Managerial Monitoring & Controlling : The Fourth Managerial Function
Monitoring & Controlling is the 4th managerial function. It is very important in management and organizations because it’s strongly linked to other functions. Besides, it is the method by which we ensure that our plans, designs and other managerial efforts are done correctly towards achieving organizational goals. This function is the subject of part 6 in Management 2015 Book, the 1st book in your channel: Management with Merits – Manage to Prosper. We have already introduced the book in a previous video, and discussed parts 1 to 5 in it in previous posts & videos. To download the presentation associated with this video in PDF, please go to YouTube and click on the link in the description section below the video.–
Monitoring & Controlling : The Importance:
In addition to the above, Controlling helps in protecting and saving organizational assets, both tangible and intangible, such as intellectual capital. Besides, it enhances empowerment in the organization, given that monitoring and controlling procedures and processes allow employees to take actions and make decisions, while being monitored and care of by managers. Also, it helps in clarification of any ambiguity and immediate correction of any possible problems by the empowered staff.
Monitoring & Controlling : The Concept
The book defines controlling as the process which consists of three main steps. First is checking and measuring performance, then comparing actual performance with the objectives and standards, and finally taking the required managerial actions. Standards are elements that identify how performance should be done, such as making annual sales standard of selling million units.
What is the Managerial Action (3rd Step):
The required managerial action depends on the outcomes of the comparison step, as well as how standards are defined. In case the actual performance matches the standards, then no managerial action is required. If the performance deviates from the standard, whether positively or negatively, then the action depends on the amount if deviation. In case it is acceptable, then no managerial action is required. However, if the deviation is unacceptable, then either standards have to be revised and corrected if necessary. Otherwise, deviation reasons must be identified and corrected. It can be something related to employees, assets, operations etc. Please refer to our post & video about Decision-Making for more details.
Types of Controlling:
Controlling is a continuous process that goes on along with the operations. Thus, the book provides three types of controlling. First is the feedforward controlling, which anticipates, identifies and prevents problems before they occur. Second is the concurrent control, which checks and corrects problems once they occur, such as management by walking approach. Finally comes the feedback control, which corrects problems after they occur.
Practical Case : Organizational Internal Fraud
Organizational fraud is a serious problem that affects all organizations. As per the estimates of U.S. Ministry of Commerce in 2000, the percentage of internal fraud (caused by employees) is 85% of the overall fraud in American organizations. Fraud can be defined as any action or task done by employees which is done not for the sake of the organization, but for gaining personal benefits for employees. Thus, monitoring and controlling help in eliminating fraud and combating it. All the types of controlling (Feedforward, Concurrent & Feedback) are important in this procedure. The below figure shows how this can be done.
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