Setting performance standards - The first step in the controlling process is setting up performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work.
In the given case, Mr Anshul had set the performance standard as the production of 200 units of goods in a month’s time.
Measurement of Actual Performance: Once performance standards are set, the next step is a measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for the measurement of performance. These include personal observation, sample checking, performance reports, etc.
In the given case, Mr Anshul had requested the final count of the goods produced during the month to compare the actual performance with the standard.
Comparing Actual Performance with Standards: This step involves a comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
In the given case, Mr Anshul had compared the actual production of 140 units with the target of 200 units.
Analysing Deviations: Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations and the reason for such deviations.
In the given case, Mr Anshul had inquired the factory supervisor about the reason for the low production who revealed the reason to be faulty machinery.
Taking Corrective Action: The final step in the controlling process is taking corrective action.
No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.
In the given case, Mr Anshul had requested the replacement of the faulty machinery as a corrective action.
