7.9: Controlling — The Fourth Function of Management

Controlling involves ensuring that performance does not deviate from standards. You can think of the control function as a five-step process. (Refer to Figure 7.9.)

1. Set the standards by which performance will be measured. Performance standards are often stated in monetary terms, such as revenue, costs, or profits, but may also be stated in other terms, such as units produced, number of defective products, or levels of quality or customer service.
2. Measure the performance.
3. Compare the actual performance against the standards and identify any deviations from the standards.
4. Determine the reasons for the deviations.
5. Take corrective action if needed.

Performance can be measured in several ways. Some measures of performance include financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree.

The managerial function of controlling should not be confused with control in the behavioural or manipulative sense. This function does not imply that managers should attempt to control or manipulate the personalities, values, attitudes, or emotions of their subordinates. Instead, this function of management concerns the manager’s role in taking necessary actions to ensure that the work-related activities of subordinates are consistent with and contribute toward the accomplishment of organizational and departmental objectives.

Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives. Controlling also requires a clear understanding of where responsibility for deviations from standards lies. Two traditional control techniques are budget and performance audits. An audit involves an examination and verification of records and supporting documents. A budget audit provides information about where the organization is with respect to what was planned or budgeted for, whereas a performance audit might try to determine whether the figures reported are a reflection of actual performance. Although controlling is often thought of in terms of financial criteria, managers must also control production and operations processes, procedures for the delivery of services, compliance with company policies, and many other activities within the organization.

The Importance of Controls

Project controls provide information that allows managers to make informed and timely decisions that prevent project risks. A manager must keep things on track and within scope throughout the project. Without a project control process, it’s difficult to answer important questions about the project, which may impact or complicate project success.

Some reasons why projects might go off track without project controls include:^[1]

• People: Without project controls, questions may arise about who is available to work on a project, who is in charge of which roles and responsibilities, and who should take ownership of specific tasks during project development.
• Quality: The project control process ensures that expectations are met, items in every project phase are complete, and everything works along the way.
• Cost: When the project cost isn’t controlled, unforeseen fees may occur because of changes from stakeholders or miscalculations during project planning.
• Time: Monitoring project time prevents issues like schedule delays, shifting priorities, and clashes in resources, which can lead to unsatisfactory project results.

Through the control process, managers can catch up when things don’t go as planned and quickly correct course to keep the project on track.

Benchmarking

Benchmarking could be considered a specialized kind of control activity. Rather than controlling a particular aspect of performance (say, defects for a specific product), benchmarking aims to improve a firm’s overall performance. The process of benchmarking involves comparisons to other organizations’ practices and processes with the objective of learning and improvement in both efficiency and effectiveness.

Benchmarking exercises can be conducted in a number of ways:

• Organizations often monitor publicly available information to keep tabs on the competition. Annual reports, news articles, and other sources are monitored closely in order to stay aware of the latest developments. In academia, universities and colleges often use published ranking tables to see how their programs compare on student satisfaction, salaries of graduates, and other important criteria.
• Organizations may also work directly with companies in unrelated industries in order to compare those functions of the business which are similar. A manufacturer of aircraft would not likely have a great deal in common with a company making engineered plastics, yet both have common functions such as accounting, finance, information technology, and human resources. Companies can exchange ideas that help each other improve efficiency, and often at a very low cost to either.
• In order to compare more directly with the competition without relying solely on publicly available data, companies may enter into benchmarking consortia in which an outside consultant would collect key data from all participants, anonymize it, and then share the results with all participants. Companies can then gauge how they compare to others in the industry without revealing their own performance to others.

Media Attributions

“Figure 7.9: Management Function: Control Process” is reused from The control process, © 2022 by Kindred Grey, licensed CC BY 4.0..

Image descriptions

Figure 7.9

A numbered list of the Control Process. From 1 to 5 the steps are: 1) Set the standard by which the performance will be measured. 2) Measure performance. 3) Compare actual performance with the standard and identify any deviations from the standard. 4) Determine the reasons for the deviation. 5) Take corrective action if needed.

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