There are four basic steps in management’s controlling function. The study focuses on the four basic steps of management’s control function. The study includes generating examples vividly explaining each management control function step. Setting into motion the four steps of management’s control function improves profit performances.
There are four basic steps of management control function. First, management must establish standards of performance. Management must define the benchmarks. Management must implement goals and objectives. For example, management sets the sales benchmark at a minimum of $ 200,000. Likewise, management sets the benchmark for operating expenses at an amount lower than $50,000.
In addition, management establishes transportation expenses at ten percent of revenues. Further, management requires the factory to generate a minimum 2,000 units. Management orders the employees to work an additional two hours.
The overtime period contributes to the company’s goal and objectives. Management can set a minimum sales quota of $300,000 for each store outlets. Management can prevent each store outlet from exceeding a $ 70,000 monthly operating expense.
Second, management measures actual performance outputs. Many entities prepare and present performance measurement reports. The actual performance outputs must be related to the standards or benchmarks established.
The company collects the actual sales figures from each store branch. Likewise, management collects the actual expense amounts from the different stores strategically located in major Cities within the United States.
Third, management must compare the actual performances to the preset performance standards. Management determines whether the actual production output attains established organizational goals and objectives. Comparing includes determining the variance between the actual performance statistics and the established goals and objectives.
For example, management must indicate the actual expenses are unfavorably higher than the established standards. In the same manner, management indicates that the actual operating expenses are favorably lower than established expense amounts. In addition, management comments that actual revenues are favorably higher than the established sales benchmarks.
Fourth, management should take corrective actions. The actions improve current performance outputs. Management focuses its time and efforts correcting figures that vary from the established benchmarks, goals, or objectives. Management should prioritize controlling unfavorable performances. Management holds a brainstorming session. The session threshes out the reasons for the performance variances.
All interested parties are invited to shed light on the discrepancy between actual outputs and benchmark figures. The employees, supervisors, managers, and other individuals encouragingly air their situational inputs. Management persuades all affected parties to give their comments, suggestions, complaints, and other recommendations. The employees request management to purchase new factory equipments.
The new equipment increases current production outputs. The sales people requests management to increase its advertising expense allotments. Based on the inputs, management generates several alternatives. The alternatives contribute to reducing the variance between standards and actual performances. Management must set into motion the best alternative.
Based on the above discussion, there are four basic steps in management’s control function. The basic steps focus on goal and objective attainment. Some examples vividly explain each of the four steps of management’s control functions. Indeed, the implementation of the four steps of management’s control function enhances profits.