Everything you need to know about the steps involved in the controlling process of an organisation.

Control is the last function of management. The controlling function will be unnecessary; to the management if other functions of management are performed properly. If there is any imperfection in the planning and actual performance, control will be needed.

The deviations are set right by the controlling function. This function ensures desired results. Planning identifies the activities and controlling regulates the activities. Success or failure of planning depends upon the result of success or failure of controlling.

The steps involved in the control process are:-


1. Setting of Control Standards 2. Measurement of Performance 3. Appraisal of Performance 4. Finding the Cause of Deviation 5. Taking Corrective Action.

Steps in Control Process for Organisations, Companies and Managers

Steps in Control Process – 4 Steps: Setting of Control Standards, Measurement of Performance, Comparing Actual and Standard Performance and Taking Corrective Action

Control is a continuous process. It is not applied when everything else is done. There may be some inbuilt controls in the exercise of managerial techniques. In spite of this, there may be a difference in standards to be achieved and actual performance. This may be due to human limitations. Some control methods may have to be applied to improve performance.

There are four steps in control process:

(1) Setting of control standards,


(2) Measurement of actual performance,

(3) Comparing actual and standard performance, and

(4) Taking corrective action.

These steps are discussed in detail:

Step # 1. Setting of Control Standards:


Every enterprise plans its activities in advance. On the basis of plans, the objectives and goals of every department, branch etc., are fixed. These goals are converted into quantity, value, man hour etc. These are to be achieved in future. There may also be qualitative goals. The achievement of various targets is made the responsibility of specific persons.

The levels of achievement are also decided in advance. Whether a particular result is to be taken as satisfactory, average or poor should be pre-determined so that the persons responsible for that work should be able to assess their performance.

Some strategic points should be selected as controls or yardsticks.

Prof. Newman has suggested four guidelines for selecting strategic points:


(i) The control points should be timely so that they may be able to reveal significant deviation in time, thereby, saving further loss.

(ii) Control points should be such as to permit economical observation and report.

(iii) Control points, especially for executives at higher levels, should provide comprehensive coverage.

(iv) Control points should be such as would promote balanced performance.

Step # 2. Measurement of Performance:


The second step in controlling process is the measurement of performance. The actual performance is measured against the standards set. This will enable management to determine whether the work is being done according to plans or not. The measurement of quantitative objectives is easy since figures of work done will be available. The qualitative performance such as human relations, employee morale, etc., can only be measured through psychological tests and surveys.

Measurement of performance is an important part of control process. If measurement is such that deviation is detected at the earliest then it will enable appropriate action well in time. If that is not possible then deviations should be detected as early as possible.

Step # 3. Comparing Actual and Standard Performance:

The next step in control process is the comparison of actual performance with the standards set. The purpose of this comparison is – (a) to find out deviations, if any and (b) to determine the reasons for such deviation. While comparing actual performance with the standard, some permissible limits are also fixed. When the deviations are within the prescribed limits then there is no cause for worry. But if the deviations are more than the allowable limits then it calls for urgent action.

This is also known as “management by exception”. When things are going as per plans or within the allowable limits then top management is not required to take any note of it. But on the other hand, if performance is not up to the level then it is brought to the notice of top management for taking corrective action. If the manager gives attention to every deviation then he will not be able to give enough time for important things.


When the actual performance is not up to the level then causes for it should be pin-pointed. Necessary steps are taken so that performance is not adversely affected once again. If no efforts are made to rectify the weak areas then the whole control process will be futile. Whenever the performance is low than the standards, the reasons for it should immediately be found.

Step # 4. Taking Corrective Action:

The last but most important step in controlling process is of taking corrective action. Whenever the performance is less than the standards, efforts should be made to rectify it. Whatever the reasons for low performance, efforts are made to achieve organisational goals. No control process can automatically rectify the mistakes in a system. It is the action which is required to set the things right.

Sometimes, the targets are not achievable even with more efforts then these will have to be revised. The control action may involve review of plans and goals, change in the methods of work, change in the assignment of task, change in existing technique of direction and change in organisation structure.

The corrective actions generally involve top management. It is said by some persons that taking corrective action is not a part of control but a separate managerial function. The overlapping of control function only shows the unity of manager’s job. It shows that managing process should be an integrated one.

Steps in the Control Process – Followed by the Managers

In performing his controlling function, the manager will do well to follow the three basic steps of the control process. In order to be able to ascertain whether or not the performance is in accordance with plans, it is necessary for the manager first to set standards. After setting up these standards, the manager will check the performance and appraise it. In doing this the manager will learn whether the performance has come up to the expected standard or if there is a deviation.

In such a case the manager takes corrective action, which is the third step. In order to control effectively, it is necessary for the manager to follow these three basic steps in the science mentioned. As a matter of fact, he cannot check and report on deviations without having set the standards in advance, and he cannot take corrective action unless he has discovered that there are deviations from standards.

1. Setting of Standards:

Standards are criteria against which to Judge results. In planning, the manager sets the objectives and goals which are the results which the enterprise hopes to achieve. The overall objectives of the company are broken down into the various objectives for the individual departments, and from these narrower objectives goals are established as to the quality, production cost, time standards, sales quotas, schedules, budgets, and many more specific standards for detailed operations.

These objectives and goals, as outlined in the planning, become the criteria, the standards according to which control is exercised.

Many standards are of a physical nature, such as quantities of units, man hours, and other physical measurements; standards can also be expressed in monetary terms relating to sales, revenues, expenses, costs, and so forth. In addition to these standards which can be expressed either in physical terms or monetary terms, there are also standards of an intangible nature.

It is not at all uncommon that among the objectives of a company is the goal of reaching a fine reputation among its competitors, the objective of having a high morale among the employees, the objective of customer goodwill, and so on. It would be exceedingly difficult if not impossible to express the criteria for such intangible standards in numerical terms. However, there are some techniques which have been devised to measure the effectiveness of such intangibles.

The further away these criteria move from the production line or the accounting department, the more difficult it will be to set up specific standards and the harder it will be to measure against them. In the following our primary concern is with standards of a tangible nature.

The objectives and goals which were defined in the manager’s planning function become the standards for purposes of control. Therefore, the question could be asked why, since planning has established these goals, control could not begin with the process of checking actual results against them instead of first establishing standards.

Newman answers this question by calling attention to the fact that in actual operations at least two important steps “should be taken before attempting to compare actual operations with standards. (1) If the control is to have effective influence on performance, the administrator should make sure that the goals are properly identified with individual responsibility.”

He also points out as a second factor that the administrator will find it impossible to review all aspects of performance and therefore, must select only certain points which will give him adequate information of what is going on.

2. Control Points:

Since the number of standards which can be used to ascertain the quality of performance is very large, it is necessary to set standards at strategic control points. Quality control alone sets an almost unbelievable number of standards. Within the area of quality control there are a number of standards referring only to the dimensions. In addition to the standards as to dimensions, there are a considerable number of standards, pertaining to the material content.

Aside from quality standards, there will be standards for the quantity of units to be produced per minute, per hour, per day, per month, or per year. In addition to this, there is a variety of costs standards which might be expressed in physical units or in monetary terms. Also, there are standards as to the income of the company in reference to profits before and after taxes, return on investment, and profits in relation to sales, capital turnover, and such.

Furthermore, there are the ratios of current assets to current liabilities, net worth to debt, and others; and there are the standards as to cash availability, working capital, inventory level, and so on. Obviously, the number of possible standards is staggering.

It is impossible, and also impractical, for a manager even to attempt to check the performance of the various activities under his supervision against all these numerous goals. As operations become more complex, or the area of a manager’s authority increases, such minute control becomes unfeasible. The manager, therefore, must concentrate on certain points in the operation which will be the strategic points against which he will measure the performance.

In doing this the manager will select those standards as strategic standards which will best reflect the goals of his department and which will best show him whether or not these goals are being met. The manager will concentrate his control on these strategic standards.

3. Guides for Selecting Strategic Standards:

It would be very helpful indeed if the manager of a company could be given specific guides as to how to select these strategic standards. But due to the vast number of possible standards and due to the many peculiarities of each company, it is not possible to give a manager specific guides for the selection of these strategic standards. However, there are certain characteristics for which a manager should look in order to select criteria as the strategic standards.

In order to choose one standard over the other as a strategic control standard, it is advisable that the following characteristics be present – The standards should be timely, should be economical, and should permit comprehensive and balanced control.

Timeliness is an important characteristic of a strategic standard. Controls look to the future, and the earlier the deviation can be discovered, the better it is. The need for timeliness of the standards is well understood in the productive end. In many- companies there are early quality control points before additional processing costs are incurred.

An example of the timeliness of a strategic control point is the department stores’ practice of setting up an “open to buy” limit which is designed to regulate buyers’ activities before firm commitments to purchase merchandise are made. Another example of timeliness are those controls which are designed to stop action before serious damage is done.

“Thus the time to check the hiring of wrong people or placing them in the wrong positions is when the initial selection is made, rather than after they have been put on the job.” Timeliness is one characteristic to look for in selecting a strategic control point.

Another consideration in selecting a standard as a strategic control point is that it should permit economical observation. In addition to these two characteristics, it is desirable that the strategic standard will provide comprehensive coverage and promote balanced performance. In selecting a strategic control point, the manager must be aware of the fact that the selection of one strategic control point might have an adverse effect on another. He must make sure that the point he selects will promote balanced performance.

Often excessive control on quantity of the production has an adverse effect on the quality of production. If expenses have been selected as a strategic control point, the quality of the service or the quality of the product may suffer. Therefore, the manager must make sure that in selecting the strategic standards he will not hurt balanced performance. When looking for a control point which permits comprehensive coverage, the manager should select a point where several operations are summarized and consolidated.

For example, many heads of small- and medium-sized businesses insist on signing all checks themselves. They believe that this will give them comprehensive control of all activities. They rightfully feel that ultimately everything in an enterprise has to be paid for, and signing all checks affords them a comprehensive strategic control point.

There is a vast array of articles available within the area of applied management describing various control schemes which have been found effective in certain situations. It is not uncommon, for example, that heads of medium sized companies will regularly open and read the morning’s mail.

These executives feel that in doing this they are keeping in close touch with what is happening in all the various departments, and they consider this a strategic control point. By the same token, other executives insist that all carbon copies of the outgoing mail pass their desks, believing that these are strategic control points in their particular companies.

There are a great number of strategic control points which executives have found to be most effective for their particular company. The manager should always keep in mind the fact that he should select those standards as strategic control points which will best reflect the goals of his activities. And what serves well as a strategic control point in one enterprise will not necessarily hold true in another case.

4. Standards are Varied:

The objectives, goals, policies, programs, procedures, and budgets initially established to guide the work give the standard according to which the performance can be measured. Therefore, in the average company there will be a multitude of standards by which the performance can be appraised. Most of these goals, of course, are of a tangible nature, although there will be others which are intangible.

While it is relatively easy to measure performance against a tangible standard, it is very difficult to measure achievement by intangible standards. It is simple to measure the units produced per hour against the standard set per hour, whereas it is exceedingly difficult to measure whether or not the enterprise has reached the standard of good community relations the enterprise had set for itself.

The most common tangible standards are physical standards, cost standards, revenue standards, and capital standards. Normally, physical standards are at the basis of all planning. They are the standards pertaining to the actual operation of the enterprise where goods are produced, services rendered, and workers employed. These physical standards are of a quantitative and qualitative nature.

They define the number of units to be produced per hour, the number of units to be obtained out of a certain quantity of material, and so forth. Physical standards concerned with quality refer to the wear ability of the product, the content of the mixture, the dimensions, closeness and precision of machining operations, the finish, smoothness, hardness, toughness, strength, and such.

These physical standards are what Goetz called “the building blocks of managerial planning,” and at the same time they become physical standards of control.

By attaching monetary value to the expenses necessary in order to achieve these standards, cost standards are secured. They reflect what it costs to achieve these goals. There are many cost standards such as direct and indirect labor costs per unit, standards per hour, standard cost for the material per unit, selling costs, overhead costs, and direct and indirect costs. All of these cost standards express in monetary values the expense involved in reaching the various goals, the various standards.

Revenue standards are achieved by attaching monetary value to the sales of the company. These are easily set by merely multiplying the number of units which are forecast to be sold by the price of each unit. The revenue standard set is the expected volume of the company for that particular period. In planning the annual sales for a department store, the standard might be set 10 per cent above the previous year’s sales. This, then, will be the revenue standard.

The revenue standard for a hospital will be based on the expected room occupancy and revenue per bed. In times of rising prices the manager should bear this trend in mind when he sets the revenue standard.

Capital standards refer to the capital invested in the company rather than to the cost of the operations. One of the most frequently used standards in this respect is the standard of return on capital invested.

There are many other standards which are used often in analyzing the balance sheet of a company, such as the ratio of current assets to current liabilities, fixed investment to total investment, the ratio of equity capital expressed by capital stock in relation to debt financing such as debentures, notes, or bonds, and debt in comparison to net worth. Capital standards of this type are commonplace and have wide applications.

It is relatively easy to measure performance against these tangible standards. However, a manager should not overlook the intangible achievements such as attitudes, beliefs, morale, competence of the personnel director, and success of the advertising program, the public relations program, and the executive development program. These goals do not lend themselves easily to numerical measurements.

Tools to aid executives in appraising these intangible standards and drawing appropriate conclusions are constantly being developed. Tests and attitude surveys are under continuous development and evaluation by psychologists and other behavioral scientists. Although some of these tools will be helpful to the executive, he must always remember that they are far from exact.

Due to the intangible nature of these areas, it will be difficult for the executive to set standards and just as hard to measure their performance. Yet he must not overlook the importance of these intangible standards in the achieving of a balanced system of controls.

5. Checking on Performance:

The second step in the process of control is to check on the performance. After standards have been set, it is the manager’s Job to compare the actual performance with these standards. The manager exercises control over the activity of the subordinates under his Jurisdiction by observing their work, by personally checking on them, and by studying various summaries of figures and reports which are submitted to him. He compares the information thus obtained with existing standards.

This is a continuous function of the manager which under certain circumstances he will have to perform daily, weekly, or once a month.

Controls are forward looking, and there is nothing the manager can do to change the past. Therefore, it is important that he check performance as soon as it is feasible so that in the event of deviations he can do something about the future so that this will not reoccur. Although timeliness is of great importance, the superior normally controls the subordinate’s functions after he has performed them.

The superior has previously delegated authority for these functions to his subordinates and made certain that there are enough controls available to enable him to take corrective action in case the subordinate’s performance does not meet the standard. In the final analysis, the superior has never actually shifted his responsibility for the function. Therefore, control is normally something the superior exercises after the subordinate has performed.

Occasionally, however, executives insist on personally checking the subject matter before this subordinate can proceed with the work. This requirement of prior confirmation may be because of numerous reasons. It can happen that the superior is reluctant to delegate enough authority to the subordinate because the superior is unable to state clearly the standards.

Then again, there are times and instances where the superior has not as yet fulfilled all the planning functions and thus has not been able to set the standards which he expects the subordinate to achieve. The lack of this complete planning with its consequent lack of standards might be due to the fact that this is a new area, and the superior himself is not as yet aware of what is involved in it.

In cases of this nature the superior should have the subordinate check with him before he proceeds, and he, therefore, requires prior confirmation instead of controlling afterwards.

In this example, where it was not possible or feasible to complete the planning and set standards, this requirement of prior confirmation is expedient and understandable. However, there are some executives who out of a lack of willingness to delegate enough authority and clarify the standards, often require prior confirmation instead of a subsequent check.

This practice, of course, is not to be condoned. It delays action, it is cumbersome, and it most certainly does not present the subordinate with an opportunity to learn by managing. In such instances the requirement of prior confirmation indicates a lack of confidence in the subordinates and might actually conceal the superior’s inability to plan properly.

6. Concentrate on Exceptions:

In checking the activities of the subordinate, the superior will find many which are performed as per standards, and he can quickly pass over those. However, he should concentrate on the exceptions, meaning those matters where the performance significantly deviates from the standard. This exception principle was first expressed by Frederick W. Taylor.

As applied to this situation the principle states that the manager should give detailed attention mainly to the unusual or exceptional items as only those items need executive, attention. Those items that are not out of line need not be referred to management. The manager might even request the subordinate not to send any reports on those activities which are within the pre-established standards and merely report on those items which do not come up to standards or those which exceed them.

There is no need for an executive to know that a subordinate stays within the budget, but it is important for him to know that, for example, the output of die production is considerably lower or higher than planned. A report on only the exceptions will enable the executive to concentrate on those matters.

Though it is expedient to concentrate on the exceptions only, there are other important factors which must be considered in order for such an arrangement to be successful. It is essential that there be a sense of mutual trust and confidence between the subordinate and the superior. The superior must know that the subordinate will not hesitate to report truthfully the deviations, and the subordinate must feel free to bring his problems to his executive knowing that the latter maintains confidence in his overall performance.

The exception principle must not be confused with the principle of strategic control points. The latter indicates only the points to be watched, whereas the exception principle refers to the watching of significant deviations regardless of where they occur.

7. Means of Checking:

In addition to the time when the manager of a business is to check the subordinate’s performance, there is also a problem as to the means by which he should perform this check. Written reports and summaries with or without oral presentation are a satisfactory way to check the subordinate’s performance. Reports serve a good purpose and are necessary. However, there is no substitute for direct observation and personal contact.

Checking the performance through personal observation is time consuming, and it is almost impossible for any executive who directs the activities of a reasonable number of people to inspect personally operations even at the most strategic control points. On the other hand, there is actually no substitute for personal observation.

If the president of a company, for example, wishes information regarding the company’s products, its reputation, the effectiveness of the publicity campaigns, there is no better way to obtain this than to travel with the area salesmen even for short periods. This will furnish him with a firsthand picture of whether or not the enterprise is reaching its standards of a physical nature such as the quality of the product and is approaching the intangible standards of reputation, customers’ goodwill, salesmen’s effectiveness, and such.

There is a chief manager of a large department store, for example, who makes it his practice to walk through the store at least once every day observing the myriad activities which would never find their way into a written report. It is true that by doing this he probably fails to perform other functions in his office.

On the other hand, he feels that only by doing this can he “know what is going on.” Although personal observation is time consuming and might look inefficient on the surface, there is no substitute for it in the control of the activities of subordinates. But many enterprises have grown beyond the size where the manager, due to the limitation of time available to him, can check through direct observation. Yet the manager must control; therefore, for his information he must depend upon prompt and well-designed reports.

8. Corrective Action:

The third stage in the process of control is taking corrective action.

The manager does not truly control unless he has taken corrective action if there has been any need for it. If there are no deviations of the performance from the established standards, then the manager’s process of controlling is fulfilled by the first two steps. But if there is a discrepancy or a variation, then his controlling function is not fulfilled unless he has taken the third step, namely, the step of corrective action.

In most examples of deviation there is very little the manager can do to correct the past, although occasionally it is possible. It is conceivable that in a department store the buyer has transcended his limits to buy. At the request of the store’s management, the supplier is willing to cooperate by canceling that particular order. In this instance there is a correction of the past, but ordinarily the manager cannot do anything about the past.

If production has not come up to standard, there is nothing the executive can do to alter past production figures. However, he must take such corrective action that the future production will meet the established standard.

In case of deviations the manager will do well to check into the various reasons for their occurrence before he prescribes any specific corrective action. Goals and standards were based on forecasts, and these forecasts in turn might have been based on forecasts which stones. In addition to forecasts, production quotas, for instance, might have been based on other conditions, to be specific, based on production quotas of a preceding department.

For example, the production quota-of the machine shop was based on a certain number of units the shop was to receive each day from the casting department. A check on the discrepancy points out that the deviation in production was not caused by the machine shop, but was due to an insufficient supply from the foundry. In such a case the corrective action must be geared so that it will affect the condition underlying the deviation, namely, in this instance, the corrective action must be directed towards the casting department.

Another reason for discrepancies might be that the subordinate manager is not qualified or has not been given proper directions and instructions. If the subordinate is not qualified, additional training might help, and then again there might be cases where even additional training would not be sufficient.

In this example a replacement would be in order. There might also be a situation where directions have not been given properly, and the subordinate was not well enough informed of what was expected of him. In this instance it is the superior’s duty to explain again to his subordinate the standards which he is expected to maintain.

It might also be helpful if the subordinate’s motivation could be made stronger.

After reviewing the different reasons for deviation the executive of an organisation must take corrective action. The mere discovery of out- of-line conditions or information about it does not achieve control. Control is exercised by taking action. This corrective action must be taken by the individual manager who has the authority for the operations affected and who has accepted the responsibility for them.

This corrective action might consist of a revision of production standards in the machining department, it might consist of replacing certain subordinates, or it might consist of a revision of the standards.

For example, an economic upswing has been forecast and standards based accordingly. If it does not materialize as anticipated, then the standards must be lowered in accordance therewith. In this instance taking corrective action means a revision of plans, and at the moment when a manager revises his plans he starts a completely new cycle of all the managerial functions.

The new plans might necessitate changes in the organization, changes in staffing, changes in direction, and of necessity will create new standards for the control process. In addition to starting a completely new cycle of all managerial functions, corrective action also starts anew the cycle of the controlling operations. New standards are set.

It will take checking and appraisal again and a comparison of results henceforth with the new standards. If deviations occur again additional correction will have to be taken. This clearly shows the, continuing circular movement of the controlling process arid the managerial process in general.

Steps in Control Process

The following three steps or phases are always present in control process:

1. Setting Standards that Represent Desired Performance:

In order to be able to find out whether or not performance is as it should be, enterprise goals, objectives and targets etc., are set as standards of performance. The actual performance is then judged against them.

The standards may be tangible or intangible, although greater emphasis should be laid on tangible standards. The standards in tangible terms may be in terms of output, costs, profit, time, persons available for training etc. In intangible terms standards may be for the results to be expected from a training programme, or an advertising campaign or employee morale etc.

2. A Comparison of Actual Results against the Standards:

Measure­ment of performance. This is the second step in the process of control. The evaluation must be either within the prior knowledge of the managers concerned or must be reported to them so that they can take the necessary corrective action, if needed.

Methods of Checking Performance:

There are three methods of checking performance, namely:

i. Prior approval – The managers may insist on checking person­ally before the work is permitted to proceed. They may do so for two reasons – (a) to make sure that the work will be done as planned; (b) to be confident that the standards laid down will be maintained. However, this arrangement of prior approval is likely to cause delay in action.

ii. Checking the unexpected – As long as the operations are going on according to plans, there is no need to submit any report. Only when unexpected results occur, there is need for reports and corrective action.

iii. Personal observation – Many executives insist on making frequent visits to their plants.

3. Taking Corrective Action:

The third step is taking corrective action. As soon as the deviations are reported it is the duty of the manager concerned to take steps to correct the past action or at least to bring similar action closer to the standards in future.

Steps in Control Process – As Identified by Prof. Newmann

Prof. Newmann identifies the following essential steps of control process:

1. Establishment of standards for measuring performance;

2. Checking and reporting on performance; and

3. Taking of corrective action.

1. Establishment of Standards:

Standards are set to constitute criteria against which results can be measured.

The standards which can be fixed for measuring performance are:

(i) Physical standards like quantities in units, man-hours, etc.

(ii) Cost standards such as cost per unit produced, material cost per unit, selling cost per unit of sale, etc.

(iii) Revenue standards such as annual sales for a department, etc.

(iv) Capital standards as the rate of return on capital invested, ratio of current assets to current liabilities, etc.

(v) Intangible standards such as competence of managers and employees, success of a public relations programme, morale of employees, etc.

2. Checking and Reporting on Performance:

To check performance against the pre­determined standards is the process of control. In other words, actual performance is compared with the standards fixed. For getting a correct idea of the variation from the standards fixed, it is necessary that standards are developed adequately and actual performance is measured accurately. Performance can be found out by a study of various summaries of figures, reports and statements. Similarly, the appraisal of performance of subordinates can be done by personal observation when they are at work.

A quick comparison of actual performance with the standards fixed is possible if the control system is well organised. The manager, while comparing the performance with the standards fixed, has to find out not only the extent of variation but also the causes of variation. Some of the variations may be unimportant while some others may turn out to be important which need immediate corrective action. Managers may use techniques such as ratios, indexes, averages, control charts, etc. for appraising performance.

3. Taking Corrective Action:

The manager, after finding out the deviations from the prescribed standards, has to take steps to correct the deviations. There is need for the manager to take corrective action immediately so that the normal position can be restored without any delay. Further, the manager has to find out the causes of deviations.

The causes of deviations may be due to inadequate communication, defective system of remuneration, defective system of selection of personnel, inadequate training of personnel, lack of motivation of subordinates, inadequate or outdated machinery, ineffective supervision, etc. Depending on the nature of causes, the manager has to take remedial action.

Steps in Control Process5 Steps

The following steps are taken in the process of control:

1. Establishment of Standards:

The first step of the control process is to establish the standards with which the actual results are to be evaluated. A standard is the criterion against which actual performance can be compared.

Standards could be broadly classified as being:

i. Tangible and

ii. Intangible.

i. Tangible standards are those which are capable of being expressed in specific numerical terms.

These are further analysed into the following divisions:

(a) Monetary standards i.e. standards expressed in terms of money e.g. profits, costs, expenses, income etc.

(b) Quantitative standards, i.e. standards expressed in terms of quantitative terms e.g. units of production, units of sales etc.

(c) Time standards, i.e. standards expressed in terms of time e.g. man- hours or machine-hours.

ii. Intangible standards are those which deal with qualitative aspects, and are not capable of being expressed directly and specifically in numerical terms.

Such standards might be set in the following areas:

(a) Morale of employees.

(b) Competence of managers.

(c) Reputation of the enterprise.

(d) Good public relations etc.

2. Measurement of Performance:

After establishment of standards, the next step is to measure the actual performance. Performance should be measured in the same terms in which standards have been established. Accurate and timely measurement of results requires an effective system of reporting.

3. Appraisal of Performance:

The actual performance is then compared with the standards. Such comparison will reveal the deviations from the standards.

4. Finding the Cause of Deviation:

Every significant deviation is analysed to find out why it has occurred. This will help in finding out who are responsible for deviations.

5. Taking Corrective Action:

The final step in the control process is taking appropriate actions so that deviations may not occur again and the objectives of the organisation are achieved.