturing company  is higher than that of a textile company.

(i) The concepts involved here are staffing and controlling.
(ii) Steps required to revamp controlling process are:
(a) Finding the deviations and extend of deviations by comparing actual output with the standards.
(b) Taking corrective measure.
(iii) The company wants to communicate to the society the value of providing good quality products.

Controlling is a systematic process which involves the following steps.
Step 1: Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the benchmark against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms.
Step 2: Measurement of Actual Performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc.
Step 3: Comparing Actual Performance with Standards: This step involves comparison of actual performance with the standard. It helps to find out the deviations if any between the actual performance and standard fixed.
Step 4: Analysing deviations: After comparing the actual performance with standards, the deviations are noted. This step involves thorough analysis of deviations to find out the reason behind the deviation. Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.
Step 5: Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Controlling is an important function of management. Without proper control, the effort of management becomes meaningless. A good control system helps an organisation in the following ways:
(i) Accomplishing organisational goals: A good controlling system helps to measure the on-going performance and find out deviations if any at the earliest. Thus it helps the organisation to accomplish its goals.
(ii) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system monitors changes taking place in the organisation and in the environment and helps to review and revise the standards according to the need.
(iii) Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.
(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.
(v) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

When Deviations go beyond acceptable range in important areas, the matter has to get immediate attention of the management and corrective action must be taken on a priority basis.

Controlling is a systematic process which involves the following steps.

Step 1: Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the benchmark against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms.

Step 2: Measurement of Actual Performance: Once performance standards are set, the next step is the measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc.

Step 3: Comparing Actual Performance with Standards: This step involves comparison of actual performance with the standard. It helps to find out the deviations if any between the actual performance and standard fixed.

Step 4: Analysing deviations: After comparing the actual performance with standards, the deviations are noted. This step involves a thorough analysis of deviations to find out the reason behind the deviation. Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.

Step 5: Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Controlling is an important function of management. Without proper control, the effort of management becomes meaningless. A good control system helps an organisation in the following ways:
(i) Accomplishing organisational goals: A good controlling system helps to measure the on-going performance and find out deviations if any at the earliest. Thus it helps the organisation to accomplish its goals.

(ii) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system monitors changes taking place in the organisation and in the environment and helps to review and revise the standards according to the need.

(iii) Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.

(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.

(v) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

Planning and controlling are two complementary functions of management. Planning is a function of setting standards which serve as the basis of controlling. Once a plan becomes operational, controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to plans. Thus, planning without controlling is meaningless.
In the same way controlling is blind without planning. If the standards are not set in advance, managers have nothing to control. When there is no plan, there is no basis of controlling. Thus planning and controlling are closely related.

Planning and controlling also have some reciprocal relationship. And they are:
1) Planning is prescriptive whereas, controlling is evaluative: Planning is basically an intellectual process involving thinking and analysis to discover and prescribe an appropriate course of action for achieving objectives. Controlling, on the other hand, checks whether decisions have been translated into desired action.

2) Planning is looking ahead while controlling is looking back: Plans are prepared for future and are based on forecasts about future conditions. Therefore, planning involves looking ahead and is called a forward-looking function. On the contrary, controlling is like a postmortem of past activities to find out deviations from the standards. In that sense, controlling is a backward-looking function.

Control is an indispensable function of management. Without controlling, planning has no meaning. A good controlling system has an important place in the organisation.

(i) Accomplishing organisational goals: A controlling function sets objectives, measure its progress and take corrective measures if there is any deviation. Thus it helps management to accomplish organisational goals.

(ii) Judging accuracy of standards: A good control system helps the management to check the accuracy of the standards set. It keeps in track the recent developments and changes in the business environment and revise the standard according to the need of the organisation.

(iii) Making efficient use of resources: Controlling helps the management to make efficient use of the resources without making wastages. It keeps in track the progress of plan by comparing it regularly with the standards and the deviations are noted simultaneously. Thus it helps to avoid wastages and use the materials wisely and judiciously.

(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.

(v) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.
(vi) Facilitating coordination in action: Controlling provides direction to all activities and efforts for achieving organisational goals. Each department and employee is governed by predetermined standards which are well coordinated with one another. This ensures that overall organisational objectives are accomplished.

Controlling function cannot be confined to a particular stage and it has no end anywhere. It is a continuous process of establishing standards, measuring performance, comparing, fixing deviations and giving feedback for better performance.

While analyzing deviations, it is important to determine the acceptable range of deviations. Deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. 

Budgetary control is defined as a technique of managerial control in which budgets relating to the responsibilities of executives are established and continuous comparison of actual with standards is made. This comparison reveals the necessary actions to be taken so that organisational objectives are accomplished.

Advantages of budgetary control includes:
1) Budgeting focuses on specific and time-bound targets and thus, helps in attainment of organisational objectives.
2) Budgeting is a source of motivation to the employees who know the standards against which their performance will be appraised and thus, enables them to perform better.
3) Budgeting helps in optimum utilisation of resources by allocating them according to the requirements of different departments.

The steps followed by harsh is the management of actual performance which comes under the controlling function of management. 

Techniques of scientific management used by Sandhya are as follows:
(i) Standardisation and simplification of Work: Standardisation of work implies setting up standards or benchmarks for any work or activity. It refers to a process wherein standards are set for any production activity. The standard is then used as a benchmark for evaluating the tasks done.
 In simplification, unnecessary elements in production or design, size etc. which add to the cost are eliminated. This technique aims at full and efficient utilisation of resources, through reducing inventories and unnecessary elements and increasing the turnover.

(ii)Time Study: According to this technique, there must be a standard time limit for the completion of a task. with regard to the time taken in completing a task, a standard limit is set which helps in deciding the number of employees required in completing a task.

1. Quality.
2. Quantity.

Because in the absence of controlling nobody will take it seriously to work according to the plans and hence, the plans will fail.

In case of negative deviation.

1. Zero Deviation.
2. Positive Deviation.

Focus point for a manager While Controlling should be the ‘key result areas’.

1. Increase in the morale of the employees.
2. Improving the quality of production.

1. Production of inferior quality goods.
2. Exploitation of consumers.

By taking care of important deviations both time and efforts are saved.

Deviation refers to the difference between actual performance and standard work.

1. Setting performance standards and
2. Taking corrective action.

The second step in the process of controlling is the measurement of actual performance. The measurements of actual performance is done on the basis of predetermined standards . The measurement of actual performance tells the manager whether the work has been done according to the plan or not.
Performance should be measured in an objective and reliable manner which includes personal observation, sample checking. Performance should be measured in same terms in which standards have been established, this will facilitate comparison.

1. Controlling.
2. Two importance of controlling are as under:
   1. Controlling helps in achieving goals: Controlling helps to achieve the goals of the organization by actual work performance with the standards.
   2. Controlling increases efficiency: Controlling increases efficiency through optimum utilization of all the resources, such as Man, Machine, Material and money.

1. Controlling.
2. Two importance of controlling are as under:
   1. Controlling helps in achieving goals: Controlling helps to achieve the goals of the organization by actual work performance with the standards.
   2. Controlling increases efficiency: Controlling increases efficiency through optimum utilization of all the resources, such as Man, Machine, Material and Money.

1. Third step of controlling process is actual performance with standards.
2. Good health and Reasonable price.

1. Planning and controlling.
2. Plans are prepared for future and involve looking ahead. On the contrary, controlling is like a postmortem of past activities to find out deviations from the standards. In that sense controlling is a backward-looking function. However, it should be understood that planning is guided by past experiences and the corrective action initiated by control function.

1. Controlling is a goal-oriented function: Controlling ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals.
2. Pervasive Function: Controlling function of a manager is a pervasive function. It is a primary function of every manager. Managers at all levels of management- top, middle and lower-need to perform controlling functions to keep a control over activities in their areas. 
3. Controlling is a continuous activity: It is continuous activity as it involves constant review of actual performance for taking timely corrective action.

1. Organizing and controlling.
2. Concepts of identified functions:
   1. Concept-related to organizing: Under it, second step of organizing process i.e., departmentalization is involved.
   2. Concept-related to Controlling: Concepts which are related to controlling are:
      1. Critical point control: It is the concept of management which holds only important activities instead of all activities the management should focus its attention on. 
      2. Management by Exception: It refers to that principle of organizational control which holds that only significant deviations (i.e., exceptions) should be brought to the top management attention.

1. First step of the controlling process i.e., setting of performance standards, has been discussed.
2. Two standards are:
   1. Main standards of marketing department.
      • Sales Volume
      • Sales Expenses.
   2. Main standards of production department.
      • Quality
      • Quantity
3. Effects of both standards are:
   1. Effect of easily achievable standards:
      • In this situation, employees turn lazy (idle).
   2. Effect of those standards which are achieved with difficulty:
      • In this situation employees are worried.
4. Reasonable.