CONTROL:

Control is checking current performance against predetermined standards contained in the plans, with a view to ensuring adequate progress and satisfactory performance.

CONTROL SYSTEM
A control system is necessary in any organization in which the activities of different divisions, departments, sections, and so on need to be coordinated and controlled. Most control systems are past-action-oriented and consequently are inefficient or fail. For example, there is little an employee can do today to correct the results of actions completed two weeks ago. Management control systems are basically the methods of collecting information that are used to guide and direct the behavior of staff members and management in order to achieve a company's goals. A management control system may use a variety of techniques to evaluate various areas to improve performance and productivity. A changing environment requires changes in the management control system

PURPOSES OF A MANAGEMENT CONTROL SYSTEM

Clearly communicate the organizations goals. Ensure that every manager and employee understands the specific actions required of him/her to achieve organizational goals. Communicate the results of actions across the organization. Ensure that the management control system adjusts to changes in the environment.

REQUIREMENT OF AN ADEQUATE CONTROL SYSTEM

Control system is necessary in every organization to ensure that everything is going properly. Every manager, therefore, should have an effective and adequate control system to assist him in making sure that events conform to plans. However, control does not work automatically, but it requires certain design while the basic principles

involved in designing a control system in an organization requires some specific design. In this tailoring of control system, there are certain requirements which should be kept in mind:

1. Reflecting organizational needs:

All control systems and techniques should reflect the job they are to perform. There may be several control techniques which have general applicability, such as budgeting, costing etc. However, it should not be assumed that these may be utilized in all situations. The managers should choose an appropriate tool for control which helps him in controlling actions according to plans.

2. Promptness in reporting deviations:

The success of a thermostat lies in the fact that it points the deviation promptly and takes corrective actions immediately. Similarly, an ideal control system detects deviations promptly and informs the manager concerned to take timely actions. This is done through designing good appraisal and information system.

3. Focus on future:
Control should be forward looking. Though many of the controls are instantaneous, they must focus attention as to how future actions can be conformed to plans. In fact the control system should be such that it provides aid in planning process. This is done in 2 ways; it draws situations where new planning is needed, and it provides some of the data upon which plans can be based.

4. Pointing up exceptions at critical points:

Control should point exception at critical points and suggest whether action is to be taken for deviation or not. Some deviations in the organizations have no impact while others, thought very little in quantity, may have great significance. The control on exception requires that a manager should take corrective action where there is exceptional deviation.

5. Objective:
The control should be objective, definite and determinable in a clear and positive way. The standards of measurement should be quantified as far as possible. If they are not quantifiable, such as, training effectiveness, etc., they must be determinable and verifiable.

6. Economical: Control should be economical and must be worth its costs. Economy is related, since the benefits vary with the importance of the activity, the size of the operation, the expense that might be incurred in the absence of control and the contribution the control system can make. If tailored to the job and the size of the enterprise, control is economical. 7. Simple: Control system must be simple and understandable so that all managers can use it effectively. Control techniques which are complicated such as complex mathematical formula, charts, graphs, advanced statistical methods and other techniques failed to communicate the meaning of there control data to he managers who use them.

8. Reflecting Organization Pattern: The control system should reflect organizational pattern by focusing attentions on positions in organization structure through which deviations are corrected. Organization structure, a principle vehicle for coordinating the work of people, is also a major means of maintaining control. Thus, in every area of control, it is not enough to know that things are doing wrong unless it is known where in the organization structure the deviations are occurring. This enables managers to fix up responsibility and to take corrective actions.

9. Avoid obsolescence: A good control system should be so arrange that it will avoid all obsolescence as and when they take place. All such majors and arrangements will die down as soon as they become useless and no more beneficial to organization. 10. Seek rapid feedback: Rapid feedback of a control system ensures supply of information rapidly least it should become out of date or the system becomes out of control. 11. Seek employ commitment: Control system should be so devised to seek understanding, promote participation and develop a supportive employee attitude. The design of control system should be such that it aims at motivating people by fulfilling their needs.

12. Indicate corrective action: A good control system must show the way to corrective action. An adequate system should disclose where failure is occurring, who is responsible for them, and what should be done about them. The action to be taken by manager may be either: Review of plans and goals and changes therein on the basis of this review, Or Change in the assignment of tasks, or Change in the existing techniques for direction and control, or Change in the organization structure, or Making provisions for new facilities.

TYPES OF CONTROL SYSTEM

Management can implement controls before an activity commences, while the activity is going on, or after the activity has been completed. The three respective types of control based on timing are feed forward, concurrent, and feedback. a. Feed forward Control System: Feed forward control focuses on the regulation of inputs (human, material, and financial resources that flow into the organization) to ensure that they meet the standards necessary for the transformation process. Feed forward controls are desirable because they allow management to prevent problems rather than having to cure them later. Unfortunately, these controls require timely and accurate information that is often difficult to develop. Feed forward control also is sometimes called preliminary control, pre-control, preventive control, or steering control. However, some authors use term "steering control" as separate types of control. This types of controls are designed to detect deviation some standard or goal to allow correction to be made before a particular sequence of actions is completed. Feedforward Control Feedforward control focuses on the regulation of inputs (human, material, and financial resources that flow into the organization) to ensure that they meet the standards necessary for the transformation process. Feedforward controls are desirable because they allow management to prevent problems rather than having to cure them later. Unfortunately, these controls

require timely and accurate information that is often difficult to develop. Feedforward control also is sometimes called preliminary control, pre-control, preventive control, or steering control. However, some authors use term "steering control" as separate types of control. These types of controls are designed to detect deviation some standard or goal to allow correction to be made before a particular sequence of actions is completed. b. Concurrent Control System: Concurrent control takes place while an activity is in progress. It involves the regulation of ongoing activities that are part of transformation process to ensure that they conform to organizational standards. Concurrent control is designed to ensure that employee work activities produce the correct results. Since concurrent control involves regulating ongoing tasks, it requires a through understanding of the specific tasks involved and their relationship to the desired and product. Concurrent control sometimes is called screening or yes-no control, because it often involves checkpoints at which determinations are made about whether to continue progress, take corrective action, or stop work altogether on products or services. Concurrent control takes place while an activity is in progress. It involves the regulation of ongoing activities that are part of transformation process to ensure that they conform to organizational standards. Concurrent control is designed to ensure that employee work activities produce the correct results. Since concurrent control involves regulating ongoing tasks, it requires a through understanding of the specific tasks involved and their relationship to the desired and product. Concurrent control sometimes is called screening or yes-no control, because it often involves checkpoints at which determinations are made about whether to continue progress, take corrective action, or stop work altogether on products or services. c. Feedback Control System: This type of control focuses on the outputs of the organization after transformation is complete. Sometimes called post action or output control, fulfils a number of important functions. For one thing, it often is used when feedforward and concurrent controls are not feasible or are too costly. Sometimes, feedback is the only viable type of control available. Moreover, feedback has two advantages over feedforward and concurrent control. First, feedback provides managers with meaningful information on how effective its planning effort was. If feedback indicates little variance between standard and actual performance, this is evidence that planning was generally on target. If the deviation is great, a manager can use this information when formulating

new plans to make them more effective. Second, feedback control can enhance employees motivation. The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done. But for many activities, feedback control fulfils number important functions. This type of control focuses on the outputs of the organization after transformation is complete. Sometimes called post action or output control, fulfils a number of important functions. For one thing, it often is used when feedforward and concurrent controls are not feasible or are too costly. Sometimes, feedback is the only viable type of control available. Moreover, feedback has two advantages over feedforward and concurrent control. First, feedback provides managers with meaningful information on how effective its planning effort was. If feedback indicates little variance between standard and actual performance, this is evidence that planning was generally on target. If the deviation is great, a manager can use this information when formulating new plans to make them more effective. Second, feedback control can enhance employees motivation. The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done. But for many activities, feedback control fulfils a number important functions.

THE ORGANIZATION CONTROL PROCESS

The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps: 1. Establish standards to measure performance: Within an organization's overall strategic plan, managers define goals for organizational departments in specific, operational terms that include standards of performance to compare with organizational activities. Establishing performance standards are when objectives are set during the planning process. Its standard is a guideline established as the basis for measurement. It is a precise, explicit statement of expected results from a product, service, machine, individual, or organizational unit. It is usually expressed numerically and is set for quality, quantity, and time (Plunkett, et al.). There are several sub-controls in this step: time controls, material controls, equipment controls, cost controls, and budget controls, financial controls, and operations controls (like total quality management). Time controls: It relate to deadlines and time constraints. Material controls relate to inventory and material-yield controls. Equipment controls are built into the machinery, imposed on the operator to protect the equipment or the process. Cost controls help ensure cost standards are met. Employee performance controls focus on actions and behaviors of individuals and groups of employees. Examples include absences, tardiness, accidents, quality and quantity of work.

Budgets control cost or expense related standards. They identify quantity of materials used and units to be produced. Financial controls: It facilitate achieving the organization's profit motive. One method of financial controls is budgets. Budgets allocate resources to important activities and provide supervisors with quantitative standards against which to compare resource consumption. They become control tools by pointing out deviations between the standard and actual consumption. Operations control methods assess how efficiently and effectively an organization's transformation processes create goods and services. Methods of transformation controls include Total Quality Management (TQM) statistical process control and the inventory management control. Statistical process control is the use of statistical methods and procedures to determine whether production operations are being performed correctly, to detect any deviations, and to find and eliminate their causes. A control displays the results of measurements over time and provides a visual means of determining whether a specific process is staying within predefined limits. As long as the process variables fall within the acceptable range, the system is in control. Measurements outside the limits are unacceptable or out of control. Improvements in quality eliminate common causes of variation by adjusting the system or redesigning the system. 2.Measure actual performance: Most organizations prepare formal reports of performance measurements that managers review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is a target, the organization should have a means of gathering and reporting sales data. 3.Compare performance with the standards: This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceeds, or falls short of standards. Typically, performance reports simplify such comparison by placing the performance standards for the reporting period alongside the actual performance for the same period and by computing the variancethat is, the difference between each actual amount and the associated standard.

4.Take corrective actions: Making changes as the activity is in progress is a form of corrective action. The real correction occurs when warnings raised by the forecasters or predictors are confirmed. The corrective action can be changing objectives, standards, plans, and the like, but it can also be penalizing employees when the objectives, standards, and plans are determined to be appropriate and employees have not met them. However, there usually are several alternative corrective actions that can be taken and often more than one will prove effective. The planning control system is not effective

until corrective action is taken and this action begins a new planning-control cycle. 5.Feedback: Performance information that flows back to managers is known as feedback. The object of any control system is to provide the required information through the process of feedback so that future deviations can be corrected. For this purpose, the information gathered through observation, reporting or inspection on going operations, has to be analyzed and reviewed. The more prompt such review and feedback, the effective will be the controlling, Sometimes, a forward looking control can even predict the probable deviations well in advance and therefore preventive measure can be taken without waiting for the actual negative event to occur.

CONTROL TECHNIQUES
Some of the tools and mechanisms devised by managers and others, over the years to control specific aspects of activity and performance of an enterprise or work units, and discussed here in some brief. These are: 1. Direct supervision and observation. 2. Budgetery Control. 3. Financial Statement. 4. Break-Even analysis. 5. Management Information System. 6. Management Audit. 7. Control By Return. 8. Self Control.

1. Direct supervision and observation: Much of the control in an organization or work unit is attempted through direct supervision and observation by managers and supervisors. Through personnel - on the spot overseeing and observation, managers examine whether the members of the work unit performs as per plans, schedule and work norms and whether they abide by the policies, procedures and rules. The regular presence of the manager on the work spot and his keen involvement with the progress of the work have an important controlling influence over the performance and behavior of subordinates. Personal supervision and observation is likely to inject a measure of work discipline among the subordinates apart from providing an opportunity to the supervisor to understand the dynamics and problems in a work spot, and to remove the hurdles to the smooth work flow, to the extent he can. 2. Budgetery Control: The concept of budgets was discussed as one of the techniques of planning. Here we shall look at budgets as mean of control. Budgets are useful as tool of control to the extent that they permit, monitoring, measurement, evaluation, regulation and correction of an enterprise activity along desired pre-determined directions.

The essentials elements of budgetery control are as follows: a. Translation of enterprise goals into sub goals of various operating units which are further operationalized as standards of performance, and targets of achievement (sales, market share, production, profit etc) over a short period of time say, six months or one year. b. Determination of volume of recourses required to achieve the operational goalsfunds, material, labour, equipment, time and so forth. c. Accord of general sanction for the acquisition and allocation of budgetry resources to various activity units over the budgetry periods. d. Devolution of necessory authority and fixing up the accountability for the planned performance standards and targets, among the various executives positions. e. Establishment of appropriate system of monitoring, measuring and evaluating the pace and quality of operations on a continuous basis. This includes initiation of required measures to ensure that actual performance is in conformity with budgeted performance. Deviations and variances are analyzed and remedial measures are taken to set them right.

3. Financial Statements: The annual financial statements of enterprises -a Income statement and balance sheet are powerful tools of control. They optimize the financial dimension of enterprise operations at periodic intervals of time. The Income statement summarize the relations between revenue and expenses of the enterprise operations during a specified period with the balance sheet is a position statement of the financial status of the enterprise at the end of the specified period. Financial statements permit management to undertake the exercise of ratio analysis. Ratio analysis could be a handy tool to understand key aspects of enterprise health, profitability, liquidity, solvency and so on - at particular point of time over a period of time. Ratio analysis can also be used for inter-firm comparison to assess the position of an enterprise in relation to other comparable enterprises in the industry. 4. Break-Even analysis: Also called cost volume profit analysis, break-even analysis is a control to size up the behavior of costs, revenues and profits at various levels of activity. It enables management to understand the amount of profit that can be expected at various volumes of operations, the appropriate volume of operations needed to obtain a target level of profit, and the impact level of changes in product prices and costs on the volume of operations and profitability. Simple break-even graphs can be prepared on a rough basis by using the available or projected data of fixed and variable costs and sales volumes of the enterprise to arrive at the break even point. The point at which the total revenues is equal to total cost. It is a profit no loss point. More complex break even analysis can be undertaken with the help of computers to project how small changes in unit prices, target profits and levels of activity influence one another. Break-even analysis is adopted asa tool of profit planning. It is thus a technique of both planning and control.

5. Management Information System: Management information system is defined as an assemblage of facilities and personal for collecting, processing, storing, retrieving and transmitting information that is required by one or more managers in the performance of their functions. Mangers at top, middle and supervisory levels need information on a continuous or period basis on several aspect of internal and external conditions for purposes of understanding and identifying problems and issues and alternatives for decision making. They wools also like to be posted with information on the status to particular activities as a basis for controlling them. The role of MIS is to systematically generate relevant data and process such data into information which is directly meant to be useful to managers on specific aspects or issues for decision making, planning, administration and control. The role of MIS stems from the fact that it is an arrangement meant for pulling together all the diverse bits of data valuable in the organization, conveniently assessable to manager at various levels and units of activity. In a well-designed MIS, data are comprehensively processed, analyzed and interpreted so as to make them directly useful to managers.

6. Management Audit: The term 'Management audit' is defined as a systematic evaluation of the functioning, performance and effectiveness of management of an organization. It is a thoroughgoing, critical and constructive review of the quality of management. The audit work is generally done by an independent team of experts from relevant areas. They naturally adopt some of the tried and tested principals of auditing. The aim is to make an ablative assessment of the manner in which the affairs of the organization are managed. The audit is conducted on periodic basis. The audit team collects evidence from historical records about the various aspects of the functioning of the organization. A few major areas which could be exposed to the search lights of management audit are listed follows: a. Formulation of organizational objectives, strategies, policies and programmers of action and the manner in which they are pursued, as also the extent of success achieved; b. Design and operation of organizational structures of roles, activities and relationships; c. The manner and efficiency with which resources and assets are mobilized, developed, allocated, utilized and safeguard, including the human resources; d. Design and functioning of various systems and operations within the organization; e. The manner in which the management team anticipates and sizes up external environmental elements and designs appropriate adaptive strategies to cope with them; f. The internal organizational climate - to what extent it is conductive for cooperation, harmony, creativity, productive and satisfaction; g. The equality of managerial decisions: their soundless, timeliness and effectiveness. The management audit function goes beyond stator audit and internal audit of the

organization because of its distinct content and character. As is to be expected, professional accountants nod auditor have shown considerable interest in popularizing the efficacy of management audit and have taken several initiatives in this regard especially in U.S.A. 7. Control by return on investment technique: The ownership group of business organizations, whether public or private, seeks a return in their investments as a reward for risk taking. The excess of revenue over the costs of doing business generally accrues to ownership group; in the form of profit, whether is distributed to them or retained in the business. The rate of return on investments (ROI) is an overall measure of the financial performance of a business enterprise on individual division there of. Net income is the residue of revenue through sales after deducting the cost of sales. Net income before and after corporate taxes can be used for purposes of comparison. Total investment includes working capital and fixes assets used in business. Management can increased in ROI by stepping up sales volume proportionately more than total investment. Another way to increase ROI is by reducing the total investment without disturbing the sales volume or by reducing the former proportionately more then the latter. A third way is by increasing the sales volume proportionately more than the cost of sales or by reducing the cost of sales proportionately more than the decrease in sales volume. 8. Self Control: Behavioral scientists assert that control is most effective when it self-directed. The implication is that most 'organization men' feel more at home under conditions of selfcontrol. Sense of responsibility for result is said to be at a more desirable level when persons are assigned the task of exercising imposed control. They wonder as to why somebody should always be looking over their shoulders, as if they are kids. They perceive that their zone of freedom being unduly restricted by outside control. Selfcontrol includes a measure of freedom to set one's own standards of performance, pace of work and evaluation and feedback of results and correction of negative deviations. If should, however, be understood that people who volunteer for self-control are binding themselves to a deeper commitment than those who do not. While freedom is more under conditions if self-control, responsibility for results is much more. It is to be admitted that some self-control is implicit even it situations of totally external control systems. For example, there cannot be a minute to minute regulation of a subordinate's pace of work by his supervisor. When the former is assigned a task, some responsibility is imposed upon him to work according to the dictates of the latter. Similarly, a person cannot be left entirely to the virtues of his self-control.

BEHAVIORAL RESPONSES TO CONTROL SYSTEMS

When employees have relatively low trust in a control system, they sometimes behave

in various ways that are harmful to the organization. They may do what is required by the system. For example, when bonuses for sales people in a department store were based on sales volume, many employees soon lost interest in customers who did not immediately purchase an item, and they spent little time helping customers, making merchandise attractive, or performing stock work. Quite often employees will report data in such a way that performance will look good for a particular time period. Some control systems will also cause employees to report invalid or misleading data about what can be done. For example, it is not uncommon at budget time for managers to ask for larger amounts than needed if they believe their requests will be reduced. In many organizations budget setting sessions are largely negotiating games with little effort given to establishing realistic standards. The advent of computer-based management information systems has also caused invalid data to be provided. These systems sometimes require historical cost, production, and other data that are simply not available and cannot be provided. When pressed, however, the data are estimated, often inaccurately. Finally, control systems that employees view as clearly threatening will cause strong resistance, perhaps the best example of this is automatic data systems. These systems create new experts with much power, are often not well understood, and, therefore are feared by many employees.