After the management has completed the task of recruiting the right candidates for the right job, training and development start according to the requirement. The employees are on their job given. The next step is controlling. Controlling is a process of controlling the difference between planned output and actual output.
The right performance of the process of control is very critical to the success of any organization. Controlling is most important as it ensures the effective and efficient utilization of a company's resources so that it achieves the planned or desired goals.
According to Brech, “Controlling is the systematic approach which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to future needs.”
There are many controlling techniques that are commonly referred to as controlling aids.
These controlling types are categorized into two -
A Traditional type of control
A Modern type of control
Under this, we have about a few types of traditional techniques of control as mentioned below:
This is one of the oldest techniques of controlling. As the name suggests, the supervisor directly observes the worker at his workplace during the working hours. This technique is very useful in small scale business or industries. A lot of issues can be sorted as the supervisor gets first-hand information about what's happening and what needs to be done. The worker is also aware that he or she is being watched, hence works with diligence and alertness.
Maintaining a profit and loss account along with the balance sheet makes it possible to control the issues that can be the reason for the decline in losses. The management can compare the profits and losses with the previous year’s accounts or with a similar organization, and take necessary steps to increase the profits of the organization.
A budget is a planning and controlling strategy. Budgetary control is a process of planning and preparing estimated figures for the organization for future needs and then comparing it with actual performance. This comparison will draw variances between the two and help the organization to take corrective actions at the proper time. Hence, the budget is a means and budgetary control is the result.
This process is a simple control tool where the management analyzes their break-even point to take corrective measures to improve their future performances. Break-even point is a point where there is no loss, no profit. For instance, if the business sells 5000 products, it will be at a break-even point. So anything below is loss and anything above this is a profit.
The reward of risk-taking is profit on investment. If the return on investment is high, then the organization is doing well and vice-versa. This tool of controlling helps the management to compare the ROI with the previous year’s profit and with other similar organizations and help them to take corrective measures.
Evaluating management and its performance is a management audit. It meticulously and critically examines and analyzes the complete management process starting from planning, organization, directing, accounting, controlling, etc. Management audit is conducted by a team of experts who collect data from different departments, processes, and members of the organization. The data is thoroughly analyzed and conclusions are drawn about the management’s performance and efficiency.
The USA in the late 50s developed two important methods that were Program evaluation and review technique(PERT) and Critical path method(CPM). Under these techniques, the tasks or jobs are divided into various parts. Then, critical tasks are identified. Focus is given to the completion of these critical tasks. So, controlling the time to complete these critical tasks will minimize the total cost and total time taken to do the complete job.
It is as simple as it sounds. Self-control is a tool best suited for entrepreneurs who set their own targets, own deadlines, evaluate their performance and quality, and then take correction steps to improve their performances. This tool is required and exercised by the top-level managers too as they do not like external control. This tool must be encouraged to be exercised by everyone in the company. This will help the management to control each and everything in a better manner. The cost and time taken to control through other ways can be minimized if self-control is conducted effectively by each member of the organization.
Various departments of an organization are converted into responsibility centres. The head of each centre is responsible for accomplishing the target of the centre.
Though modern techniques are used to improve the effectiveness of controlling processes even today these traditional techniques are used extensively by the organization.
1. What are the types of control?
There are 3 main types of internal controls: preventive, detective and corrective. These are some of the procedures executed by the organizations that help in preventing the problem and protect the assets of the company.
2. What are the major kinds of budget to plan and control the organizational activity?
There are two major kinds of the budget that help in planning and controlling organizational activities, that are:
Operational budgets: These budgets co-relate with the operational activities that involve revenues and expenses. The operating budget takes care of the planned operations in the organization. It decides exactly what service of the products or quantities of the products the organization is supposed to create and the resources that will be used to create them.
These are further classified into expense budgets, revenue budgets, profit budgets.
Financial budgets: The work of operating budgets are facilitated by financial budgets. The types of financial budgets include capital expenditure budgets, cash budgets, balance sheet budget.