Page 1 - Microsoft Word - Home assignment 19 Directing Meaning Importance

SAI INTERNATIONAL SCHOOL

CLASS-12TH
BUSINESS STUDIES
CHAPTER -8 Controlling

TOPIC: Controlling Process
(LESSON - 29)

CONTROLLING PROCESS

Controlling is a systematic process involving the following steps.
1. Setting performance standards

2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analyzing deviations

5. Taking corrective action
Step 1: Setting Performance Standards:

The first step in the controlling process is setting up of performance standards.
Standards are the criteria against which actual performance would be measured.

Thus, standards serve as benchmarks towards which an organization strives to
work. Standards can be set in both quantitative as well as qualitative terms. For

instance, standards set in terms of cost to be incurred, revenue to be earned,
product units to be produced and sold, time to be spent in performing a task, all

represents quantitative standards.
Sometimes standards may also be set in qualitative terms. Improving goodwill

and motivation level of employees are examples of qualitative standards. The
table in the next page gives a glimpse of standards used in different functional
areas of business to gauge performance.

At the time of setting standards, a manager should try to set standards in precise

quantitative terms as this would make their comparison with actual performance
much easier. For instance, reduction of defects from 10 in every 1,000 pieces

produced to 5 in every 1,000 pieces produced by the end of the quarter.
However, whenever qualitative standards are set, an effort must be made to

define them in a manner that would make their measurement easier. For