The controlling process for different companies or other organization can be very different, still there are some general steps. First we have to define what to control, then to set objectives and standards, followed by choosing the right measurement tools and methods, measuring performance, comparing measured performance to the set objectives and standards and taking corrective actions if necessary (more effort, better organization or even adjusting standards).
Defining what to control
Usually, starting from the planning process organization define those areas which need to be controlled. Logical the most important objectives and standards are the most important to control. The bigger the company the more aspects need to be controlled. Management has to pay attention to the costs of controlling too or the negative influence on employee’s moral.
Companies can control market share or other market aspects, financial aspects of activity, production / operations control.
Setting objectives and standards
In management activity, standards have a major influence being the specific criteria when management evaluates performance and analyses employee behavior. Standards allows employee to understand what management expects from them and for what they will get paid.
Setting objectives according to the mission of the organization and to the basic values of it represent also a basis for an efficient controlling process and long range success.
Choosing the right measurement tools and methods
As we know our objectives and standards we have to decide how to measure performance. The methods and tools of measuring depends on the set standards and objectives. It can be quantitative and also qualitative methods. When we talk about daily sales, return on investment, number of defects found on 1000 products it is obvious that we talk about quantities and precisely measurable facts and we use money, numbers, percents.
Also knowing how polite are my salesmen to the customers, how elegant behaves our shop employee in a made to measure fashion boutique are very important, still difficult to control. For these and similar aspects we need some qualitative methods.
How often we need to measure performance to control activity? Hypermarkets control their sales daily or even hourly, major manufactures control production on real time, others on daily or monthly bases. Financial data are controlled on monthly, quarterly and annual bases. The period of measurement depends on the importance of each objectives. Also the potential of changing and the speed of changing in their field of activity and the potential (negative and positive) influence of changes are important factor to decide how often to control.
Who controls? Some of the controlling tools belongs to the middle and top management, other to ordinary employees. Important is that every decision taking person need to get the right information at the right time.
Comparing measured performance to the set objectives and standards
Management and employees need to compare the measured performance to the set objectives and standards. Did the sales team reached the sales objectives, did the production department kept the accepted cost level, did the front office team serve at the accepted standard the customers, did the workers on the production line reach the set efficiency?
If actual results are up to the set standards everything is all right. If not pass to the next step.
Taking corrective actions if necessary
If objectives and standards are not met managers must pay attention to analyze the reasons why it happened and to take decisions, corrective actions. There are two possibilities:
– the set standards or objectives were to high, then they have to reset them
– to allocate more or other resources to reach them, punish or motivate workers as individual or as team, different organization of activity
If the managers consider that their companies (or sales team, production department etc.) didn’t reach objectives and standards because of wrongly setting them they can adjust standards and objectives. This could be the result of fasten changing outside conditions which could not being forecast.
Sometimes they have to adjust objectives by rising them, for example when an economic boom appears sales team can have higher targets. Or if new technologies are implemented in factory individual and team production efficiency will improve.
Other situations adjusting is downward, for example with the existing resources it is impossible to reach those goals.
Controlling process needs to be improved continuously. Year after year, month after months expectancy is higher for production, sales, services, cost cutting etc. This process allows the management not to lose direction and get to the danger zone.
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