Controlling
Controlling monitors performance, compares with standards, and takes corrective action. It ensures plans are executed and goals achieved. Controlling completes the management cycle — feeding back into planning.
Control Process
Step 1: Establish standards — measurable targets from plans (sales Rs 1 crore/month, production 10,000 units/day, satisfaction 90%). Step 2: Measure performance — reports, observations, inspections, audits, MIS. Step 3: Compare with standards — variance analysis. Management by exception: focus on significant deviations only. Step 4: Corrective action — correct performance (training, motivation) or revise standards (if unrealistic or conditions changed).
Types of Control
Feedforward (preventive): anticipates problems before they occur — quality raw material inspection, pre-employment testing. Most desirable, hardest to implement. Concurrent (real-time): monitors as activities happen — direct supervision, sensors, dashboards. Allows immediate correction. Feedback (corrective): measures results after completion — financial statements, appraisals, complaint analysis. Most common but delayed.
Budgetary Control
Compares actual financial performance with budgets. Types: operating budget, capital budget, cash budget, master budget. Favourable variance: actual better than budget. Adverse variance: actual worse. Investigate significant variances for causes and corrective action.
Non-Financial Controls
Quality control: inspection, TQM, ISO certification. Nepal’s NBSM certifies standards. Inventory control: EOQ, ABC analysis, JIT. Employee performance: appraisals, attendance, productivity. Operational: schedules, delivery timelines, service standards.
Balanced Scorecard (Kaplan & Norton, 1992)
Four perspectives: Financial (profit, ROI — How do shareholders see us?), Customer (satisfaction, retention — How do customers see us?), Internal Process (efficiency, quality — What must we excel at?), Learning & Growth (employee development, technology — Can we keep improving?). Prevents overemphasis on financial metrics alone.
Summary
Controlling ensures plans are implemented through setting standards, measuring performance, comparing, and correcting. Feedforward, concurrent, and feedback controls serve different needs. Balanced Scorecard provides comprehensive four-perspective framework.
Types of Control Comparison
| Type | When | How | Example | Nepal Example |
|---|---|---|---|---|
| Feedforward | Before activity | Anticipate and prevent problems | Raw material inspection, pilot testing | NBSM quality testing before products reach market |
| Concurrent | During activity | Monitor in real-time, correct immediately | Supervisor watching production, dashboard monitoring | Bank teller supervisor checking transactions as they happen |
| Feedback | After activity | Measure results, learn for next time | Annual performance review, financial statements | NRB reviewing bank performance through quarterly reports |
Worked Example: Budgetary Control
Himalaya Traders budgeted Rs 500,000 monthly sales and Rs 350,000 monthly expenses. Actual results for Baisakh 2081:
| Item | Budget (Rs) | Actual (Rs) | Variance | Type |
|---|---|---|---|---|
| Sales Revenue | 500,000 | 540,000 | +40,000 | Favourable |
| Raw Materials | 150,000 | 170,000 | -20,000 | Adverse |
| Salaries | 120,000 | 120,000 | 0 | On target |
| Rent | 30,000 | 30,000 | 0 | On target |
| Marketing | 50,000 | 65,000 | -15,000 | Adverse |
| Net Profit | 150,000 | 155,000 | +5,000 | Favourable |
Analysis: Overall profit is favourable (+Rs 5,000), but management should investigate the adverse variances. Raw material costs exceeded budget by Rs 20,000 — was this due to price increases (uncontrollable) or waste (controllable)? Marketing overspend of Rs 15,000 — did it contribute to the Rs 40,000 sales increase? If so, the extra marketing was a good investment (Rs 15,000 spent → Rs 40,000 gained). Management by exception: focus on the two significant adverse variances rather than reviewing every line item.
Balanced Scorecard Practical Application
| Perspective | Question | KPI Example | Target |
|---|---|---|---|
| Financial | How do shareholders see us? | Net Profit Margin | 15% |
| Customer | How do customers see us? | Customer Satisfaction Score | 90% |
| Internal Process | What must we excel at? | Order Fulfilment Time | 24 hours |
| Learning & Growth | Can we keep improving? | Employee Training Hours/Year | 40 hours |
Exam Tips
Tip 1: The 4-step control process is the most tested topic — know each step with workplace examples. Tip 2: Feedforward vs concurrent vs feedback comparison table is commonly asked. Tip 3: Budgetary control with variance analysis — practice interpreting favourable/adverse variances and recommending actions. Tip 4: Balanced Scorecard’s four perspectives with KPI examples is increasingly popular. Tip 5: “Controlling is looking back” is wrong — feedforward control is preventive (looking ahead). Make this distinction in essays.