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Management controlling is one of the functions of management, without which it is impossible to realize the rest functions, such as: planning, organization, leadership and motivation. Thus, planning must always take into account the real possibilities and the changing conditions of the functioning and development of the company. Monitoring is intended to provide a correct estimate of the real situation and thus create the preconditions for an adjustment in the planned development indicators, as individual units, and the whole company. Therefore, control is one of the principal instruments of policy and decision-making, ensuring the normal functioning of the company and achieving its goals: long term and in terms of operational management.
Controlling is a process ensuring that the organization fulfills its objectives. The controlling function of management has four basic steps, such as setting objectives, observing and measuring performance, comparing results and corrective action (David, 1999).
Developing or establishing standards and criteria is the first step of controlling that shows how close the monitoring and planning are. Standards are specific objectives, the progress against which can be measured. These goals arise out of the planning process. All standards are used for controlling should be selected from the multiple objectives and strategies of the organization. Goals that can be used as standards for controlling are characterized by a time frame and specific criteria against which it is possible to estimate the degree of performance. For this step it is important to define the performance indicators that accurately define what must be obtained in order the goal to be achieved.
Observing and Measuring Performance
The second step consists of measuring actual performance. Supervisors of organizations collect information to measure actual performance and determine variation from the standard. Performance can be measured with the help of personal observation, statistical reports, and oral reports. Watching the employees working gives lots of information, extensive coverage, and the ability to make conclusions while reading between the lines. Employees can wrongly understand supervisor’s walking around as mistrust.
Comparison of the results achieved with established standards is the third step of controlling. At this step the supervisor should determine how achieved results correspond to expectations. It is necessary to determine how acceptable or safe the detected deviations from the standards are. Activities undertaken at this step of controlling are the most important. These activities include four stages.
The first stage is to define the scope of permissible deviation, and the exclusion principle. The second stage is to measure the results. It is the most difficult and costly element of control that allows determining how the company managed to meet established standards. To be effective, a system of measurement should correspond to the activity that is subject of controlling. The third stage is the transfer and dissemination of information, which plays a key role in ensuring the effectiveness of controlling. Fourth, final stage is to assess the results. It is the supervisor, who determines the degree of relevance and importance of the received information (Sherman, 2006).
Taking the necessary corrective action is the fourth step of controlling function, coming into force after the supervisor making an assessment of the situation. At this step, the supervisor selects one of three behaviors: do nothing, eliminate the deviation or revise the standards. Here is a brief explanation of each decision.
Do nothing. The main purpose of controlling is to achieve a situation in the organization operate in accordance with the plan. If the controlling system shows that some elements of the organization work well, there is a need to continue to measure performance, repeating the cycle of controlling.
Eliminate the deviation. The pursued adjustment should focus on eliminating the causes of the deviation. The step of measurements should show the scale of deviation from the standard and a clear indication of its cause. Unfortunately it is impossible in real life, since most of the work in the organization is the result of combined efforts of groups of people. The meaning of corrections is to understand the causes of deviation and to return the organization to the proper course of action.
Revise the standards. Not all significant deviations from the standards should be addressed. Sometimes the standards themselves may be unrealistic because they are based on plans, and plans are only predictions of the future. Therefore, in revising the plans, standards also should be revised.
Summarizing, there is a need to repeat that controlling is one of the most important management functions in the organization. Leaders begin to implement the function of control from the very moment they formulated the goals and objectives and created the organization. Control is very important if supervisor wants the organization to function effectively. Chaos starts when there is no controlling, and to combine the activities of any groups becomes impossible. It is also important that goals, plans and structure of the organization determine its activity by distributing its efforts one way or another and directing execution of work. Control, thus, is an integral part of the very essence of any organization.
David, F.R. (1999). Strategic Management, Concepts and Cases. 12th edition. P. 45-47.
Sherman, H., Rowley, D.J., & Armandi, B.R. (2006). Strategic Management: an Organization Change Approach. pp. 489-491.