Following steps are involved in controlling process:
Step 1 : Setting Performance Standards:
i. The first step in the controlling process is setting up of performance standards.
ii. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organization strives to work.
iii. Standards can be set in both quantitative as well as qualitative terms.
Step 2: Measurement of Actual Performance:
i. Once performance standards are set, the next step is measurement of actual performance.
ii. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc.
Step 3: Comparing Actual Performance with Standards:
i. This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
ii. Comparison becomes easier when standards are set in quantitative terms. iii. For instance, performance of a worker in terms of units produced in a week can be easily measured against the standard output for the week.
Step 4: Analysing Deviations:
i. Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations.
ii. 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 manger in this regard.
a. Critical Point Control:
- It is neither economical nor easy to keep a check on each and every activity in an organization.
- Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organization. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organization suffers.
b. Management by Exception:
- Management by exception, which is often referred to as control by exception, is an important principal of management control based on the belief that an attempt to control everything results in controlling nothing.
- Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management.
Step 5: Taking Corrective Action:
i. The final step in the controlling process is taking corrective action. No corrective action is required when the deviation are within acceptable limits.
ii. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.
iii. Corrective action might involve training of employees if the production target could not be met.
