Principles of Management - Controlling.pptx

Principles of Management

1. Principles of Management Lecture 9 Controlling Faculty of Engineering Civil Engineering Department

2. Contents Introduction Controlling Characteristics of Control Process of Control Methods of Control 2

3. 3 Introduction

4. 4 Controlling Management involves the performance of four functions- planning, organizing , leading and controlling. Planning results in the framing of objectives and laying down of targets. To achieve the objectives, an organization is designed , people are employed to carry out various tasks, They are directed to perform their respective jobs. The actual performance is then checked from time to time to make sure that what is performed is according to the plans and targets . This is the controlling function.

5. 5 Controlling Control as a function of management refers to evaluation of actual performance of work against planned or standard performance and taking corrective action if necessary . Planning and control are closely related and depend upon each other. Controlling depends upon planning because planning provides the targets or standards against which actual performance is compared . Controlling on the other hand appraises planning. It brings out the shortcomings of planning and helps to improve upon the plans.

6. 6 Controlling Example . In a factory, 10 workers are required to cut steel sheets into small pieces. The working plan of the manager prescribes that each worker should cut 40 pieces in a day (240 pieces per week ). After a week the manager finds that out of 10 workers 6 were able to cut 200 pieces each whereas 4 could cut only 180 pieces each.

7. 7 Controlling Now the manager investigates to find out the causes for this deviation. He checks the physical facilities provided to workers in the work place. On being satisfied with these conditions the manager may conclude that the target of 240 pieces per week is too high for workers to achieve. Therefore he should reduce his weekly target from 240 to 200 pieces . You should note here that though control depends upon planning , it also reveals the possibility of targets being too high and beyond the reach of the workers.

8. 8 Controlling Controlling does not simply mean checking the quantity of work done but also includes checking the quality of performance, the time taken and the cost incurred . In the above example , suppose each worker could cut 240 pieces per week but in the process most of the pieces were not of the specified size or there was an excessive wastage of steel sheets . In such a case, the managers have to take steps so that the quality of work is improved , wastage is reduced and is within the prescribed limits .

9. 9 Characteristics of Control Planning and control are closely related and mutually interdependent: Planning provides the standards against which actual operations are evaluated . In the same way planning depends upon control because control indicates the shortcomings of planning. Control may be called both backward as well as forward looking: it involves checking of what has already been done. The corrective action taken is always meant for future use. It is a continuous exercise : Control should continue along with the progress of planned operations. Control is exercised at all levels of management.

10. 10 Process of Control

11. 11 Process of Control Establishment of Standards: Setting standard is the first requirement of control . Standards arise out of plans and provide the basis of comparison . There can be different types of standards. Measurement of Performance: When standards are established the next step is to measure the performance at regular intervals. Appraisal of Performance: The next step in the control process is comparison of actual performance against the standards. Comparison of actual and standard performance may lead to three possible outcomes; actual performance may be equal to, more than, or less than the standard .

12. 12 Process of Control Detecting the reasons for deviations: Before taking any corrective action , managers should try to ascertain the reasons for the occurrence of deviations . Taking corrective action: Once the causes for deviations become known , the next step is to correct these deviations. Managers should concentrate only on major deviations whereas minor deviations, i.e ., deviations within permissible range, need not be reported to the higher authorities .

13. 13 Methods of Control There are a number of techniques (methods) for controlling the operations of an enterprise. The more commonly used techniques are the following : Budgetary Control; Cost Control; Break-even Analysis;

14. 14 Methods of Control 1. Budgetary Control A budget is a plan of future operations expressed in financial or numerical terms. The budgets give a clear indication of the results to be achieved by managers in their respective functions. From time to time the budgeted and actual results are compared and if any deviation is noticed, corrective action is taken.

15. 15 Methods of Control 2. Cost Control Cost control is exercised by breaking the cost of production into its various components , e.g., cost of materials used, wages and salaries paid , expenses incurred. Managers fix cost standards in respect of every component. From time to time they compare the actual and standard costs and take action if they differ.

16. 16 Methods of Control 2. Break-even Analysis A break-even point is one which shows the level of sales at which total costs are exactly covered by the total sales revenue. At this point there is no profit or loss. So it is also called the point of ‘No profit, No loss ’. To earn profits a business firm must sell a quantity more than that indicated by the break even point.

17. 17 Thank You