Methods of Establishing Control (Control Stages)
Fig.10.2 Designing Control Systems
Control methods are adopted in three stages.
In the first phase, the controls are evolved even before the plans are implemented. These methods are termed as "Precontrol" operation. In this stage, the proposed operations are devised in such a way that actual results will compare favourably with planned results. Therefore the important aspect to be considered is that the management policies are to be fully reflected in action plans. The policies actually give direction in which the objectives are to be achieved. The methods and procedure should be framed in accordance with policies.
As actual operation methods and procedure are prepared as per the objectives and policies, Precontrol becomes an effective control system and facilitate the attainment of desired results. Resources allocation is another aspect which gets importance in precontrol system. Both human and non-human (technical financial) resources are to be properly allocated and "monitoring" devices are to be developed for proper utilisation of these resources. Control devices should see that resources are utilised for the purpose for which they are appropriated. Control system should signal the top management about dangers of diversion of resources immediately.
Thus, precontrol devices, develop inbuilt control systems to be adopted in operational plans. The term "inbuilt" refers to the very operational procedure which gives the desired result. The purpose of control system is to achieve the desired objectives. For example, devising an "Internal check" system which controls a method operated by two or more persons without the knowledge of one another. In this system there will be check of procedure at every point of operation without the knowledge of one another who are involved in that method. You just imagine the process of clearing a cheque in a bank counter. When you present your cheque to the ledger clerk, that person examines your ledger and passes cheque to the accountant who will be sitting in a different place. Accountant will examine the entries made by ledger clerk and pass the cheque for payment after making an entry, in his scroll. Then the cashier will make payment to the customer across the cash counter. In this procedure you find that a transaction is checked by three persons — ledger clerk, accountant and cashier — without the knowledge of one another. This is a precontrol system evolved to monitor the operations. Similarly in every control, precontrol devices are designed and incorporated in the operational procedure. This facilitates the automatic control of operations. These precontrol devices are a must in every planning operation and are designed for human, financial and marketing operations. These control systems are evolved by the top management in accordance with objectives and policies of the organisation.
In the second phase of controlling, the operation managers have to monitor the procedures in accordance with the plan already laid down. The manager should observe the operations and instruct subordinates in the proper methods and procedures^ He/She is only a link between top management and workforce and directs the operations in accordance with the laid policies, methods and procedures. The relative importance of direction depends upon the nature of task to be performed by the workforce of that unit. This technique is called "Concurrent control."
In this stage every operation is directed. The director (i.e., manager) should possess "interpersonal communication skill." The operational aspects are to be properly communicated to the workforce (Subordinates). If there is no clarity in communication, the subordinates, when they do not understand clearly the policies and procedures may deviate in their operations. Hence, the manager should have communication skills to regularly inform the subordinates about their operations. Many managers think that laid down methods and procedures are clear and there is no necessity for further clarification to be made to the workforce. But, many a time the workers had failed to understand their task and had deviated from the set task. Therefore proper communication of procedures is very essential.
The concurrent depends upon "not only the manner in which the directives are communicated but the manner of the person who directs." The style and character of the manager also will have an impact on the direction and control technique. If the managers are intelligent, democratic and more humane in nature, they give proper direction and any deviation in operation from the set standard will be rectified immediately and the desired results are achieved. If he is autocratic or permissive, these will have different effect on control methods.
Besides these aspects, the fast changing technology market forces compel managers to resort to decision-making approach. They cannot stick on to the formal chain of command. This deviation will help the organisation to complete the task in emergency situations. Thus, the concurrent control technique involves, proper communication of methods and procedure, clarity in communication and right decision-making technique in case of emergency.
Besides Precontrol and concurrent control systems, post control measures are to be adopted for successful completion of planning. Historical documents provide a base for post control operations. The financial statements, the production documents, marketing data etc. available after the implementation of plan will provide data for correct actions. The routine post control methods used in several organisations are (i) Standard costing techniques, (ii) Financial Statement analysis, (iii) Performance appraisal of employees and (iv) Quality control systems.
Standard costing system provides a mechanism which facilitates the comparison of actual cost of production with standard costs already set in each element of costing, viz., raw material, labour and overheads. Standard costs are predetermined costs. Although standard costing and variance analysis technique have been used profusely in production, the adopting of this technique in sales and administrative expenses is increasing. Variance analysis shows the difference between actual expenditure and standard cost. This will help the management to take corrective action.
Every firm prepares annually financial statements like Income statement (P & L A/C), Balance sheet, Funds Flow statement, Cash Flow statements, Management reports etc. These are all post operation documents and provide the real situation of the firm for a given period which includes assets, liabilities, equity, income and expenditure. They also show how the funds are obtained (sources) and spent (application). Cash movement is also disclosed. These are all the historical aspects and provide data to formulate a new strategy, if need be.
Periodical performance appraisal of human resources in a firm is essential and is a post control technique. Evaluating human resources is a very critical task. Their work cannot be weighed physically or cannot be easily quantified. Whether the assigned duties to the managers and their subordinates are properly performed or not, have to be examined periodically to see that there will not be deviation from the set task.
Another post control device to be adopted is Quality Control. "Systems have to be developed and efforts have to be put in to control the quality of the product or service. The strategist should establish quality centres in each system to ensure quality in operation or production etc. It is not possible to ensure cent percent quality in operation or production. It is due to variation in raw material, imperfect operational aspects, monotony of workers at later stages of their daily routine etc. Everywhere "Quality" has become buzz word. People are prepared to pay high price for quality product. Therefore the planner should incorporate quality standards in operations and monitor the same throughout the implementation of operational plans. Quality control should be linked to organisational performance. There are several dimensions of quality that are perceived by consumers. They may be (i) Performance (the product's primary operating character) (ii) Features, i.e., exclusive characters of the product (iii) Reliability (iv) Conforming to the standards (v) Durability of the product (vi) Service ability (vii) Aesthetics (taste, looks, smell, sound etc. of a product or service) and (viii) Perceived quality.
All these quality dimensions of consumers cannot be imbibed in one product or service. One or two dimensions may be adopted in this. For example, purchase of T.V. set. One consumer may examine the functions and durability. Another may look into the appearance of the set. Third may look into the price. Fourth may consider the after sales service etc. Thus the quality dimensions are different and the strategist should consider the quality concept and adopt it in his strategy.
Therefore, every control system involves three fundamental sub-control systems, viz., precontrol, concurrent control and post control systems.
Planner has to design an integrated control incorporating these control systems. The integrated control system should provide for "standards, information and action at every point from inputs to process to output."