Control In Management

Control in management is a crucial goal-oriented function in a business that ensures that operations are carried out per the set standards, and if not, taking the necessary steps so that the results are in line with the expectations. The controlling process is common at every level of management.

This function ensures that all managers monitor and assess their subordinates' performance, thus allowing them to take corrective measures. This, in turn, helps organizations prevent losses. Moreover, control ensures the efficient and effective utilization of the available resources to achieve the predetermined goals. There are three levels of control in management — tactical, operational, and strategic control.

• The control in management definition refers to a forward-looking process in a business that involves taking corrective measures to eliminate the gap between the actual performance and the expected result.
• This function has multiple benefits. For example, it motivates employees, helps in efficiently utilizing the resources, and fulfilling the organizational goals.
• There are three levels of control in management. They are operational, tactical, and strategic control.
• Control techniques in management are of two types — traditional and modern. Traditional techniques include break-even analysis, budgeting, personal observation, etc. On the other hand, ROI and management audits are examples of modern techniques.

Control in management definition refers to a process that involves monitoring and comparing the actual performance against the set standards and taking corrective actions when necessary. Besides facilitating coordination in the organization, the systematic exercise helps businesses plan.

The process of control in management consists of four steps. Let us look at them in detail.

1. Setting the standards: Standards refer to the targets a business plans to achieve to fulfill the organizational goals. These standards are of two types — quantitative and qualitative. The former is measurable, for example, expenditure, profit, cost, output, etc. On the other hand, the latter is immeasurable in monetary terms. A few examples are managers' performance, an employee's attitude toward a specific concern, etc.
2. Gauging the actual performance: The business measures employees' performance in the next step. This way, it becomes easier for organizations to identify deviations from their established standards. That said, one must remember that with the increasing management levels, measuring actual performance becomes challenging for companies.
3. Comparing the actual and standard performance: Identifying the deviations from the established standards is crucial for companies to assess their performance. In this step, managers must figure out the cause and extent of the deviation. Without identifying the gaps in performance, an organization cannot take corrective measures.
4. Taking corrective actions: Lastly, companies take the steps necessary to eliminate deviations from the set standards.

Thus, the process of control in management regulates an organization's activities to ensure that the actual performance conforms to the set standards. When companies have an effective control system, the managers can steer clear of circumstances that lead to financial losses.

Control is of three types in management. Let us look at them in detail:

1. Operational Control: This deals with the implementation of operational plans. Besides regulating the business's daily results, it is concerned with schedules, budgets, and particular outputs. Moreover, it also involves taking corrective measures. This is common in an organization's lower-level management.
2. Strategic Control: Companies use it to control the development and implementation of strategic plans. Typically, top-level management is involved in the strategic control process.
3. Tactical Control: This level involves making tactical plans to achieve a long-term goal. Typically, middle managers implement these plans at all department levels.

The features of the control function are as follows:

• Regular or Continuous Process: This is a continuous process, and a company's management team must keep track of all activities to ensure that the business is following the right path.
• Dynamic Process: The control process is flexible, not static, and the system remains effective as long as it changes according to the business's requirements.
• Action-Oriented: The process involves eliminating deviations from the set standards through corrective actions.
• Forward-Looking Process: Controlling is a forward-looking concept, as businesses can control future happenings, not the past. It aims to minimize losses, wastage, and gaps between the actual performance and the desired result.
• Coordinate-Integrated Mechanism: It is a coordinated-integrated mechanism; the system stresses the data accumulated for one reason may differ from those having another purpose. Such data must be made compatible with each other. On account of this, the process is a single system. However, one might want to think of it as multiple interlocking sub-systems.

There are two types of control techniques in management. Let us look at them.

A) Traditional

The traditional techniques are as follows:

#1 - Budgeting

A budget is a statement reflecting an organization's future expenditures, profits, and earnings. It is an estimate of a company's future financial position. Units sold, units produced, and unit labor and material costs are a few of a budget's crucial components. Budgeting control involves comparing the actual performance with the budgeted or planned performance. Some of the different types of budgets are cash budget, sales budget, and production budget.

#2 - Personal Observation

This is the easiest way for managers to control organizational activities. Managers of a business can observe the work in progress to accumulate information as first-hand information. Then, if they spot any performance gap, they correct it instantly by taking the necessary action.

#3 - Break-Even Analysis

Managers utilize this method to study the relationship between volume, profits, and costs. This helps them understand the possible losses or profits at different activity levels while analyzing the organization's overall position.

#4 - Statistical Reports

This refers to analyzing data and reports presented to an organization's managers to give them an idea regarding the business's performance in different areas. The information is presented in tables, graphs, charts, etc., enabling managers to compare with previous periods' performance easily.

Modern

Now, let us look at some modern control techniques used in organizations.

#1 - Return On Investment

Also called ROI, it is a useful technique that helps determine whether the business has been able to utilize the available capital efficiently. Besides the overall organizational performance, one can gauge the performance of individual divisions or departments using this technique.

#2 - Ratio Analysis

Companies use ratio analysis to measure the organization's performance. The different types of ratios commonly used are profitability ratios, solvency ratios, liquidity ratios, and turnover ratios.

#3 - Responsibility Accounting

This is an accounting system where the involvement of different sections, departments, and divisions is set up as 'Responsibility Centers'. These centers can be of various types, like revenue and cost centers. Every center's head is responsible for achieving the center's predetermined objective.

#4 - Management Audit

This is the systematic appraisal of an organization's management team based on performance. It aims to assess the efficiency of the management. Moreover, it plays a crucial role in improving future performance.

Let us look at this control in management example to understand the concept better.

Suppose Organization ABC focuses on the control process more than any other management function to ensure efficient allocation of resources and coordination in the team. All superiors across different management levels assign work to the subordinates and then measure their performance.

Jim and Mike can know about the actions and efforts of every employee by measuring the performance of every employee and the business's owners. Then, by comparing employees' performance with the desired results, they can decide which employees deserve a bonus, promotion, or hike.

The following are some benefits of control in management:

• This function ensures efficient allocation and utilization of the available resources to achieve the predetermined organizational objectives.
• It instills order and discipline in the business.
• Managers of an organization can delegate tasks to subordinates. This ensures the completion of the routine chores on time.
• It boosts employees' morale and motivates them.
• This function helps assess the accuracy of the set standards. In addition, it minimizes the gap between the actual performance and the desired result.

Another crucial benefit of control in management is that it ensures all departments within the organization work in sync.

The process has certain limitations. Let's find out what they are. 

• Organizations cannot control external factors, such as technological changes,  changes in government policy, etc.
• Employees may resist control. This reduces the effectiveness of the control process.
• The control process is costly as organizations must invest significantly to install this system. Moreover, it requires a lot of effort and time as managers must observe their subordinates' performance.
• Setting qualitative standards can be challenging for organizations.

This article has been a guide to what Is Control In Management & its meaning. Here, we explain its process, techniques, importance, characteristics, limitations, and examples. You may also find some useful articles here -

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