Controlling

Making sure work goes to plan: the importance and limits of controlling, its five steps, deviations, critical point control, management by exception and corrective action.

Key ideas

Controlling ensures that activities are performed as planned; it is needed at every level and looks both backward and forward.
It helps achieve goals, judge whether standards are right, use resources well, motivate employees, keep order and discipline, and coordinate action.
Its limits: some standards are hard to measure, outside factors cannot be controlled, employees may resist, and it can be costly.
Its steps: set performance standards, measure actual performance, compare it with the standards, analyse deviations, take corrective action.
Critical point control watches the key result areas; management by exception reports only deviations beyond a set limit.
Planning and controlling are inseparable twins: planning without control is meaningless, and control without planning is blind.

Remember

Deviation	actual − standard
Percentage deviation	deviation ÷ standard × 100 (always divide by the standard)
Favourable?	sales or output above the standard: favourable; below it: unfavourable
Report it? (management by exception)	only if the percentage deviation is above the permitted limit
Corrective action	defective material: change supplier; old machines: repair or replace; untrained workers: train them; unrealistic standards: revise them

Watch out

Dividing the deviation by the actual figure instead of by the standard.
Reporting every small deviation: management by exception reports only the significant ones.
Taking corrective action before measuring and comparing performance.

Worked example

Put these steps of the controlling process in order: (a) measuring actual performance (b) taking corrective action (c) setting performance standards

Working: setting performance standards → measuring actual performance → taking corrective action

Answer: c, a, b