Page 290 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes

Task Discuss how would you control the overhead costs of your organisation
when you know that they are high only on papers because they are being
incurred by your company to warm the pocket of your accountant?

16.3 Steps in Control Process

There are three basic steps in a control process:

1. Establishing standards
2. Measuring and comparing actual results against standards
3. Taking corrective action.

16.3.1 Establishing Standards

The first step in the control process is to establish standards against which results can be measured.
The standards the managers desire to obtain in each key area should be defined as far as possible
in quantitative terms. Standards expressed in general terms should be avoided. Standards need
to be flexible in order to adapt to changing conditions. The standard should emphasis the
achievement of results more than the conformity to rules and methods. If they do not do so, then
people will start giving more importance to rules and methods than to the final results.
While setting the standards, the following points have to be borne in mind:
1. The standards must be clear and intelligible. If the standards are clear and are understood
by the persons concerned, they themselves will be able to check their performance.

2. Standards should be accurate, precise, acceptable and workable.
3. Standards are used as the criteria or benchmarks by which performance is measured in the
control process. It should not be either too high or too low. They should be realistic and
attainable.
4. Standards should be flexible i.e., capable of being changed when the circumstances
require so.

16.3.2 Measuring and Comparing Actual Results against Standards

The second step in the control process is to measure the performance and compare it with the
predetermined standards. Measurement of performance can be done by personal observation,
by reports, charts and statements. If the control system is well organised, quick comparison of
these with the standard figure is quite possible. This will reveal variations.
After the measurement of the actual performance, the actual performance should be compared
with the standards fixed quickly. A quick comparison of actual performance with the standard
performance is possible, if the control system is well organised. While comparing the actual
performance with the standards fixed, the manager has to find out not only the extent of variations
but also the causes of variations. This is necessary, because some of the variations may be
unimportant, while others may be important and need immediate corrective action by the
manager.

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