Objectives, Principles, and Techniques of Control
Control is a fundamental management function designed primarily to correct errors and ensure organizational activities align with established plans and standards. Beyond error correction, control aims to improve quality, accelerate operational cycles, and add value by diagnosing deviations and implementing timely corrective measures across strategic, tactical, and operational levels.
Key Takeaways
The primary goal of control is correcting errors after deviations from the planned course occur.
Control must adhere to principles like balance, timeliness, and cost-effectiveness.
Secondary objectives include enhancing quality, speeding up cycles, and adding competitive value.
Control is applied across strategic, tactical, and operational levels within all business areas.
What is the primary objective of organizational control?
Control's primary objective centers on the correction of errors, which is the most evident reason for its importance in management. This function is reactive, applied after a plan deviates from its intended course. By identifying discrepancies between actual performance and established standards, control allows management to implement necessary adjustments to realign operations with strategic goals and prevent recurrence.
- Reasons for control highlight its importance.
- Control is applied after the plan deviates from the plan.
What are the secondary goals achieved through effective control?
Effective control achieves crucial secondary objectives that enhance organizational performance and competitive advantage. these goals include improving quality by identifying failures in resources or processes, and accelerating operational cycles to quickly respond to consumer demand. Control also facilitates organizational diagnosis, helping the entity adapt to changes in technology, regulations, and market dynamics, ultimately adding value through speed.
- Creating better quality by addressing resource or input failures.
- Ensuring the process and its products are free of errors.
- Diagnosing effects of facing change.
- Producing faster cycles to meet consumer demand and deliver new goods/services.
- Adding value by using fast times as a competitive advantage.
What core principles guide the implementation of organizational control?
Organizational control must be guided by specific principles ensuring its effectiveness. The principle of balance dictates that control must correspond to delegation and be founded on clear objectives. Opportunity emphasizes applying control before an error occurs. Deviation requires analyzing variance causes for preventive action. Cost-effectiveness ensures the system's cost justifies results, and exception focuses control only on critical functions.
- Equilibrium: Control must match the degree of delegation and be based on objectives.
- Opportunity: Control should be applied before the error occurs.
- Deviations: Analyze causes and take preventive and corrective measures.
- Cost-effectiveness: The cost of the system must justify the results achieved.
- Exception: Control only exceptional or representative functions.
- Controlling Function: The controlling function must not encompass the controlled function.
How is control applied across different organizational levels?
Control is implemented hierarchically across three levels to ensure alignment from strategy to daily tasks. Strategic control is executed at the highest levels, focusing on long-term direction. Tactical control operates at the management level, focusing on the specific management of functional areas like production or administration. Operational control monitors the specific, day-to-day activities within each department to ensure immediate task execution meets standards.
- Strategic Control: Applied at superior hierarchical levels.
- Tactical Control: Focuses on the management of each area (commercial, production, administration).
- Operational Control: Monitors specific activities within each department.
What are the essential stages in the control process cycle?
The control process follows a systematic cycle for continuous monitoring and improvement. It begins by establishing clear objectives and determining appropriate control techniques. A crucial step involves designing the information system as the control tool. Performance is measured against standards, deviations are identified through comparison, and the cycle concludes with correcting deviations, adjusting standards, and communicating results via reports.
- Establish qualitative and quantitative objectives.
- Determine control levels and techniques.
- Design the Information System as a Control tool.
- Measure performance and establish standard measurement parameters.
- Compare standards to actual performance.
- Correct deviations found and adjust standards.
- Communicate results through reports.
Which functional areas require specific control mechanisms?
Control mechanisms must be tailored and applied across all critical functional areas of the business to maintain efficiency and compliance. Commercial control focuses on sales metrics, volume, and pricing. Human Resources manages attendance, vacations, and salaries. Production focuses on volume, quality, costs, inventory, and waste management. The Administration Area, specifically Financial control, manages budgets and administrative costs, ensuring fiscal responsibility.
- Commercial Area: Control of sales volume, pricing, and performance by client/territory.
- Human Resources Area: Control of attendance, delays, vacations, and salaries.
- Production Area: Control of production, quality, costs, times, inventory, and waste.
- Administration Area (Financial): Control of budgets and administrative costs/expenses.
What techniques are used to execute effective control?
Effective control uses diverse techniques, categorized into general methods and those specific to the accounting system. General techniques include accounting, auditing, budgeting, and computerized systems. Accounting-focused techniques analyze the economic structure (rentability, utility margin) and the financial structure (liquidity, debt indices). They also provide essential patrimonial information regarding investment and financing composition, offering a comprehensive view of fiscal health.
- General Techniques include: Accounting, Auditing, Budgets, Reports, Computerized systems, Investigations, and Mathematical models.
- Accounting System Techniques analyze economic structure (rentability and utility margin).
- Accounting System Techniques analyze financial structure (liquidity, rotation, and debt indices).
- Accounting System Techniques provide patrimonial information (composition of investment and financing).
Frequently Asked Questions
What is the difference between strategic and operational control?
Strategic control occurs at the highest hierarchical levels, focusing on long-term goals and overall direction. Operational control monitors specific, daily activities within individual departments to ensure immediate task execution meets established standards.
Why is the principle of cost-effectiveness important in control?
The principle of cost-effectiveness ensures that the resources invested in establishing and maintaining the control system are justified by the positive results and benefits achieved. Control should not cost more than the problems it solves.
What is the primary purpose of control in the Production Area?
Control in the Production Area focuses on core objectives such as managing production volume, ensuring quality standards are met, controlling costs, optimizing production times, and managing inventory and waste efficiently.
When should control ideally be applied, according to the Principle of Opportunity?
According to the Principle of Opportunity, control should ideally be applied proactively, before an error or deviation actually occurs. This allows for timely intervention and minimizes the negative impact on organizational plans.
How does control contribute to adding value?
Control adds value by enabling the organization to achieve faster operational cycles and quickly adapt quality to measured results. Leveraging speed and responsiveness provides a significant competitive advantage in the marketplace.
