Describe first four steps in Process of Controlling.
Answer – Controlling ensures that activities conform to plans by comparing actual performance with standards and correcting significant deviations. It is goal oriented, pervasive, continuous and closely linked with planning. It looks backward at completed performance and forward by improving future action.
- Set performance standards: use clear, measurable and attainable targets where possible; qualitative standards are also needed for matters such as goodwill.
- Measure actual performance: obtain reliable information through observation, reports, samples or measurement.
- Compare performance with standards: identify the difference, or deviation.
- Analyse deviations: determine causes and significance. Critical-point control concentrates on key result areas; management by exception draws attention to deviations beyond acceptable limits.
- Take corrective action: remove the cause, for example through training, repairs, revised methods or better resource allocation. Revise unrealistic standards when justified.
Production standards can concern quantity and quality; marketing standards include sales; personnel standards include absenteeism and disputes; financial standards include capital expenditure and cash flows.