Controlling
Controlling is measuring actual performance against standards, finding deviations and taking corrective action. It is both backward-looking (reviews results) and forward-looking (corrects future action). The exam tests the control process, the planning–controlling relationship, and techniques.
Control process
- Set standards (quantitative and qualitative).
- Measure actual performance.
- Compare actual with standards.
- Analyse deviations - magnitude and cause.
- Take corrective action.
Critical point control focuses on key result areas; management by exception attends only to significant deviations, saving time.
Techniques
- Budgetary control: sales, production, cash, capital budgets.
- Non-budgetary: break-even analysis, ratio analysis, statistical reports, management information systems, PERT and CPM.
- Ratio analysis covers liquidity, solvency, activity and profitability.
Worked example
A unit sets a standard of 100 units per day. Actual output is 90. The deviation is −10%, which is beyond the ±5% tolerance. The manager checks records and finds 45 minutes of machine downtime. Corrective action: preventive maintenance and a spare-part stock. The standard is not revised because the cause was a controllable breakdown.
Traps
Do not say controlling is the last function in a one-way sequence; it feeds back into planning. A deviation can be positive (above standard) and still need analysis. Control does not mean only punishment. Standards must be measurable, and corrective action should address the cause, not just the symptom.