Meaning and importance of controlling

The essentials

Controlling means ensuring that the activities in an organisation are performed as per plans. It also ensures that resources are used effectively and efficiently. Controlling is the last function of management, but it links back to planning because its findings help in making new plans.

Key points

• Features: controlling is goal-oriented, is a pervasive function (done by managers at all levels in all organisations), and is both backward-looking (checking past performance) and forward-looking (improving future performance).
• Importance: helps accomplish organisational goals, helps judge the accuracy of standards, makes efficient use of resources, improves employee motivation (employees know what is expected of them), ensures order and discipline, and facilitates coordination in action.
• Limitations: difficulty in setting quantitative standards for some activities (for example, employee morale or customer satisfaction), little control over external factors such as government policy or technology changes, resistance from employees who see it as a restriction on freedom, and high cost of control systems for small firms.

Exam tips

• A case in which a firm uses CCTV and strict checks to reduce theft and dishonesty shows 'ensuring order and discipline'.
• If standards prove too high or too low after comparison, the importance shown is 'judging accuracy of standards'.

Common mistakes

• Saying controlling is only backward-looking. It also aims to improve the future.
• Saying controlling can fully control external factors such as competition or policy changes.