Chapter 12 » Process of Controlling | Business Studies – XII

1. Establishing or setting standards– the first step of controlling is to set standard against which results can be measured. For setting standard, targeted results must be identified and it should be quantitative as far as possible. Quantitative term can make controlling effective. Standards are expressed in general term as

a.       Cost should be reduced

b.      Orders should be executed

c.       Overhead must be reduced

d.      All orders must be executed in 2 days or so on.

Standards can be expressed in qualitative as well as qualitative terms. The quantitative are physical standard, cost and revenue standards, capital standards etc. the qualitative standards are related to employees morale, motivation, relations between superior and subordinates and public etc. quantitative standard should be flexible.

2. Measuring actual performance– in this step, actual performance of employees, group or units is measure. A manager should examine actual performance on the basis of given standard which id definite set of work assigned to definite employees different techniques can be used to measure the actual performance. In convenience of manager, he develops better information system to measure the actual performance. Actual performance measurement system should be a regular and constant basis so that it can provide reliable and regular feedback to the management.

3. Comparing actual performance with standard– after measuring actual performance, those results should be compared with standard set in the first step to know if the exp results are achieved or not. For that, good system of comparison between performance and standard should be maintained. This comparison should reveal it the actual performance is equal, lower or higher than that of predetermined standards. If lower standards are achieved the manager should find out the deviation and take corrective action.

4.  Taking corrective actions– after comparing actual performance with the standard, if any deviation is detected, and then corrective actions should be taken and initiated. If performance does not meet the standard, it is duty of manager to take corrective action and further help the organization to overcome any difficulty. The corrective action may be related to

a.       Revision of standard if they seem to be unattainable

b.      Revision of strategies, policies and procedures

c.       Additional employees training

d.      Greater motivation

e.      Change in the existing technique of direction

f.        Product design improvement