Through controlling function we measure actual performance against predetermined standards. Controlling helps to check errors and to take corrective action to improve performance. Controlling means to look back while planning is to look ahead.
Process of Controlling
1. Establishing standards:
The first step in controlling process is to establish standards. Standards are the plans which tell us what should be done. Usually, there are two types of standards, measurable and non-measurable. Measurable standards are those that can be measured such as cost, time, profit etc. Non-measurable standards are those that cannot be measured such as goodwill, market image, quality of products, moral etc. By establishment of these standards the process of controlling becomes easy because they provide basis for measuring actual performance.
2. Measuring performance:
The second step in controlling process is to measure performance. In this step actual performance is measured against predetermined standards. Measuring of performance may be easy or difficult dependent upon standards. If standards are of tangible nature, such as production units, sales, profit etc. they can be easily measured. While measuring of intangible standards such as goodwill, moral, behavior etc. become difficult because they cannot be measured in numerical terms.
3. Compare actual performance with standards:
It is an important step to compare actual performance with standards in order to find out deviations. Deviations are the difference between actual performance and standards established. The manager must find out those deviations that can adversely affect the business and as well reasons for such deviations. If there is any minor deviation, it may be ignored but a major deviation must be noted for taking corrective action.
4. Correction of deviations:
After finding out major deviations among standards and actual performance, the manager must take corrective action to improve performance. By taking corrective action, the management will get benefit of matching actual performance with standards in future. The corrective action must be taken promptly, otherwise it can be more difficult to correct deviations.