The control process and its phases
The control process sets standards, measures performance, compares it with standards and takes corrective action, feeding back into planning.
The control process
- back to Set standards
Robbins describes three steps (measure, compare, take action) and treats standards as coming from planning. Many texts add 'set standards' as the first step.
Phase 1: setting standards
Standards are targets taken from goals and plans. Good standards are specific, measurable and realistic. They can be quantitative (units per hour, rupees of sales per month, defects per 1,000 items) or qualitative (courtesy to customers). Managers set standards at key control points, where a small error could cause a big problem.
Phase 2: measuring actual performance
| Source | Advantages | Drawbacks |
|---|---|---|
| Personal observation | First-hand; not filtered; covers the whole activity | Open to personal bias; time-consuming; may look like distrust |
| Statistical reports | Easy to visualize; show relationships | Limited information; ignore subjective factors |
| Oral reports | Quick; allow feedback, tone and discussion | Information is filtered; no permanent record |
| Written reports | Comprehensive and formal; easy to file and find | Take more time to prepare |
Phase 3: comparing with a range of variation
A supermarket outlet in Kurunegala sets a monthly sales standard of Rs. 4,000,000 for each department, with an acceptable range of variation of ±5%. Actual sales: Produce Rs. 4,150,000; Groceries Rs. 3,700,000; Household Rs. 3,880,000. Which department needs managerial action?
- Range = 5% × Rs. 4,000,000 = Rs. 200,000, so the acceptable band is Rs. 3,800,000 to Rs. 4,200,000.
- Produce: 4,150,000 − 4,000,000 = +Rs. 150,000 (+3.75%): within the range.
- Groceries: 3,700,000 − 4,000,000 = −Rs. 300,000 (−7.5%): outside the range.
- Household: 3,880,000 − 4,000,000 = −Rs. 120,000 (−3%): within the range.
Only Groceries needs action. The manager should first find the cause of the Rs. 300,000 shortfall, then choose immediate or basic corrective action.
Phase 4: taking managerial action
The results of each round feed into the next round of planning, so control is a continuous process.
Sri Lankan banks run the control process every day. The CBSL sets prudential standards such as capital and liquidity requirements; banks measure their own ratios, compare them with the required levels, and take corrective action, such as raising new capital, when they fall short.
Short answer: “What is the range of variation?” The acceptable band of difference between actual performance and the standard; deviations inside it need no action.
Structured question: “Distinguish immediate corrective action from basic corrective action.” Immediate action fixes the problem at once to restore performance; basic action finds why the deviation happened and removes the root cause. One example each.
Essay: “Explain the phases of the control process with a diagram.” Draw the cycle, then explain setting standards, measuring (four sources), comparing (range of variation, with a numerical example) and the three managerial actions.
Control process: 'Some Managers Check Again' = Set standards, Measure, Compare, Act. The three actions: 'Nothing, Correct, Revise'.