Organisational Change (Module 5) 175

and
Cntnoling

MODULE Controllingand
5 Organisational Change

5.1. CONTROLLING

51.1. Meaning and Definition

of Control/ Controlling
is considered to be an indispensable function of manageinent in an
Controlling
incomplete without proper
ranisation. The process of management remains likewise planning.
controlling. It seeks to make sure that all other processes and conducted to
properly executed
organising, statfing, and directing areControlling is a function of management
arhieve the same organisational goal. when
measure the performances and take the remedial actions
that strives to
controlling is a process which facilitates
needed. Thus, it can be concluded that
set standards.
measuring the actual performance against
that
According to Henry Fayol, "Control of an undertaking consists of seeing
has been
accordance with the plan which
everything is being carried out in been
the orders which have been given, and the principles which have rectified
adopted, may be
down. Its object is to point out mistakes in order that they
laid
and prevented from recurring".
EFL Breach, "Control is checking current performance against
According to plans, with a view to ensure adequate
pre-determined standards contained in the
progress and satisfactory performance".
Management control is the process by
According to Robert N. Anthony, obtained and used effectively and
assure that resources are
wich managers organisation's objectives".
eiticiently in the accomplishment of an
"Controlling is the measuring and
According to H. Koontz and 0'Donnell, plans".
ensure that events conform to
tOecting of activities of subordinates to

5.1.2. Importance of Control

mportance of control is as follows: allows the
Aids in Achieving Organisational Goals: Controlling and the
3 the difference between the
outcomes
management to ensure that
aids in achieving the intended
benchmark is minimum. This in turn,
organisational goals.
Resources: lmplementation of plans involves
9 Enables Optimum Utilisation of material, and money. Resources are alwavs
ualisation of resources, i.e., men, or
be judiciously utilised, without wastage
lmited and scarce and hence have toeffective control mechanisms.,
Under-utilisation. This is ensured by
176
Principles of Managemem
3) Ensures Discipline and Order: Controlling introduces
attentiveness amongst employees that they are under contro] a
This ensures that all are performing as per expectation and evaluaio of
and Sense
plan.
4) Improves Coordination: Controlling also
workingaas per the
involves
activities in the organisation. It seeks to ensure that all
coordination, for the achievement of common goals the integratiounitsn of all the
procedures.
5) Helps in Better Planning:
according to planswork in
Planning and
same coin, each complementing the other. controlling are two sides of
Controlling
feedback about the implementation of plans, which in provides the
plan in a better way, so that the
be avoided in future.
turn
helps
observed pitfalls and identified to real-tims e
manager
6) Makes Employees
errors could
tomonitor and observeAccountable: Control function enables the
the performance of
duties assigned to them. This helps in employees regarding the roles and
fixing accountability and holding them management
responsible for their performance of success or failure.
7) Motivates Employees: Controlling enables
employees. It helps in identifying
are then felicitated and performers monitoring the performance of
and achievers. Such
employees rewarded by the organisation. This emploves
to perform as they motivates
and their efforts would be know that their performances would be noticed
8) acknowledged.
Facilitates Delegation: Controlling helps
capabilities and performance of their superiors to evaluate the
Superiors in delegating responsibility to subordinates,
them.
which allows the
management more efficient, as Delegation always makes
superiors now have more time
important tasks and duties, for other
5.1.3. Steps of Control Process:
Control System Designing an Effective
Following are the distinctive stages involved in a control
figure 5.1: process, shown in
Set Performance
Standards Measure
Performance Compare Determine
Deviation

Meets
Standards
Standards

Take
Corrective No Yes

Reinforce and
Continue Work
Figure 5.1: Steps of
Control Process
 177
|Organisational
and Change(Module 5)
onrolling
in terms
Setting.Performance Standards: Allthe firms chase certain targets standard
of
revenues, creativity, customer satisfaction, personnel, etc. A The
helpsin maintainng the expectancy level of performance for the targes. of
standards are the targets which help in reaching the required levels
benchmarks for
performance, encourage for better performance, and provide
for any
measuring the actual performance levels. Astandard can be fixed
activitysuch as finance, operational, legal, charitable, etc.
measured on
is not solely
Itisimportant to note here, that the performancetaken
he basis of employees, but the measurement is as a combined output
f man and machine. Thus, four important factors are
highlighted below
against which the performance is measured are:
i) Quantity,
i) Quality,
ii) Required Time, and
iv) Cost Incurred.

is to evaluate the level of

) Measuring Performance: The next stage
the number of units
performance. For example, a manager can calculate amount of money
produced, total time taken, the days of absenteeism,
earned.

data are
Following are the three sources from where the performance
attained:
reports are the
i) Written Reports: Computerised reports and on-screen and its abilities, data
types of written report. With the help of computer
can be gathered and analysed easily. This technology can provide
enormous benefits to the managers in presenting written reports.
provided
i) Oral Reports: Oral reports are the presentations or summary provides
person
by the managers to their superiors. For example, a salesachieved,
targets number
a daily summary to his superior regarding the of
of calls made in a day, challenges faced by him, and the reaction
customers regarding a product or service.
11) Personal Observation: In direct observation, the person goes to the
place where the work is going on and observes what exactly is
happening. It is possible for the manager to personally observe methods
adopted by the personnel, their non-verbal language and the usual
operations. Though, the direçt observation depicts the exact picture of the
situation, yet it is not free from the loopholes. The major disadvantages
are that it does not give precise quantitative data, and generally, the
information obtained lacks objectivity and is superficial as well.
3) Comparing Performance with the Standards: The third stage is a
COmparison of performance against the standard. This process involves
ASSessment of performance by the manager. n some ases, small variations
from the benchmark are tolerable while in afew cases, even minor variation
Can cause disaster.
178
Pinci
production procedures.
ples of Managemens
For example, in case of most of the a
going in the either direction (e.g., a hole which is drilled is eithermajor
too big) is undesirable. In some other activities, a
direction (like falling sales or the lack of customers variation goitonogVasinmrialaiolnoneor
as rising sales above the target level, or production beyond thesaditirsefactcitoionn)(such
considered to be a major issue, while, variations in the other is

theexpecmatantiaognerss
of the customers) reveal a good sign. Thus, it is important for
playing the role of asupervisor, to carefully analyse and assess the
As per the management principle of exception, it is possible outcomes,. to have
control ifthe exceptions to the standard performance or
expected performance can be identified and determined. deviations frombeter
the
important for the management to direct their attention towards it is Therefore,
exceptions. For example, the sales manager may investigate
behind unexpectedly declining sales of a product in the the
one region, while
handlirenasOns
g
increasing sales for the same product in other region.
4) Taking Corrective Actions: The final stage of the
corrective actions when major variations are foundcontrol process is takine
in the outcomes Th
stage ascertains adjustment of operations for achievement of the
outcomes or continuing further if possible. If any major variation is desired
found
the manager takes strong and immediate actions to
The choice of the remedial measures deal with the challenges
relies on the nature of the issue. The
remedial measures can be anything such as changes in the
(in case sales are below the desired marketing strategy
a newtechnique to inspect the levels), introducing rules and principles,
manufactured items, or altering a process.
5.1.4. Tools for Controlling
Many tools have been developed to control the
list is very long, and it is difficult to activities in management. The
tools are: describe them all. Some of the important

5.1.4.1. Financial Control

The evaluation of the actual and concrete outcomes of a
various standpoints at different intervals
the formulated business plan and of time and thencompany, Viewou
comparing it agaiof
the business is referred to as the long-, medium- and short-termnecessitate objectives
use of adjustment and control financial control.
the
Such evaluations
procedures
plan is properly followed and that it can besoadjusted
that it is during
made sure
timesthat the Dus
of iregularities
or anomalies.

Financial control is exercised through the

following:
1) Control through Costing: Controlling cost is another method of controlling.
It strives to minimise the wastages and establishes predetermined costs. Costs
of an Standardsand
organisation can be controlled
targets and comparing the actual through setting against
up the them. After

comparison, if deviations are performance corrective

significant, then
Imeasures

are taken. necessary

 1Organisational Change (Module 5) 179
and
Arolling

Budgeting
and Budgetary Control: "Budgeting" refers to preparation asof
budgets
and procedures for various organisation such
activities of an
predetermined
planning, coordination, controlling, etc. Abudget is a
statement for a stipulated duration of time, which helps in
prepared
budgetary
comparingthe actual result with the scheduled one. The term different
contro>" denotes the process of establishing the budgets for
In
operationsand then comparing the actual outcome against the budgets.
due to
terms,
budgets,the expected performance is mentioned in monetary control is
whichit makes the process of comparison easier. Budgetary planning and
continuousin nature, which helps in on-going processes, i.e., and
decision-1making processes of an organisation. The budget is atechnique
budgetary control is the outcome.
refers to the on-
Operational Audit or Internal Audit: Internal audit firm by its
process of evaluating the accounts and operations of a
going regarding the organisation
Own internal experts. It provides feedbacks processes and operations of a
uide performance, as it includes all the purpose, which is to inspect
husiness. Internal authority follows adefinite organisational staffs.
are met by the
and analyse whether the set standards employees cautious as well as
This in turn, helps in kceping the
motivated.
Companies Act, 1956, it is
External Audit Control: According toconduct an audit of their financial
mandatory for thejoint-stock companiesto accountant. This audit seeks to
status and accounts by an cxternal chartered in
stakeholders and other parties are kept
ensure that the interests of practices and none of the illegal
consideration during various management The shareholders jointly
organisation.
practices are being conducted in the
yearly general meeting. It is important
appoint the external auditor during the profit and loss accounts as well as the
the
for the auditor to authenticate that actual
real and accurate picture of the
balance sheet of the firm depict the
financial situation of the firm.
widely used
Profit and Loss Control: This is one of the simplest and most
) organisational processes. It helps in
techniques to control the overall
to which the firm enjoys success
determining the revenue and expenses due
failures. It helps in predetermining the revenues, expenditures,
Or may face management and its operations get
and profit, with the help of which
expenditure and gains of a
Influenced. It involves comparing the sales,
with that of the other divisions. The departments or products are
dlvision held
managers ofvarious departments are
cOnsidered as the cost centres. The deviation is found, the corrective
Tesponsible for their performances. If any
actions are taken immediately.
Analysis: Another important technique for controlling is break
Dreak-Even
decision-making and control. It helps in making
eVen analysis, which aids in because of following reasons:
beneficial
mportant managerial decisions. It is sales needed to avoid loss or
fr
the lowest amount of
It identifies
attaining the target gains.
 180

n) Analysing the break-even point provides valuable

Principles ManageMen
the cost and resources which aids in'make or
buy' idecisions.
nnformation
iii) It provides information regarding the market
products which in turn helps in creating or
iv) It helps in comparing the budgeted and actual
potential
deleting
product Iines.
regaring
aand proi t of
performances.
V) Break-even analysis finds out the sales mix, channels of
sales promotion techniques.
7) Financial Statement Analysis: Financial distribuion,
statements play an important
in controlling the business operations. Some of
and

statements are profit and loss statement, balance sheet.the important role
These statements are used in comparing the
with other over different periods of time. performance
income
of an Statementfinan,cial
These
analysing the ratios that highlight the financial status ofstatements
an
also organihelsaption
in
5.1.4.2. Information Control organisation.
Secret and confidential information are
organisation. It is very essential to control and possessed by generally e
databases. It has emerged out to be a serious issue handle the use of
There are two ways through which the
1) As an area or domain of the
in the domain of
information is handled by the control.
computer
2) As a means to control organisation which should be controlled.managers:
and
different activities of the organisation.
The performance and
activities of the organisation can be
monitored by the managers when they measured and
correct quantity and at the correct time. have the correct information in the
performanceso and the happenings within Information
their
regarding the standards of
managers that they can measure the actualresponsibility area is required by
against the set standards.
Information performance by
is also required to comparing it
acceptability levels of the in performance. At last, ascertain the
required for the formulation deviations
of suitable action plans. That is information is
very crucial. The why information is
considered as the management
source from information system of an
which managers receive organisation Can b
information. Therefore, the system most or ie
offered regularly to the managers isthrough which the required informatou
System or MIS. MIS known as the Management Information
can be operated manually or through Computers.
However, computer-based MIS
applications are used by most of the
and order. nowadays. "System' in MIS encompasses purpose, arrangement
organisations
Overall, managers receive and
processed data) and not just data (whichinformation
is the ravw(which is analysedfacts)
and unprocessed
through MIS.
News regarding breach in
every other day. According toinformation
astudy, lastsecurity
year alone
can bewitnessed areportable
heard and see data
data
breach inside organisations, as acknowledged by 85 per cent of security and
privacy professionals. Information should be protected through extensiveand
secure control mechanisms since it is crucial for all the activities and operations
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ORGANISATIONAL CHANGE
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e ones, affected
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 1) within 5.2.3. 186
(external)
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Social the businesses
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187
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Organisational
1) 5.2.4. 188
recognise
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change stagesnon-productive
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arrepeated till so or take 189
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5) 4) 3) 1)
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change in
toaffairs ext e rnal rooted reasons, iEvery changes but
market, they spur basic team about
are and and get the its are 191
to is to in and toalso
 2) Levels 192
take 3) 1)5.2.6. Revolutionary16) 15) 14) 13)
xtensive groups. Group organisation.
the individual responsibility,
thinking ar e
Individual transformation.
dramatic,
different disruptive. isopposed small IMOnotonous
the work The of
groups recommended
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decisions
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obstacle groups. Thereultimatelyassessflows. organisation. become
to Evolutionary aandChange: Recreational e authority
thdelegation
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workplace events
job employces.
idea a
are various Before organisational
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e
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