The basic elements of the control process in an organisational setting are simple and straightforward. Each of these basic components involves important managerial attention and decisions. The processes of managerial control include:Establish standards
- Measure performance
- Compare performance against standards
- Evaluate results (of the comparison) and, if necessary, take action
1. Establish Standards
Specifying what management expects is absolutely critical at each step of the control process. This starts at the top level of the organisation and, ideally, should eventually involve every level of employee. First and foremost, those at the highest levels should be able to articulate a vision and formulate broad strategic goals for the organisation. Without a strategic vision and goals for the overall organisation, managers in various parts of the organisation will find it difficult to develop meaningful and agreed-upon performance yardsticks.
2. Measure Performance
The second step in the basic control process is the measurement of performance. Measurement of performance means the actions of people and equipment that the organisation wants to monitor. If specific and concrete standards have been set, measurement is facilitated and there is more likely to be agreement on how performance is to be measured. When readily quantifiable criteria do not exist, however, it becomes especially important to obtain as much consensus as possible about the way in which performance is to be assessed.
3. Compare Performance Against Standards
Comparing performance results against previously set standards of the company is the third step in the control process. Just as performance measurement is influenced by the set standards, so are comparisons affected by the kinds of measurements available. If key measurements have not already been built into the system, it is usually not possible to go back and reconstruct them for purposes of comparison.
4. Evaluate Results and Take Action
The fourth step of the control process is to evaluate results and take action, which is arguably the most difficult managerial task in the entire control system. The results that emerge from the performance comparisons may or may not require action. Managers are required to consider whether one single comparison or a pattern of comparisons are necessary for the action to be taken.
If actual performance deviates from expected performance, how much of a difference is required before something is done about that difference? That question has no single answer. It needs evaluation of the importance and magnitude of the deviation. The evaluation and action step of control requires managers to have strong diagnostic skills as well as a certain level of expertise.
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