Controlling Jeffrey L. Cuartero

Chapter 9
Controlling
Prepared by:
Jeffrey L. Cuartero
Controlling
o What is Controlling?
o Importance of Controlling
o Steps in Controll Process
o Types of Control
o Components of Organizational Control System
o Strategical Control Systems
o Identifying Control Process

Controlling
What is Controlling?
Controlling refers to the “process of ascertaining whether

organizational objectives have been achieved; if not, why not;
and determining what activities should then be taken to achieve
objectives better in the future. Controlling completes the cycle
of management functions. Objectives and goals that are set at
the planning stage are verified as to achievement or completion
at any given point in the organizing and implementing stages.
When expectations are not met at scheduled dates, corrective
measures are usually undertaken.
Importance of Controlling
When controlling is properly implemented, it will help the
organization achieve its goal in the most efficient and effective
manner possible.
Deviations, mistakes, and shortcomings happen inevitably.
When they occur in the daily operations, they contribute to
unnecessary which increase of producing goods and services.
Proper control measures minimize the ill effects of such
negative occurrences. An effective enventory control system,
for instance, minimize, if not totally eliminates losses in
inventory.
Steps in the Control Process
The control process consists of four (4) steps, namely :
1. Establishing performance objectives and standards.
2. Measuring actual performance.
3. Comparing actual performance to objectives and standards,

and
4. Taking necessary action based on the results of the

comparisons.
Establishing Performance Objectives and Standards
In controlling, what was to be achieved must first be
determined. Examples of such objectives and standards are the
following:
1. Sales targets- which are expressed in quantity or monetary
terms.
2. Production targets- which are expressed in quantity or quality.
3. Worker attendance- which are expressed in terms of rate of
absences;
4. Safety record- which are expressed in number of accidents for
given periods;
5. Supplies used- which are expressed in quantity or monetary
terms for given periods.
Measuring Actual Performance
There is a need to measure actual performance so that
when shortcomings occur, adjustments could be made. The
adjustments will depend on the actual findings.
The measuring tools will differ from organization to
organization, as each have their own unique objectives. Some
firms, for instance, will use annual growth rate standard basis,
while other firms will use some other tools like the market
share approach and position in the industry.
Comparing Actual Performance to Objectives and
Standards
Once actual performance has been determined, this will be
compared with what organization seeks to achieve. Actual
production output, for instance, will be compared with the target
output.
Taking Necessary Action
The purpose of comparing actual performance with the
desired result is to provide management with the opportunity to
take corrective action when necessary.
1. Hire additional personnel

2. Use more equipment
3. Require overtime
Steps in Control Process
Establish Performance
`
Objectives and Standards
Measure Actual
Performance
Do nothing
Does Actual
Performance Match
the Standards? Yes
No
Take Corrective
Action
`
Types of Control
Control consists of three distinct types, namely:
1. Feed forward control
2. Concurrent control
3. Feedback control
Feed forward Control
When management anticipates problems and prevents their
occurrences, the type of control measure undertaken is called
feed forward control. This type of control provides the
assurance that the required human and nonhuman resources are
in place before operations begin.
Concurrent Control
When operations are already ongoing and activities to detect
variances are made, concurrent control is said to be
undertaken. It is always possible that deviations from standards
will happen in the production process. When such deviations
occur, adjustments are made to ensure compliance with
requirements. Information on the adjustments are also
necessary inputs in the pre-operation phase.
Feedback Control
When information gathered about a completed activity, and
in order that evaluation and steps for improvement are derived,
feedback control is undertaken. Corrective actions aimed at
improving future are features of feedback control.
Feedback control validates objectives and standards. If
accomplishments consists only of a percentage of standard
requirements, the standard may be too high or inappropriate.
Component of Organizational Control
System
Organizational control systems consists of the following:
1. Strategic plan
2. The long-range financial plan
3. the operating budget
4. Performance appraisals
5. Statistical reports
6. Policies and procedures
Strategic Plans
A strategic plan provides the basic control mechanism for
the organization. When there are indications that activities do
not facilitate the accomplishment of strategic goals, these
activities are either set aside, modified or expanded. These
corrective measures are made possible with the adoption of
strategic plans.
The Long-Range Financial Plan
The planning horizon differs from company to company.
Most firms will be satisfied with one year. Engineering firms,
will require longer term financial plans. This is because of the
long head times needed for capital projects. An example is the
engineering firm assigned to construct the Light Rail Transit
(LRT) within three years. As such, the three-year financial will
be very useful.
The Operating Budget
An operating budget indicates the expenditures,
revenues, or profits planned for some future period
regarding operations. The figures appearing in the budget
are used as standard measurements for performance.
Performance Appraisals
Performance appraisals measures employee performance.
As such, it provides employees with a guide on how to do their
jobs better in the future. Performance appraisals also function
as effective checks on new policies and programs. For
example, if a new equipment has been acquired for the use of
an employee, it would be useful to find out if it had a positive
effect on his performance.
Statistical Reports
Statistical Reports pertain to those that contain
data on various developments within the firm.
Policies and Procedures
Policies refer to the “ the framework within which the
objectives must be pursued”. A procedures is a “ plan that
describes the exact series of actions to be taken in a given
situations”.
Strategic Control System
To be able to assure the accomplishment of the strategic
objectives of the company, strategic control systems
become necessary. These systems consists of the
following :
1. Financial analysis
2. Financial ratio analysis
Financial Analysis
The success of most organizations depend heavily on its
financial performance. It is just fitting that certain
measurements of financial performance be made so that
whatever deviations from standards are found out, corrective
actions may be introduced.
Financial Ratio Analysis
Financial ratio analysis is a more elaborate approach used
in controlling activities. Under this method, one account
appearing in the financial statement is paired with another to
constitute a ratio. The result will be compared with a required
norm which is usually related to what other companies in the
industry have achieved, or what the company has achieved in
the past
Identifying Control Problems
Recognition the need for the control is one thing, actually
implementing it is another. When operations become complex,
the engineer manager must consider useful steps in controlling.
Kreitner mentions three approaches.
1. Executive reality check
2. Comprehensive internal audit
3. General checklist of symptoms of inadequate control

Executive Reality Check
Employees at the frontline often complains that
management imposes certain requirements that are not
realistic. In a certain state college, for instance, requests for
purchase of classroom materials ad supplies take last priority.
This is irregular because requests of such kind must be of the
highest priority considering that the organization is an
educational institution.
Comprehensive Internal Audit
An internal audit is one undertaken to determine the
efficiency and affectivity of the activities of an organization.
Among the many aspects of operations within the
organizational, a small activity that is not done right may
continue to be unnoticed until is snowballs into a full blown
problem.
Symptoms of Inadequate Control
If a comprehensive internal audit cannot be availed of for
some reason, the use of a checklist for symptoms of inadequate
control may be used.
The End

Controlling Jeffrey L. Cuartero

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Controlling Jeffrey L. Cuartero

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Chapter 9

o Steps in Controll Process

o Components of Organizational Control System

o Strategical Control Systems

o Identifying Control Process

Controlling refers to the “process of ascertaining whether

2. Measuring actual performance.

3. Comparing actual performance to objectives and standards,

4. Taking necessary action based on the results of the

1. Hire additional personnel

1. Feed forward control

2. Comprehensive internal audit

3. General checklist of symptoms of inadequate control

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