The control’s scope is very wide. A well-designed plan of control (or control system) covers almost all management activities.
According to Holden, Fish and Smith, the main control’s scope or areas are as follows: 1. Control over policies: The success of any business organization to a large extent, depends upon, how far its policies are implemented. Hence the need for control over policies is self-evident. In many enterprises, policies are controlled through policy manuals. [ Control’s Scope ] 2. Control over organization: Control over organization is accomplished through the development of organization chart and organization manual. Organisation manual attempts at solving organizational problems and conflicts making long-range organization planning possible, enabling rationalization of organization structure, helping in proper designing of
organization and department. [ Control’s Scope ] 3. Control over personnel: The statement that ‘Management is getting the work done through people’ underlines sufficiently the importance of control of personnel. All employees working at different levels must perform their assigned duties well and direct their efforts in controlling their behavior. Personal Director or Personnel Manager prepares control plan for having control over personnel. [ Control’s Scope] 4. Control over wages and salaries: Such type of control is done by having a programme of job evaluation and wage and salary analysis. This work is done either by personnel department or industrial engineering department. Often a wage and salary committee is constituted to help these departments in the task of controlling wages and salaries. [ Control’s Scope ] 5. Control over costs: Cost control is exercised by the cost accountant, by setting cost standards for material, labor and overheads and making a comparison of actual cost data with standard cost. Cost control is supplemented by budgetary control systems. [ Control’s Scope ] 6. Control over methods: Control over methods is accomplished by conducting periodic analysis of activities of each department. The functions performed, methods adopted and time devoted by every employee is studied with a view to eliminating non-essential motions, functions, and methods. [ Control’s Scope ] 7. Control over capital expenditures: It is exercised through a system of evaluation of projects, ranking of projects in terms of their rank power and appropriate capital to various projects. A capital budget is prepared for the whole firm. A capital budgeting committee reviews the project proposes and approves the projects of advantages to the firm. Capital budgeting, project analysis, break-even analysis, the study of the cost of capital, etc. are some popular techniques of control over capital expenditure. [ Control’s Scope ] 8. Control over research and development: Such activities are highly technical in nature so no direct control is possible over them. By improving the ability and judgment of research staff through training programs and other devices, an indirect control is exercised on them. Control is also exercised by having a research on the business. [ Control’s Scope ] 9. Control over external relations: Public relations department is responsible for controlling the external relations of the enterprise. It may prescribe certain measures for other operating departments which are instrumental in improving external relations. [ Control’s Scope ] 10. Overall control: It is effected through budgetary control. Master plan is prepared for overall control and all the departments are made involved in this procedure. For effective control through the master plan, active support of the top management is essential.
Process of Control
1. Setting objectives:Objectives must be set in measurable terms for individuals as well as work groups. This occurs during planning if planning is done well. By clarifying what is desired of the enterprise and of the individuals and groups within it. Management by Objectives serves as the link between planning and control. 2. Establishing predictors of the objectives: Effective managers do not wait for a specific time to find out whether objectives are being achieved. They look for regular reliable and prompt indicators. For example weekly or monthly sales results highlighting problems by product/service and territory provide managers with the opportunity to help define and correct those problems. An effective flow of information and feedback system are vital components of a system for determining whether objectives are being achieved or not. 3. Establishing the standard of performance: Insofar as possible, each objective should specify quantitatively the minimum acceptable standards of performance. These standards may be based on past performance projected into the future, established by managerial judgment, or for some units, developed through detailed studies such as time studies for individual jobs. 4. Evaluating results against standards:When the manager sees results early enough to act on them, he or she determines which are critical, which bear watching, and which can be temporarily ignored based on the amount of their divergence from standards and the significance of the items involved.
Thus, for instance, a 5% shortfall in sales in the firm’s smallest territory on a minor product is not the same as a 30% loss on its largest product in its biggest territory.