What is the process of monitoring actual performance and taking corrective measures in case of division?

ESSENTIAL POINTS TO SOLVE CASE STUDIES
Concept of Controlling
Controlling is the process of monitoring organisational performance, finding out deviations (or gaps in between the actual performance and the set standards), and taking corrective action in order to achieve organisational goals (as per set standards).

Nature of Controlling

1. Controlling is the fundamental function of management as without proper controlling, all other functions of management are meaningless.
2. Controlling is a goal oriented process as it ensures completion of organisational goals by monitoring the actual performace.
3. Controlling is an action oriented process as it involves corrective action to remove the gap between the set targets and the actual performance.
4. Controlling is a continuous process as right from the beginning of organisational performance its simultaneous monitoring takes place and up till the completion of goal, corrective actions are also simultaneously taken.
5. Controlling is all pervasive as no department, level or organisation can exist without controlling.
6. Controlling is looking backward as well as looking forward. It is looking backward as this is its very basic nature as it does analysis of past activities. It is also forward looking as the experience gained in the past helps in making better future plans.

Importance of Controlling

1. It helps in maintaining order and discipline in the organisation as it keeps strict obser¬vation on various activities in the organisation.
2. It helps in achievement of organisational goals through proper monitoring of per-formance and implementation of corrective action.
3. It helps in judging the accuracy of standards as in case standards are too strict, they can be revised. Some goals are too tough to be achieved as the external business environment may not support the organisation. In such condition, it is wise to revise the set standards.
4. It helps in efficient utilisation of resources as through continuous monitoring and action, all the unnecessary wastages can be prevented.
5. It helps in motivating employees through proper controlling, their performance is continuously monitored as per set standards.
6. It facilitates coordination in action as every employee and department performs according to set targets. The employee as well as the departmental targets are kept in proper coordination with each other.

Relationship between Planning and Controlling

1. Planning and Controlling are considered as inseparable twins as both are interdependent functions and complement each other.
2. Planning is meaningless without controlling as set plans have no meaning unless and until they are achieved through proper controlling.
3. Controlling is considered blind without planning as it is planning which sets standards for controlling and acts as a torch bearer.
4. Planning is looking forward (as it is futuristic and involves foresight) as well as looking backward (as while planning previous performances and plans are also analysed).
   Controlling is looking backward (as it looks back and analyses past performances) as well as looking forward (as future plans are made better by analysis of past mistakes).

Controlling Process

1. Setting standards. Standards should be set in precise quantitative terms. These are set at the stage of planning. They should be flexible in nature so that they can be altered as per need.
2. Measuring actual performance. This is the next step. Personal observation and sample checking are the methods applied. For different departments different parameters are to be used.
3. Comparing actual performance with the set standards. At this stage deviations come into picture. Deviation is the gap between set standards and actual performance.
4. Analysing deviations.
   • Critical point control: It is important for the management to keep track of a few Key Result Areas (KRAs) which are also known as critical points. For example, labour cost is a KRA but cost of stationery item is not a KRA.
   • Management by exception: It states that if management tries to control everything it will end up controlling nothing.
     So the management should keep track of significant deviations going beyond limits. For example, if the increase in labour goes beyond, say a permissible limit of 5%, the management should take all possible actions to bring down the increase in labour cost.
5. Taking corrective action. Corrective action is taken at this step to bring down deviation. The reasons for deviations are eleminated and that requires a total action oriented approach.

CASE STUDIES

Question 1.
Gagan is trying to apply a function of management in his department. First he lets his team perform according to their best potential. Then in a meeting he calls ody and asks his team to check what they have performed. One day it was found that the total number of units produced were 20 less than the set target. It was decided that no worker will go home unless and until this gap of 20 units is overcome.

1. Which function of management is being performed by Gagan and his team?
2. What is ’20’ in the above case?
3. At which stage of management do you think the target was set? What is its signi-ficance now?

Answer:

1. In the above case the function performed by Gagan and his team is controlling.
2. ’20’ in the above case is deviation. Gap between actual performance and set standards.
3. The target was set at the planning stage of management. The significance of planning is that it sets standards in the form of targets so that controlling could be done by minimizing deviations.

Question 2.
Saurabh is working in an MNC. He has created an atmosphere of proper controlling in his department. In order to do so he keeps himself aware about any dishonest behaviour and takes a stern action immediately. Recently he has installed CCTV cameras to keep vigil on the employees.

1. In the above case which importance of controlling has been implemented by Saurabh?
2. Name one more importance of controlling other than the above highlighted.
3. Can you suggest one more way by which Saurabh could have implemented controlling?

Answer:

1. The importance of controlling implemented in the above case by Saurabh is:
   Controlling ensures proper order and discipline in the organisation.
2. One more importance of controlling. Controlling helps in making efficient use of resources.
3. Saurabh could have implemented controlling by issuing balance score card to every employee. In this way could check their performance and contribution to the organisation on a daily basis.

Question 3.
Savita has been assigned the job of quantity controller. She knows this is a tough job but she also realises the importance of it. Her daily routine is to send alarm to the manufacturing department about the deviations in the number of units produced so that the target of the day could be achieved. This helps the whole department to focus towards its main plan of action. However one day she realises that the number of units which are to be produced is 500 which is very high and creates chaos at the shop floor. She discusses it with the management and the target is reduced to 450. This has helped the manufacturing department in maintaining quality of the work done. There are 10 workers at the shop floor where Savita does inspection. She divided the task into 45 units for each worker so that by the end of the day the target of the department is completed.

1. Which benefits of controlling have been highlighted in the above case?
2. Name one department where controlling should be applied in proper coordination
   with the manufacturing department for proper quality control of the manufactured products.

Answer:

1. The benefits of controlling highlighted in the above case are:
   • Controlling helps in accomplishing organisational goals. Her daily routine is to send alarm to the manufacturing department about the deviations in the number of units produced so that the target of the day could be achieved.
   • Controlling helps in judging accuracy of set standards. However one day she realises that the number of units which are to be produced is 500 which is very high and creates chaos at the shop floor, she discusses it with the management and the target is reduced to 450.
   • Controlling helps in facilitating coordination in action. She has divided the task into 45 units for each worker so that by the end of the day the target of the department is completed.
2. One department where controlling should be applied in proper coordination with the manufacturing department for proper quality control of the manufactured products is purchase department. Unless and until input is good output can never be good. For high quality manufactured product the raw material should be of high quality and this is the area of concern of the purchase department.

Question 4.
Parasmani Ship Builders is a renowned ship manufacturing company. The company is doing well but the employees keep on complaining as they say there are no standards to judge the state of mind of the employees, their motivation and job satisfaction levels. The HR department is trying to see to the problems which have recently occurred with the employees. In other areas however company has set some standards and is trying to effect the control mechanism but the company finds all such efforts expensive. All this has not been so easy. Employees in other departments like manufacturing, purchase, marketing, etc. have time and again resisted to the installation of computer monitoring systems and CCTVs. They say that it is against their freedom. Despite all these great efforts made by the company it had to face losses last year. Even though all the control mechanisms are in place there is an entry of competitors with better technology. This has given some bad time to the company despite its alertness in putting proper controlling in execution.

1. Which concept of management has been highlighted in the above case?
2. Identify the different types of this concept of management highlighted in. the above case.

Answer:

1. The concept of management which is highlighted in the above case is ‘limitations of controlling’.
2. The different limitations of controlling highlighted in the above case are:
   • It is difficult to set quantitative standards when it comes to controlling. The company is doing well but the employees keep on complaining as they say there are no standards to judge the state of mind of the employees, their motivation and job satisfaction levels.
   • Controlling is costly. In other areas however company has set some standards and is trying to effect the control mechanism but the company finds all such efforts expensive.
   • Controlling has to face resistance from employees. Employees in other departments
     like manufacturing, purchase, marketing, etc. have time and again resisted to the installation of computer monitoring systems and CCTVs. .
   • An organisation has little control on external factors. Even though all the control mechanisms are in place there is entry of competitors with better technology.

Question 5.
Adarsh is trying to reduce wastage of resources in his company. He is trying to do it in the best possible manner. He has set standards for performance of different types of activities and is doing his level best to perform according to these set standards to minimise wastage of resources. Things are not going to be over for him as he will have to look into other aspects too. He has set up a good monitoring system which helps him know how to employees ate performing according to set standards as when the employees meet these standards they will be given incentives. He is hoping to pull out a good performance from his team this year.

1. Which function of management has been referred to in the above case?
2. Which benefits of this function of management have been highlighted in the above case?

Answer:

1. The function of management which has been referred to in the above case is controlling.
2. The benefits of controlling highlighted in the above case are:
   • Controlling helps in efficient utilisation of resources. He has set standards for performance of different types of activities and is doing his level best to perform according to these set standards to minimise wastage of resources.
   • Controlling helps in improving employee motivation. He has set up a good monitoring system which helps him know how employees are performing according to set standards as when the employees meet these standards they will be given incentives.

Question 6.
Identify the step of controlling process applicable in the following cases:

1. Esha is keenly observing the quantity of capsules produced in a pharmaceutical company. She realises that there is no need for any action to be taken as the deviations are within the acceptable limits. A day later when she comes to work she finds the situation opposite to that of the previous day. This lime the deviation wa’S beyond the acceptable range and needed immediate action. She called her subordinates and told them that this should not happen again.
2. Mahesh who is the owner of a company has decided to focus only on a few activities of his business. He considers that the rest of all activities are not critical to the performance of his company. One such area he finds is of labour. The labour cost recently went up by 4% sending signals of coming danger. Now he will put his efforts to control this variation by arranging labour at a cheaper rate.
3. In a company a manager is trying to find out the deviation between the actual number of fans produced and the desired number. He already knows about the standard as the company has assigned him a definite quantity of fans to be produced.
4. Manoj Khanna a senior experience manager is concerned about the 2% rise in the raw materials. However he knows that this is an acceptable range. He tells his staff that if this rise goes beyond 2% it should be brought into the notice of management. Then he sets a limit of 5% when the management should give it the priority over other activities.
5. Virendra wants to ran his company in a different manner. He wants to set standards to be achieved in both qualitative as well as quantitative terms. He wants to judge the motivation, skill levels and satisfaction of the employees. Ail these things will require qualitative standards. On the other hand the company will have to set quantitative standards for the number of units produced.
6. Some employees have been assigned the job of judging the output of production in a neutral and reliable way. They are applying different techniques for achieving this aim. Some of these are personal observation, sample checking, etc. They are also keeping the units of measurement same to that of the units of set standards.

Answer:
The different steps of the controlling process applicable in the above cases are:

1. Taking corrective action.
2. Analysing deviations. Critical point control is the technique used.
3. Comparing actual and standard performance.
4. Analysing deviations. Management by exception is the technique used.
5. Setting standards.
6. Measurement of actual performance.

Question 7.
‘A.S. Ltd.’ is a large company engaged in assembly of air-conditioners. Recently the company had conducted the ‘Time’ and ‘Motion’ study and concluded that on an average a worker can assemble ten air-conditioners in a day. The target volume of the company in a day is assembling of 1,000 units of air-conditioners. The company is providing attractive allowances to reduce labour turnover and absenteeism. All the workers are happy. Even then the assembly of air-conditioners per day is 800 units only. To find out the reason the company compared actual performance of each worker and observed through C.C.T.V. that some of the workers were busy in gossiping.

1. Identify the function of management discussed above.
2. State those steps in the process of the function identified which are discussed in the above paragraph.

Answer:

1. Function of management – Controlling.
2. Following steps of controlling are identified in the given para:
   • Setting performance standards which are the criteria against which the actual performance would be measured.
     ‘…. and concluded that on an average a worker can assemble ten air-conditioners in a day.’
   • Measurement of actual performance with the standards in an objective and reliable maimer.
     ‘Even then the assembly of air-conditioners per day is 800 units only.’
   • Comparing actual performance with standards to find out any deviations.
     ‘…. the company compared actual performance of each worker and observed through C.C.T.V’

Question 8.
Hina Sweets is a renowned name for quality sweets since 1935. Harsh the owner of Hina Sweets was worried as the sales had declined during the last three months. When he enquired from the Sales Manager, the Sales Manager reported that there were some complaints about the quality of sweets. Therefore Harsh ordered for sample checking of sweets.
Identify the step taken by Harsh that is related to one of the functions of management
Answer:
Sample checking is a technique of Measurement of actual performance (Controlling).

Question 9.
Isha Machnies was a renowned name for quality sewing machines since 1960.
Mr. Suresh, the owner of Isha Machnies, was worried as the production had declined during the last three months. He directed the Production Manager to find out the reason. The Product Manager ordered the different supervisor to prepare a performance report of the workers working under them.
Identify the steps taken by the Production Manager that is related to one of the functions of management.
Answer:
Measurement of actual performance which is related to (controlling) function of management.

Question 10.
Peter is a production manager in a tyre manufacturing company. Recently he noticed that his team could not achieve the target production of 80 units per day. Instead on an average the production touched the target of only 65 units. On thorough analysis he found out that the deviation between standard production and actual production is far beyond acceptable range, on overall analysis he also found out that there has been a marginal increase in office stationery expenses. Moreover, he detected that the machine installed for the purpose of manufacturing was not able to perform at its best Being a management expert suggest Peter how he should deal with the existing problem.
Answer:
Peter should follow the following principles of managerial control while analysing deviations:

1. Critical point control. According to this principle of managerial control a manager should focus on Key Result Areas (KRAs) that are critical to the success of an organisation. A manager should not waste his precious time on checking each and every activity in the organisation. He should focus on those areas which are critical to the success of the enterprise. In the above case Peter should focus on improving the performance of the machinery either by repairing it or by replacing it with the new one. Marginal increase in stationery expenses can be dealt later by him.
2. Management/Control by Exception. As per this principle of managerial control a manager trying to control everything may end up controlling nothing. Therefore, only significant deviations that go beyond the permissible limit should be brought to the notice of management. In the above case poor performance of machinery needs immediate managerial attention.

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