Essay About Setting Standards And Establishment Of The Range Of Deviation

The Control Process
The given text deals with the notion of control and control process. According to the author, controlling is the most misunderstood management function which is often associated with some negative connotations like keeping workers in line. But in general controlling can be described as simply restraining negative behavior and ensuring that an organization is attaining its objectives.As Peter Drucker states, performing the control function starts with formulating objectives and defining a company’s direction. In this way, there are three basic stages in the control process: 1) setting standards; 2) comparing performance to standards; 3) and taking necessary corrective actions.According to the text, in their sense standards represent any specific objectives against which progress can be measured. There are two main characteristics that define objectives which can be used as standards: a time limit and specific criterion of work comparison. In pair, these characteristics are often named as performance indicators. Obviously, it is quite easy to establish indicators in quantifiable areas such as profits, sales and costs, but it is rather tricky in areas which cannot be expressed numerically such as moral or motivation. Of course, these notions can be tracked indirectly, with measuring some manifestations of an indicator. But this can appear to be very dangerous as some other external variables can influence the received figures. In this case, a manager should be able to recognize this and act properly. Still, any subjective indicators are better than none at all. That is why, according to the text, most companies still use some indicators to evaluate their activity and results in the R&D sphere even if they do not take into account a company’s direction in the made researches.The second stage of the control process is comparing actual performance to the established standards. The basic activities of which this stage consists of generally include the establishment of the range of deviation, measurement, communication, and evaluation.It is a quite obvious fact that any company almost never hits its targets precisely. That is why, according to the text, any standards set by a company’s management team should have a realistic safety margin. Therefore, top management has to establish a range of deviation. What the range of deviation should be is a critical decision as an inappropriate range may prevent an organization from attaining its objectives. What is more, controlling the deviation may appear to be rather costly. That is why the benefits must exceed the costs of the control system. This is often achieved by practicing management by exception which means that only significant variations from standards should trigger the control system.