CHAPTER 5

PRINCIPLES OF
MANAGEMENT

“the art of getting things done through the efforts of
other people.”

MULTAZIMAH BINTI MAT DAUD

TABLE OF CONTENTS

1 Introduction to Management
2 Planning
3 Organizing
4 Leading
5 Controlling
6 Staffing
7 Decision Making

CHAPTER FIVE

CONTROLLING

DEFINITION OF CONTROLLING

 According to Stoner, Freeman and Gilbert (1995) control is a
process to ensure that actual activities are conducted
according to the planned activities.

 Process where by manager ensure that actual activities are
conducted in line with the planned activities and corrective
actions.

 Control is making sure that something happen the way it was
planned to happen. As implied in this definition, planning and
controlling are virtually inseparable functions. (Certo, 2000, p.
422).

 Process whereby managers ensure that actual activities are
conducted in line with the planned activities and take
corrective actions

 "Controlling is the measuring and correcting the activities of
subordinates to ensure that events conform to plans.“

 "Control is the process of checking to determine whether or
not plans are being adhered to, whether or not proper progress
is being made towards the objectives and goals and acting. It is
necessary to correct any deviation."

IMPORTANCE OF
CONTROLLING

1. Accomplished organizational goals
• By comparing actual result with the planned result, corrective

action can be taken if there are deviations

2. Ensures efficient use of resources
• Controlling involves checking employee’s work at every stage of

the operations.

3. Ensures standards are realistic and fair
• When managers regularly monitor the work of employees, they

will know whether the standards set by management are too
low or high, and adjust the standard so they are achievable and
fair.

4. Improves motivation
• Employees know the standards against which their performance

will be judged and how much effort they will need to put in to
get the rewards they desire.

5. Improves employee behavior
• Controlling ensures a close check on employees activities.

CONTROLLING PROCESS

Set the standards

Measure the actual performance
Compare the actual performance with the

standards

Take corrective action

CONTROLLING PROCESS

CONTROLLING PROCESS

CONTROLLING PROCESS

CONTROLLING PROCESS

PRINCIPLES OF EFFECTIVE
CONTROLLING

a) Principle of attainment of objective :
Controls must contribute to the achievement of goals by quickly and
accurately detecting actual and potential deviations from plans to
permit corrective action to be taken in a timely manner.

b) Principle of reflection of plans :
Controls need to be coordinated with the organization’s plans. If the
plans are clear, then controls can be better designed to support the
plans.

c) Principle of control responsibility :
Primary responsibility for the exercise of control rests with the manager
charged with the execution of a particular plan.

d) Principle of efficiency of controls :
The control system should detect and highlight the cause of deviation
efficiently with minimum time, effort and cost.

e) Principle of critical points :
All operation have certain areas that are more prone to errors or that
would be very costly for the organization should errors occur.

PRINCIPLES OF EFFECTIVE
CONTROLLING

f) Principle of individually of controls :
Controls are more effective when they meet the individual
requirements of managers, in relation to their position,
operational responsibility, competence and needs.

g) Principle of review :
The control system should be reviewed periodically and adjusted
as necessary.

TYPES OF CONTROLLING

a. Control Types by Timing

TYPES OF CONTROLLING

a. Control Types by Timing

i. Feed Forward Control

 Managers who conduct feed foward control are
usually involved in making policies, procedures and
rules to eliminate any undesired behaviors .

 The objective is to avoid mistakes that occur before
the activity is implemented.
Examples is:
- A human resources manager of a crude oil refinery
provides training for new employees and reduce the
number of industrial accidents, particularly in oil field
refinery.

TYPES OF CONTROLLING

a. Control Types by Timing

ii. Concurrent Control

 Management can take action promptly to correct the
mistakes that occur before it becomes serious. This
can reduce the cost of taking corrective action.

 Concurrent control is not only conducted on
employees’ performance, but it is also conducted on
human and non-human resources such as equipment,
machinery, and the office layout.

 For example:
- The production manager reprimands an employee who,

in the manager’s opinion did not concentrate on his
work. This can affect the smoothness and safety to
operations in the organization.

TYPES OF CONTROLLING

a. Control Types by Timing

iii. Feedback Control

 Measures the results of a completed activity.
 Sometimes called post-action or output control.
 Focus on financial measurements because

organizations need to be profitable in order to survive.
 For Example:
 - students provide feedback on the value and

usefulness of every subject they take. They also
measure research inputs and outputs of lecturers, and
use the information to adjust policies, guide decisions
and allocate resources.

TYPES OF CONTROLLING

b. Financial Control
i. Financial Statement

BREAK-EVEN CASH FLOW
ANALYSIS STATEMENT

□ To study the relationship between □ Measures how well a
total sales/revenues and costs company manages its cash
position
□ difference between total sales (or
total revenues) and total costs (or □ Measures how well the
total expenditures) company generates cash to
pay its debt obligations and
□ Helps the company management fund its operating expenses
to understand sales, volume,
pricing, costs and sales price

□ Can be used to forecast
profitability, control expenditure,
plan marketing activities and
select profitable projects

TYPES OF CONTROLLING

b. Financial Control
ii. Ratio Analysis

 To report key figures from the organization's financial records as
percentages (﹪) or fractions (½)

TYPES OF CONTROLLING

b. Financial Control

ii. Ratio Analysis

 to ensure that debt levels haven’t become too high or that
assets are being used productively.

 Liquidity ratios measure an organization’s ability to meet
its current debt obligations.

 Leverage ratios examine the organization’s use of debt to
finance its assets and gauge whether it’s able to meet the
interest payments on the debt.

 Activity ratios assess how efficiently a company is using its
assets. Finally, profitability ratios measure how efficiently
and effectively the company is using its assets to generate
profits.

TYPES OF CONTROLLING

c. Benchmarking

 A measurement of the quality of an organization’s policies, products,

programs, strategies and others, and their comparison with standard
measurements or similar measurements of its peers.

 Objectives:

i. Determine what and where the improvement
ii. Analyze how other organizations achieve their high
performance
iii. Used the information to improve performance

 A continuous process of measuring products, services and practices

against major competitors and industry leaders.

 Enables managers to know if the company is performing particular

activities or functions.

 Internal processes are measured against an external standard to

identify weaknesses and performance gaps.

 To incorporate-or better still, improve on-their competitors’

techniques.

 Best practices as a tool for monitoring and measuring performance.

TUTORIAL

Gagan is trying to apply a function of management in his
department. First he lets his team perform according to
their best potential. Then in a meeting he calls ody and
asks his team to check what they have performed. One
day it was found that the total number of units produced
were 20 less than the set target. It was decided that no
worker will go home unless and until this gap of 20 units

is overcome.

a. Which function of management is being performed by
Gagan and his team?
b. What is ’20’ in the above case?
c. At which stage of management do you think the target
was set? What is its significance now?

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