Revision Notes for Class 12 Business Studies Chapter 8 Controlling
Here we are providing Revision Notes for Class 12 Business Studies Chapter 8 Controlling. These are the important points related to the chapter. Students should remember these points.
The function of controlling is indispensable for achieving organisational goals. The function of controlling is performed by every manager in an organisation but its nature and scope varies at each level.
CONCEPT OF CONTROLLING
Controlling means ensuring that activities in an organisation are performed as per the plans.
FEATURES OF CONTROLLING
The features of controlling function of management or outline below:
(a) It is a goal-oriented function.
(b) It is a pervasive function as it is carried out in the organisations of varying types and sizes.
(c) It is considered to be a forward looking function, as it helps to improve future performance by providing valuable feedback for reviewing and revising the standards.
(d) It is considered to be a backward looking function, as it is like the post mortem of the past activities to ascertain the deviations if any.
(ie) It is not the last function of management, as it brings back the management cycle back to the planning function.
IMPORTANCE OF CONTROLLING
The importance of controlling function is described below:
(a) Accomplishing organisational goals: The controlling function facilitates constant monitoring of the actual performance in comparison to the predetermined standards. It brings to light the deviations, if any, and indicates corrective action.
(b) Judging accuracy of standards: A good control system enables management to validate whether the standards set are correct and objective.
(c) Making efficient use of resources: By implementing a good control system a manager is able to curb the wastage and spoilage of resources because each action is performed in accordance with fixed standards.
(d) Improving employee motivation: An effective control system motivates the employees by informing them well in advance about (a) the level of performance expected from them and (b) what are the standards of performance on the basis of which their performance will be evaluated.
(e) Ensuring order and discipline: The regular monitoring of the employees performance seeks to establish a sense of order and discipline in the organisation.
(f) Facilitating coordination in action: Effective controlling creates coordination because the efforts of each department and employee is governed by well-defined standards, which serves as a basis for integrating one task with another.
RELATIONSHIP BETWEEN PLANNING AND CONTROLLING
The various aspects which give a picture of the relationship between controlling and planning is described below:
(a) Planning and controlling are inseparable twins of management. Planning without controlling is meaningless and controlling without planning is blind.
(b) Planning is prescriptive where as controlling is evaluative.
(c) Planning is looking ahead and controlling is looking back.
(d) Planning precedes controlling and controlling succeeds planning.
Thus, planning and controlling are interrelated and reinforce each other because:
❖ Planning is based on facts and makes controlling process easier and adds to the effectiveness.
❖ Controlling also adds to the effectiveness of planning process by providing valuable feedback based on past experiences.
STEPS INVOLVED IN THE CONTROLLING PROCESS
The various steps involved in the process of controlling are described below:
(i) Setting performance standards: The first step in the controlling process involves setting standards in clear, specific and measurable terms.
(ii) Measurement of actual performance: The next step relates to the measurement of actual performance. Depending upon the nature of work various techniques for measurement of performance like personal observation, sample checking, performance reports, etc. may be used.
(iii) Comparison of actual performance with standards: This step involves comparison of actual performance with the standard and the deviations are noted.
(iv) Analysing deviations: Once the deviations are identified it is important to analyse them through:
I. Critical point control II. Management by exception
(iz) Taking corrective action: This is the final step involved in the controlling process. When the deviations go beyond the acceptable range corrective action is required.