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Read free for 60 days Cancel anytime. ControllingControlling involves ensuring that performance does not deviate from standards. Controlling consists of five steps: (1) set standards, (2) measure performance, (3) compare performance to standards, (4) determine the reasons for deviations and then (5) take corrective action as needed (see Figure 1, below). Corrective action can include changes made to the performance standards—setting them higher or lower or identifying new or additional standards. Performance standards are often stated in monetary terms such as revenue, costs, or profits but may also be stated in other terms, such as units produced, number of defective products, or levels of quality or customer service. Figure 1. Five-Step Control Process The measurement of performance can be
done in several ways, depending on the performance standards, including financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree. CostsFinancial costs—direct
(i.e., paying for an accountant for an audit) and indirect (i.e., people employed by the organization whose primary function is related to control—internal quality control, for instance). BenefitsCost and productivity control—ensures that the firm functions effectively and efficiently. KEY TAKEAWAYS The control function can be viewed as a five-step process: (1) Establish standards, (2) Measure performance, (3) Compare actual performance with standards and identify any deviations, (4) Determine the reason for deviations, and (5) Take corrective action, if needed. Check Your Understanding Answer the question(s) below to see how well
you understand the topics covered in this section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times. Licenses and AttributionsWhat measures the deviation of actual performance?Controlling measures the deviation of actual performance from the standard performance and helps in correction action.
What are the remedies if there are deviations in the actual performance of the firm when compared to its established goals and standards?If the deviations in the third step are in an unacceptable range, then the firm needs to improve their performances. So if the actual result is far from the desired result (the standards that have been set), then the manager has to take some corrective action.
In which functions of management standards are compared with actual deviations are find out and corrective steps are taken?Controlling. Explain the various steps involved in the process of control. Explain the process of controlling. “Comparing the actual performance with laid standard, finding out deviations and taking corrective action is an important process of a function of management”.
What is the process of monitoring performance and taking action to ensure the desired results?Controlling as a Management Function. A process of monitoring performance and taking action to ensure desired results. It sees to it that the right things happen, in the right ways, and at the right time.
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