Updated: Nov 21
Author: Barbora Bělová
Date of Publication: 30/03/2023
Controlling and Management
Controlling is an important function of management that involves monitoring and measuring the performance of an organisation. In particular, the purpose of controlling is to ensure that the organisation achieves its objectives effectively and efficiently.
Characteristics of controlling
Controlling has four steps:
setting performance standards,
measuring actual performance,
comparing actual performance to standards, and
taking corrective action as necessary.
Performance standards are the desired level of performance for a particular task or activity, and they should be specific, measurable, and achievable. Specifically, actual performance is measured using various tools and techniques such as financial statements, quality control charts, and employee feedback. Therefore, the comparison between actual performance and performance standards helps identify any deviations or variances. So, the next step is to take corrective action to bring the performance back on track.
Essence of controlling
Controlling is important because it helps managers to:
Monitor progress towards achieving objectives
Identify potential problems or issues
Take corrective action to prevent or minimise negative impact
Improve performance over time
Evaluate the effectiveness of policies and procedures
Moreover, controlling is a continuous process that requires ongoing monitoring and adjustment. In addition, effective control requires clear communication, accurate measurement tools, and a commitment to continuous improvement.
Types of controlling
In fact, there are a lot of types of controlling. Actually, they depend on the specific needs and goals of the organisation. Some of the most common types:
These types are connected with management planning.
The following types of controlling depend on the focus of the company or its department:
Controlling and management accounting
Controlling and management accounting are two concepts that are closely related and often used together in the field of management. Management accounting is the process of collecting, analysing, and reporting financial and non-financial information. That is used by managers to make informed business decisions. Controlling, on the other hand, is the process of monitoring and regulating the activities of an organisation. So, the goal is to ensure that they are consistent with the goals and objectives of the organisation.
Navigating Organizational Performance
Management accounting provides the information necessary for controlling. The data provided by management accounting includes financial statements, budget reports, cost accounting reports, and other relevant financial and non-financial data. This information can be used to measure the performance of the organisation and to identify areas where improvements can be made.
Controlling, on the other hand, is the process of taking action based on the information provided by management accounting. Specifically, it involves monitoring the activities of the organisation to ensure that they are consistent with the organisation's goals and objectives. For example, if deviations from the plan come up, controlling takes corrective action to bring the activities back in line with the plan.
In summary, management accounting provides the information necessary for controlling. Controlling involves using that information to monitor and regulate the activities of an organisation. This is important to ensure that they are consistent with the goals and objectives of the organisation.
In today's rapidly changing business environment, control is more important than ever. This is because organisations need to be agile and able to adapt quickly to new challenges and opportunities. As such, the role of controlling is likely to evolve and become even more critical in helping organisations stay competitive. As a result, they will achieve long-term success.