UNIT 5: CONTROLLING
Overview of Controlling
Controlling is an essential function for all managers in the organization by which
they monitor performance and take corrective action when needed. Controlling
is the process that checks performance against standards. Its purpose is to ensure
that performance is consistent with plans and that the organizational and
departmental goals and objectives are achieved.
Controlling is the process of determining that everything is going
according to plan. The controlling function is closely related to the
other four managerial functions, but it is most closely related to the
planning function. When the manager performs the planning
function, the direction, goals, objectives, and policies are set and
become standards against which performance is checked and
appraised. If deviations are found, the manager has to take
corrective action, which may entail new plans and standards. This
is how planning decisions affect controls and how control decisions
affect plans, illustrating the circular nature of the management
process.
There is no substitute for engaged leadership. A manager simply
cannot afford to be distracted or disengaged. Small, isolated
problems, when left unattended, often grow in size and complexity, stealing more and more
resources as they compound and create other problems, until they become the sole focus of a
manager’s time and attention. A manager must constantly and consistently review the current
situation in the laboratory to ensure that there are no unattended details. The best way to avoid
big problems is to address and solve small problems before they have a chance to become
resource hogs that drain productivity and threaten accuracy. Being mindful of the daily activities
of the laboratory is one of a manager’s most important responsibilities. By controlling the details,
a manager ensures that the laboratory functions at the highest possible level of efficiency.
The Human reaction to control
The word control often carries negative connotations. Although controls are an absolute
requirement in any organized activity, one must keep in mind that in behavioral terms control
means placing constraints on behavior so that what people do in organizations is more or less
predictable. Control systems are designed to regulate behavior, which implies loss of freedom.
People react negatively to loss of freedom. The amount of control determines how much
freedom of action an individual has in performing the job. Complete absence of control,
however, does not maximize an individual’s perception of freedom because controls not only
restrict a person’s behavior but also the behavior of others toward them.
A certain amount of control, therefore, is essential for any organizational freedom to exist. Neither
the extremes of tight control nor complete lack of control, however, bring about the desired
organizational effectiveness. A balance between the two extremes is therefore necessary, which
considers the amount of decentralization in the organization, management styles, motivational
factors, situation, professional competence of the employees, and so on.
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CONTROL SYSTEMS
Three different types of control systems are discussed: anticipatory (preventive or
ahead of time), concurrent (in process or during the event), and feedback
(reactive or after-the-event) controls.
These control systems assess whether deadlines and time constraints are met (time controls),
whether the appropriate amounts of inventoried parts or materials have been consumed
(material controls), whether the equipment functioned properly (equipment controls), and
whether the product or service was delivered at the anticipated cost (cost controls).
A. Anticipatory Controls
Also known as feedforward controls, preliminary controls, or preventive controls, Anticipatory
controls are in place before the service activity or production starts. They anticipate potential
problems and prevent their occurrence. Anticipatory control is a proactive, not a reactive,
approach.
Anticipatory controls focus on human, material, and financial resources within the
organization. These controls are evident in the selection and hiring of new employees. For
example, organizations attempt to improve the likelihood that employees will perform up to
standards by identifying the necessary job skills and by using tests and other screening devices
to hire people with those skills..
The supervisor should preview the entire process and task. In doing this, forward-looking control
mechanisms will be built into the system, and mistakes are likely to be avoided. The purpose
of preliminary controls is to anticipate and prevent mistakes by taking care of a potential
malfunction in advance. For example, the supervisor plans and arranges for regular
preventive maintenance so that the equipment does not break down when needed. Other
examples of anticipatory controls are policies, procedures, standard practices, and rules.
These are designed so that a predetermined course of action is prescribed to prevent mistakes
or malfunctioning.
B. Concurrent controls
Concurrent controls help spot problems as they occur. These monitor ongoing employee
activity to ensure consistency with quality standards. The purpose is to apply controls while the
operations are in progress instead of waiting for the outcome. In these situations, the supervisor
does not anticipate problems but monitors operations in process. For example, concurrent
controls enable the supervisor to keep the quality and quantity of output standardized.
Their purpose is to ensure that work activities produce the desired results. As an example, many
manufacturing operations include devices that measure whether the items being produced
meet quality standards. Employees monitor the measurements; if they see that standards are
not being met in some area, they make a correction themselves or let a manager know that
a problem is occurring.
Many computer software applications have concurrent controls that may require entry of
data in a certain field or flagging a discrepancy. The software alerts the user immediately so
corrective action can be taken at that time.
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C. Feedback controls involve reviewing information to determine whether performance meets
established standards. For example, suppose that an organization establishes a goal of
increasing its profit by 12 percent next year. To ensure that this goal is reached, the
organization must monitor its profit on a monthly basis. After three months, if profit has
increased by 3 percent, management might assume that plans are going according to plan.
Feedback controls are most helpful in planning process improvements. Examples of feedback
controls are quality and quantity reports, opinion surveys or service surveys, and accounting
reports. A common human resources feedback control is the exit interview performed with
employees leaving the organization.
Requirements of Adequate Controls
1. Controls must reflect the nature and needs of the activity
All control systems should reflect the job they are to perform. Controls of the sales department
will differ from those of the finance department and these from the controls of the purchasing
department. And a small business will need different controls from a large business.
The manager must be aware of the strategic factors in his plans and operations calling for
control and use techniques suited to them.
2. Controls should report deviations promptly
The ideal control system detects deviations before they actually occur. In any case, the
information must reach the manager as soon as possible.
3. Controls should be forward looking
Although ideal control is instantaneous, as in certain electronic controls, the facts of
managerial life include a time lag between the deviation and corrective action. Therefore,
the manager should strive for a control technique which will forecast deviations in time for him
to make corrections before the problem occurs.
That this is possible is illustrated by such forward-looking devices as cash control. A company
manager cannot very well find in April that he ran out of cash in March. Properly, he forecasts
his cash requirements to handle his payroll and other cash needs as they arise. This approach
to control can surely be applied on a much broader front than is now the case.
4. Controls should point up exceptions as strategic points
The time-honored exception principle, that the manager should only watch for and deal with
exceptions, is not enough for effective control. Some deviations from standards have little
meaning and others have a great deal. Small exceptions in certain areas have greater
significance than larger deviations in other areas. A manager, for example, might be
concerned if the cost of office labor deviated from standard by 5%, but unworried if the cost
of postage stamps deviated from budget by 20%.
Therefore, controls should not only point up deviations but should pinpoint them where they
are important or strategic to his operations.
5. Controls should be objective
Management necessarily has many subjective elements in it, but whether a subordinate is
doing a good job should not be the matter for subjective determination. Where controls are
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subjective, a manager’s or subordinate’s personality may influence judgments of
performance inaccurately; but people have difficulty in explaining away objective control of
their performance, particularly if the standards and measurements are kept up to date
through periodic review.
Objective control should be definite and determinable in a clear and positive way. Objective
standards can be quantitative, such as costs or man-hours per unit, or date of job completion;
they can also be qualitative, such as a better budget program or accomplishing an
upgrading of the quality of personnel. The point is that, in either case, the standard is
determinable and verifiable.
6. Controls should be flexible
Controls must remain workable in the face of changed plans, unforeseen circumstances, or
outright failures. A complex program of managerial plans may fail in some particulars. The
control system should report such failures, and should contain sufficient elements of flexibility
to maintain managerial control of operations despite such failures.
7. Controls should reflect the organization pattern
Organization, being the principle vehicle for coordinating the work of people with assigned
duties and delegated authority, is also the means of maintaining control; and the manager is
the focal point of control, just as he is the focal point for assignment of tasks and the
delegation of authority.
8. Controls should be economical
Control must be worth its cost. Although this requirement is simple, its practice is often complex,
for a manager may find it difficult to know what a particular control system is worth, nor may
he know what it costs. Economy is relative, since the benefits vary with the importance of the
activity, the size of the business, the expense that might be incurred in the absence of control,
and the contribution the system can make.
Since a limiting factor of control systems is relative economy, this, in turn, will depend a great
deal on the manager’s selecting for control only strategic factors in areas important to him. If
tailored to the job and the size of the enterprise, control will probably be economical. On the
other hand, one of the economies of large-scale enterprise results from being able to afford
expensive and elaborate control systems.
9. Controls should be understandable
Sometimes the manager could understand controls if he would take the time to learn the
techniques, but whether his lack of understanding results from complex techniques or
impatience in learning them, the effect is the same: The control system will not function well.
Many so-called experts in graphs, charts, advanced statistical methods, or exhaustive
analyses fail to communicate the meaning of their control data to the manager who should
use it. “Control” staffs and departments in business often develop needed information that
cannot or will not be used by managers, because it is not simple enough or adopted to the
manager’s understanding.
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What may be valuable and comprehensible to one manager may not be to another, and it
is up to the manager (or his staff assistant) to make sure that he has an adequate control
system that he understands.
10. Controls should indicate corrective action
A control system that detects deviations from plans will be little more than an interesting
exercise if it does not show the way to corrective action. An adequate system should disclose
where failures are occurring, who is responsible for them, and what should be done about
them.
Barriers to Successful Controlling

Control activities may unnecessarily create an overemphasis on short term goals
neglecting long term goals.

Control activities may frustrate employees by putting a check on their freedom. This type
of reaction tends to occur primarily where management exerts too much control.

Control activities may result in manipulations and tempering with the facts. It may
encourage falsification of reports.

Control activities may hamper the creativity of the individuals which ultimately lead to
narrowing the perspectives of organizational members.

Control activities may not show their effectiveness where proper standards have not been
set and faulty evaluation systems are there.

Control activities may show their ineffectiveness in an environment where there is fear of
discrimination and favoritism.

Control activities go against the basic fundamental belief system or ideology of human
being then also, they won't be effective.
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THE CONTROL PROCESS
The organizational control system can be viewed as a feedback model.
Information on how the system is doing is obtained by the supervisor, or the sensor,
who then monitors the system by comparing the actual results with the desired
performance. Whenever the actual performance deviates from the standards set,
the system triggers corrective action in the form of an input (Figure 1.5.2).
This closed-loop feedback system works
the same way a thermostat in the home
functions. The thermostat is set at the
desired
degree
of
temperature.
Whenever the room temperature falls
below or rises above that temperature,
the thermostat, continuously comparing
room temperature to the desired
temperature, corrects the variation by
turning on or shutting off the furnace or air
conditioner. This type of control is known
as cybernetic because it monitors and
manages a process with the help of a selfregulating mechanism.
Figure 1.5.1 Closed-Loop System of Feedback
(Source: Dunn, 2016 . Haimann’s Healthcare Management 10th Edition)
Controlling involves ensuring that performance does not
deviate from standards. Controlling consists of five steps
(Figure 1.5.1). Corrective action can include changes
made to the performance standards—setting them higher
or
lower
or
identifying
new
or
additional
standards. Performance standards are often stated in
monetary terms such as revenue, costs, or profits but may
also be stated in other terms, such as units produced,
number of defective products, or levels of quality or
customer service.
1. Establishing Standards
The establishment of standards is the first step in the control
process. Standards are criteria against which subsequent
performance or results can be judged.
Standards also are known as performance metrics.
Figure 1.5.2 Five-Step Control Process
Performance metrics are any performance-related (Source: Adapted from Exploring Business.
measurement of activity or resource utilization.
2016. University of Minnesota.)
 Tangible Standards
The most common tangible standards are physical standards that pertain to the actual
operation of a department in which goods are produced (e.g., the dietary department)
or services are rendered (e.g., nursing services, laboratories, and laundry). Physical
standards define the amount of work to be produced within a given time span. Cost
standards are also tangible standards and define direct and indirect labor costs, costs of
materials and supplies used, overhead, and many other items.
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
Intangible Standards
In a hospital or related healthcare facility some intangible standards are the institution’s
reputation in the community; the quality of medicine practiced; the excellence of patient
care; and the degree of “tender loving care,” the level of commitment to values, and
the level of morale of the employees. It is exceedingly difficult, if not impossible, to express
the criteria for such intangible standards in precise and numerical terms. It is much simpler
to measure performance against tangible standards, such as number of nursing personnel
in relation to the number of patients or days of revenue in unbilled accounts.
2. Performance Measurement
Observing and measuring performance is an ongoing activity for every manager. Work is
observed, output is measured, and reports are compiled. The checking of activities is usually done
by the supervisor after the subordinate has completed the function. Because the supervisor does
not shift responsibility when assigning a duty to a subordinate and when delegating authority, he
or she must make certain that enough controls are available to take corrective action in case
the performance does not meet the standards.
The measurement of performance can be done in several ways, depending on the performance
standards, including financial statements, sales reports, production results, customer satisfaction,
and formal performance appraisals. Managers at all levels engage in the managerial function of
controlling to some degree.
All organizations measure performance to some extent. However, there is a large disparity among
organizations in terms of which performance measures are used with many primarily focusing on
financial measures. There has however, been a general move away from financial measurement
since the early 1980's. This was accelerated in the 1990's and 2000’s by the worldwide
acceptance of business excellence models and performance measurement frameworks that
address all stakeholders' needs.
Performance measurement is one of the cornerstones of business excellence. Business excellence
models encourage the use of performance measures, but in addition and more importantly, they
consider the design of performance measurement systems to ensure that measures are aligned
to strategy, and that the system is working effectively in monitoring, communicating, and driving
performance.
3. Comparing
As the manager observes and measures performance, it must be compared with the standards
developed in the beginning of the control process. Such comparisons are an ongoing activity of
the supervisor daily, weekly, and monthly. The observed performance may be higher, the same
as, or lower than the standards. In the first two situations, the supervisor obviously does not have
any problems. If the performance does not meet standards, however, corrective action is
required. Because some deviation is expected in some activities, the question is how much
deviation is acceptable before taking remedial action.
Observation is probably the most widely used technique for measurement. There is no better way
for a supervisor to check performance than by direct observation and personal contact.
Unfortunately, personal observation is time consuming, but every manager should spend part of
each day away from his or her desk observing the performance of the employees. For example,
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regular rounds are not only necessary for the head nurse; they are just as important for the director
of housekeeping, the chief dietitian, and the hospital administrator.
4. Determine any reason for deviations
Whenever supervisors observe their employees at work, they should assume a questioning
attitude and not a fault-finding one. Supervisors should not ignore mistakes, but the manner in
which they question is essential. They should ask themselves whether there is any way they could
help the employees do the job better or more easily, safely, or efficiently.
Written and oral reports are good means of checking on performance. Reports can be used as
documentations for any reasoning resulting to deviations. The nature of healthcare activities calls
for reports that are accurate, complete, and correct, especially when patient care is involved.
The supervisor must bear in mind that the performance standards were based on certain
prerequisites, forecasts, and assumptions and that some of these may have been faulty or may
not have materialized. A check on the discrepancy may also point out that the trouble was not
caused by the employee in whose work it appeared but in some preceding activity. For instance,
a patient’s infection might not be caused by the nursing activities or conditions on the nursing
floor, but rather by conditions or actions in the recovery room or the surgical suite. In such a
situation, the corrective action must be directed toward the real source. In this case, the
corrective action will emanate from the nursing director’s office, assuming that the latter is the
common line superior to all the departments concerned.
The supervisor might also discover that a deviation may be caused by an employee who is not
qualified or who has not been given the proper directions and instructions. If the employee is not
qualified, additional training and supervision might help, but in other cases finding a replacement
might be in order. In a situation in which directions have not been given properly and the
employee was not well informed of what was expected of him or her, it is the supervisor’s duty to
explain again the standards required.
5. Taking corrective action
If there are no deviations in performance from the established standards, the supervisor’s process
of controlling is fulfilled by the first two steps—setting standards and checking performance. If a
significant and worthwhile discrepancy or variation is found, however, the controlling function is
not fulfilled until and unless the third step, appropriate corrective action, is taken. If the deviation
is minor and acceptable and within a non-critical activity, it may be appropriate to do nothing
except call it to the employee’s attention. As always, data must be examined as quickly as
possible after the observations are made so that timely corrective action can be taken to curb
undesirable results and bring performance back into line.
Only after a thorough analysis of the reasons for a deviation will the supervisor be in a position to
take appropriate corrective action concerning the employee in question. Again, it is not sufficient
merely to find the deviation; controlling means to correct the situation. The supervisor must decide
what remedial action is necessary to secure improved results in the future. Corrective action may
require revising the standards, a simple discussion, a reprimand or other disciplinary action,
transferring or even replacing certain employees, or devising better work methods. Corrective
action, however, is not the final step. The supervisor must follow up by studying the effect of each
corrective action on future control. With further study and analysis the supervisor may find that
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additional or different measures may be required to produce the desired results, keep operations
on line, or get them back on track.
Benchmarking
An effective approach to improving an organization’s operational performance is to identify
similar organizations that seem to be performing better, visiting with the managers at those
organizations, and discussing how they are able to achieve optimal performance. This process is
known as benchmarking. Benchmarking allows organizations to assess their operations, become
knowledgeable about competitors, and incorporate what they learn about the best practices
used by these industry leaders. Using the wisdom of the optimally performing organization, the
managers can attempt to implement the same or similar practices or processes at their own
enterprise and hopefully experience some improvement in performance.
Benchmarking can begin at a macro level by comparing one’s key statistics to those published
by local, regional, or national organizations. If your organization’s length of stay falls within the first
quartile but your costs fall into the third quartile, the source of the survey may be contacted for
further information, or a performance improvement team may be convened to evaluate the
situation.
Benchmarking is really the seeking of best practices so that your organization remains competitive
in the marketplace. Other sources of best practices are professional newsletters and journals and
specialty discussion groups on the Internet. Conducting some research helps you locate
organizations that more closely mirror yours and allows you to compare your processes to theirs.
Benchmarking is similar to other process improvement activities. As with any activity that may
require reorganizing or possibly reengineering, the customer must always be considered first, and,
as noted above, the stakeholders— your employees—should always be involved in assessing the
situation. According to Cashen (1999), “Furthermore, benchmarking is not a numbers-only
exercise”. Measuring the performance of best practice organizations only reveals that they are
doing better in the chosen activities. Understanding the managerial and operational processes
that allow the target organizations to achieve their results is necessary in order to create
improvements in one’s own activities. In other words, benchmarking is not about mimicking other
organizations, it is about helping individuals learn new ways to think about existing problems.”
MODULE 1 UNIT 4 & 5 — QUIZ
++ End of Unit 4 ++
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