3 Important Steps in the Process of Organizational Controls

To enforce control in organizations, we follow certain steps as below:

1. Establishment of Standards:

The first step in the process of control is to formulate plans and establish standards.

Planning requires projection of the future, while standards relate to the criteria of performance. Since, plans are yardstick against which control must be desired, it follows logically that the first step in the control process would be to establish plans. Standards may be tangible or intangible, vague or specific.

However, these must be so expressed that the people concerned can understand them and that the accomplishment of assigned duties can be measured against them. Standards relating to factors like employee morale, loyalty and results expected of a training programme and public relation cannot be generally stated in quantifiable terms. Such intangible and somewhat abstract standards need special care.

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To judge the performance, organizations may consider a large number of standards and the strategic control points and ultimately decide the most effective standards for appropriate assessment of performance. While determining strategic control standards, management should be economical, comprehensive and balanced.

Control standards would be effective when it relates to the specific performance of individual. This is due to the reason that in organizations, people are held responsible individually for the delivery of results. At times, however, this process of individual-based performance standards may not work.

This is more particularly in a situation, where individual decisions are based on cross-functional inputs. It is now the practice in the organizations to form a Tender Purchase Committee (TPC), drawing people from different functions, so that correct purchase decisions (in the form of cost effectiveness, quality and on-time delivery) can be made.

Let us consider the case of the level of inventory holding in any organization. This depends not absolutely on individual decisions, but on the decisions of several others, like those in production and marketing, etc. In these cases, performance standards can be set at each individual level of decision making to ensure better control.

2. Measurement of Performance:

The second basic step in control process is the evaluation of performance. At this stage, performance evaluation system is decided. Such evaluation system must be appropriate in measuring the work in terms of control standards and communicating the appraisal to persons responsible for taking corrective actions.

Measurement of performance must be in those units which are corresponding to units of standards. It is not a mere post-mortem of past events. It is not intended just to determine the mistakes. It enables the manager to predict future problems. Hence, it should ideally be forward looking to detect the deviations, before it occurs, so that unwanted situations can be avoided by taking suitable actions, well in advance.

Measurement of actual and expected performance would be easy when standards are properly developed, and the measurement criteria are expressed in physical and monetary terms. To take an example, units of production, volume of sales, rate of rejection, value and volume of production loss due to the machine downtime, etc., are some of the effective measurement criteria to evaluate the performance standards.

However, qualitative or intangible performance cannot be so measured precisely, just the way we cannot measure the employee morale. Organizations in such cases make use of psychometric tests, attitudinal and opinion surveys, focused group interviews, etc.

As these techniques are more intuitive in nature and may not exactly track or account for the exact performance standards, Peter Drucker believed that it is not always necessary to make the measurements criteria absolutely quantitative. Rather, it is more important both for the tangible and intangible performance to develop measurement criteria which can meet the following conditions:

(a) Must be clear, simple and rational

(b) Must be specific and relevant

(c) Must provide direction to focus attention and efforts

(d) Must be reliable and self-evaluative

To compare the actual and the standard performance, organizations can follow two steps, (i) assessment of the extent of deviations and (ii) identification of the causes of deviations. Since, the nature of deviations is often very specific to the type of activity; organizations cannot adopt any uniform practice to determine the deviations.

To take an example, any minute variation in the balancing of a gun barrel (mainly ascertained by Viewers, who are trained to perform this task manually seeing through the gun barrel) can ultimately render the barrel unusable, as it is a very crucial quality parameter. On the other hand, ± 5 per cent deviations in the chemical properties of a steel bar may not render the same unusable.

3. Correction of Deviations:

This is the last stage in the control process. It requires initiation of actions to ensure desired control. In fact, correction of deviations is the point where control grows together with other functions of management, like, planning, organizing, staffing and directing. Due to this, many persons hold the view that correcting deviations is not a step in the control process. Correction may be done through redrafting the plans, changing the organizational structure, by re-staffing or through better direction of subordinates.