Executive Summery

Controlling is a four-step process of establishing performance standards based on thefirm's objectives, measuring and reporting actual performance, comparing the two, andtaking corrective or preventive action as necessary. It actually is a process of monitoring performance and taking action to ensure desired results. Performance standards come from the planning function. No matter how difficult, standards should be established for every important task. Although the temptation may be great, lowering standards to what has been attained is not a solution to performance problems. On the other hand, a manager does need to lower standards when they are found to be unattainable due to resource limitations and factors external to the business. Control helps an organization adapt to changing conditions, limits the compounding of errors, helps an organization cope with complexity, and helps minimize cost. In today’s complex and turbulent environment, all organizations must contend with change. If managers could establish goals and achieve them instantaneously, control would not be needed. But between the time a goal is established and the time it is reached, many things can happen in the organization and its environment to disrupt movement toward the goal or even to change the goal itself. A properly designed control system can help managers anticipate, monitor, and to changing circumstances. Small mistakes and errors do not often seriously damage the health of an organization. With the passage of time, however, small errors may accumulate and become very serious. When a firm purchases only one raw material, produces but one product, has a simple structure, and enjoys constant demand for its product, its managers can probably maintain control with a note pad and pencil. But in an organization that produces many products from myriad raw materials, has a large market area and complicated organization structure, and operates in a competitive environment, it is difficult to maintain adequate control without and elaborate control system. When control is practiced effectively, it can help reduce costs and boosts output. Effective control system can eliminate waste, lower labor costs, and improve output per unit of input. So in management Controlling plays a major role in achieving a specific target.

Introduction
Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.” Just as a navigator continually takes reading to ensure whether he is relative to a planned action, so should a business manager continually take reading to assure himself that his enterprise is on right course.” Corrective action is necessary when performance is below standards. If performance is anticipated to be below standards, preventive action must be taken to ensure that the problem does not recur. If performance is greater than or equal to standards, it is useful to reinforce behaviors that led to the acceptable performance. It sees to it that the right things happen, in the right ways, and at the right time. Donewell, it ensures that the overall directions of individuals and groups are consistent with short and long range plans. It helps ensure that objectives and accomplishments are consistent with one another throughout an organization. It also helps maintain compliance with essential organizational rules and policies.

Objective
As a part of our “Management of organization” course we are working on Controlling. We believe this study will help us learning the concept of controlling in detailed with various perspective in it. Further more this study will help us learn how to take a group decision effectively as well as how to work in a group efficiently toward a single group task. Besides learning controlling we tried to develop our communication skill by interacting with each other which will help us in the long run while working in an organization.

The purpose of controlling
In many ways the purpose of control should be obvious. The purpose of control is to provide managers with an assessment of where the organization is in comparison to where it is supposed to be at a certain point in time and in terms of one or more indicators of performance.

Areas of controlling
Organizational control can focus on any area of an organization. Two useful ways of identifying areas of control are in terms of resource focus and level.The resource view of control, as shown in the fig: deals with financial, physical, human,and information resources. The management process itself involves efficiently an deffectively combining these resources into appropriate outputs. Control of physicalresources includes inventory management, quality, control, and equipment control.Control of human resources includes selection and placement activities, training anddevelopment, performance appraisal, and compensation levels. Control of informationresources involves sales and marketing forecasting, environmental analysis, publicrelations, production scheduling, and economic forecasting.Control can also classified by level. Operations control is control focused on one or moreoperation systems within an organization. Quality control is one type of operationscontrol. Organizational control is concerned with the overall functioning of theorganization. Strategic control is concerned with how effectively organizationunderstands and aligns itself with its environment.8 Responsibilities of controlling
Managers have always been responsible for managing control. It is they who actuallyimplement control systems and take appropriate actions based on the information provided by those control systems.Most large organizations also have one or more specialized managerial positions calledcontroller. The controller is responsible for helping line managers with their controlactivities, coordinating the organization’s overall control system. Many businessesthat use a divisional form of organization design have several controllers: one for thecorporation and one for each division.

The planning controlling link
The organization continuously cycles back and forth between planning and controlling.The manager makes plans and then uses the control system to monitor progress towardfulfillment of those plans. The control system, in turn, tells the manager that things aregoing as they should.

The Control Process
•Establish objectives and standards.•Measure actual performance.•Compare results with objectives and standards.•Take necessary action.

7.1 Establishing standards
The first step in the control process is the establishment of standards. A standard is a target against which subsequent performance is to be compared. As much as possible, standard established for control purposes should be derived from the organizations goals. On a broader level, control standards also reflect organizational strategy. A final aspect of establishing standards is to decide which performance indicators are relevant. When a new product is introduced, its manufacturer should have some idea in advance whether the first month’s sale will take a while to gather momentum.•The control process begins with planning and the establishment of performance objectives. Performance objectives are defined and the standards for measuring them are set. There are two types of standards: –Output Standards - measures performance results in terms of quantity, quality, cost, or time. –Input Standards - measures work efforts that go into a performance task.

7.2 Measuring performance
The second step in the control process is measuring performance. Performance refers to that which we are attempting to control. The measurement of performance is a constant, ongoing activity for most organizations and for control to be effective, relevant performance measures must be valid. When a manager is concerned with controlling sales, daily, weekly, or monthly sales figures represent actual performance. For a production manager, performance may be expressed in terms of unit cost, quality or volume. For employees, performance may be measured in terms of quality or quantity of output. Measurements must be accurate enough to spot deviations or variances between what really occurs and what is most desired.• Without measurement, effective control is not possible.

7.3 Comparing performance against standards
The third step in the control process is to compare measured performance against thestandards developed in step 1. Performance may be higher than, lower than, or the sameas the standards. The issue is how much leeway is permissible for remedial action istaken. In some cases comparison is easy. It is relatively simple to determine whether thisstandard has been met.In other settings, however, comparison is less clear-cut. Assume that each of three salesmanagers has a goal of increasing sales by 10% during the year. At the end of year, onemanager has increased sales by 9.9%, another by 9.3% and the third by 8.7%. How do we decide whether each has met the standard? For the most part, this is a managementdecision that must be based on many relevant factors. Although none of the three salesmanagers attained the precise goal of 10%, one was very close. Another may have metwith unexpected competition from a new company. These and other relevant factors must be considered.•The comparison of actual performance with desired performance establishes theneed for action.•Ways of making such comparisons include:Historical / Relative / Engineering Benchmarking

7.4 Evaluation and Action
The final step in the control process is to evaluate performance and then take appropriateaction. This evaluation draws heavily on a manager’s analytic and diagnostic skills. After evaluation, one of three actions is usually appropriate.
•Maintain the status quo: One response is to do nothing, or maintain the statuesquo. This action is generally appropriate when performance more or less measuresup to the standard.
•Correct the deviation: It is more likely that some action will be needed to correct adeviation from the standard. If the cost-reduction standard is 4% and we have thusfar managed only a 1% reduction, something must be done to get us back ontrack. We may need to motivate our employees to work harder or supply themwith new machinery. Managers at sharper image saw a clear problem with their same–store sales and took corrective action immediately.
•Change standards: A final response to the outcome of comparing performance tostandards is to change the standards. The standard may have been too high or toolow to begin with. The company may need to reassess its standard and adopt alower one to better reflect the realities of its marketplace.
•Taking any action necessary to correct or improve things.
•Management-by-Exception focuses managerial attention on substantialdifferences between actual and desired performance..

Types of operational control:
Operational control can take three forms-preliminary, screening and post action. Thethree forms vary primarily in terms of where they occur in relation to the transformation processes used by the organization.

a.Preliminary Control (feed forward)
Preliminary Control concentrated on inputs to the system early in the overall process. Preliminary control attempts to monitor the quality or quantity of financial, physical, human and information resources before they become part of the system. Firms like Proctor & Gamble and General Mills hire only college graduates for their management training programmes-and only after several interviews and other selection criteria have been satisfied. Thus, they control the quality of he human resource entering the organization. When Sears orders merchandise to be manufactured under its own brand name, it specifies rigid standards of quality, thereby controlling material inputs. Similarly, organizations often take steps to control financial and information resources as they enter the system.

b.Screening Control (Concurrent)
Screening Control takes place during the transformation process. Screening control relies heavily on feedback processes. Suppose that a manager of a manufacturing control establishes a number of checkpoints along the assembly line. As the product moves along the line, it is periodically checked to make sure that all of the components assembled so far are working properly. This is screening control, because the product is being controlled during the transformation process itself. Because screening control are widely applicable and useful in identifying the cause of problems they tend to be used more often than other forms of control. More and more companies are adopting a screening control philosophy. Such control systems are an effective way to promote employee participation and catch problems in the transformation process.

c.Post action control
Post action control focuses on the outputs of the organization after the transformation process is complete. If a product can be manufactured in only two or three steps, postaction control may be the most effective method. Although post action control isgenerally not as useful as preliminary or screening control, it can be effective in twoimportant ways. It provides management with information for future planning. Postaction control also provides a basis for rewarding employees.

Forms of organizations control 9.1 Bureaucratic Control
Bureaucratic Control is a form of organizational control characterized by formal andmechanistic structural arrangements. The goal of bureaucratic control is to extractemployee compliance. Organizations that use it rely on strict rules and a rigid hierarchy,12 concentrate on ensuring that people meet minimally acceptable levels of performance andhave a tall structure. Moreover they focus their rewards on individual performance andallow only limited and formal employee participation.

9.2Clan Control
Clan Control is an approach to organizational control based on informal and organicstructural arrangements. Accordingly, it relies heavily on group norms, a strong corporateculture and self-control of behavior. The focus of performance is not so much onminimally acceptable levels, but rather on how people can enhance their levels of performance beyond minimal levels. Organizations using this approach are usuallyrelatively flat and encourage shared influence. Rewards are often directed at group performance and participation is widespread.

9.3 Strategic control
Strategic control-the third level of control practiced by organization-is aimed at ensuringthat the organization is maintaining an effective alignment with its environment andmoving toward achieving its strategic control. Because the study of strategic control isstill in its infancy, there are no generally accepted models or theories. In general,however, the implementation of strategy generally five basic areas: structures, leadership,technology, human resources, and information and control systems. Thus it follows thatstrategic control should focus on these five areas in order to ensure that strategy has beenand is being effectively implemented.

9.4 Cybernetic Control System
One that is self-contained in its performance monitoring and correction capabilities. Thecontrol process practiced in organizations is not cybernetic, but it does follow similar principles.Controlling consists of verifying whether everything occurs in conformities with the plans adopted, instructions issued and principles established. Controlling ensures thatthere is effective and efficient utilization of organizational resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from thestandard performance, discovers the causes of such deviations and helps in takingcorrective actions.

Managing the control process

Developing Effective Control Systems
Control systems tend to be most effective when they are integrated with planning and areflexible, accurate, timely and objective.

Integrated with Planning
We noted earlier that control should be linked with planning. In general, the more explicitand precise this linkage is, the more effective the control system will be. The mostimportant factor in effectively integrating planning and control is to account for controlas plans are developed.

Flexible
Another characteristic of an effective control system is flexibility-that is, the controlsystem itself must be flexible enough to accommodate change.

Accurate
Control systems must also be accurate. This seems obvious enough, but it is surprisinghow many managers base decisions on inaccurate information. Denied accuratemeasurement and reporting of performance, managers may take inappropriate action, andthe results of inaccurate information can be quite dramatic.

Timely
Another characteristic of an effective control system is that it provides performance information in a timely way. Timeliness does not necessarily means fast; it simply means that information is provided as often as is suitable for that which is being controlled.

Objective
To the extent possible, the information provided by the control system should be objective or it can be said that the control system should therefore provide objective information to the manager for evaluation and action, but the manager must take appropriate precautions in interpreting it.

Understanding Resistance to Control

Over control
Occasionally, organizations make the mistake of over control-they try to control toomany things. This becomes especially problematic when the control relates directly toemployee behavior. As for example when a company tells an employee how to dress,how to wear their hair, employees are likely to feel over controlled.

Inappropriate fears
Another reason for resistance is that the focus of the control system may be inappropriate.The control system may be too narrow, or it may focus too much on quantifiablevariables and leave no room for analysis or interpretation.

Rewards for inefficiency
If two separate departments in one company gets treated different way for their spendingor conserving like: one dept. is punished (budget cuts) for being overly efficient withtheir funds while the other is rewarded (budget increase) for being inefficient. Peoplenaturally resist this kind of control, because the rewards and punishments associated withspending and conserving are unfair.

Accountability
Another reason some people resist control is that effective control systems createaccountability. When people have the responsibility to do something, effective controlsallow managers to determine whether they successfully discharge that responsibility. If the standards are properly set and performance is accurately measured, managers not onlyknow when problems arise but also which dept. and even which individuals areresponsible.

Overcoming resistance to control
Create effective controls
Perhaps the best way to overcome resistance to control is to create effective control to begin with. If control systems are properly integrated with an organization’s planningsystem and if the controls are flexible, accurate, timely and objective, the organizationshould not fall victim to the problems of over control, incorrect focus or rewardinginefficiency.

Encourage Participation
Participation can help overcome resistance to change. By the same token, whenemployees are involved with planning and implementing the control system they are lesslikely to resist it.15 Use of MBO
Management by objectives, or MBO can also overcome employee resistance to control.When MBO is used properly, employee help establish their own goals. These goals, inturn, become standards against which their performance will be measured. Employeesalso know in advance that their rewards will be based on the extent to which they achieveand maintain those goals and standards.

Use of Checks and Balances
Another way to overcome employee resistance to control is to maintain a system of checks and balances. The human resource control system should have records on thematter. Multiple standards and information systems provide checks and balances for control. Resistance declines because the system of checks and balances serves to protectemployees as well as management.

Choosing a style of control
One approach to selecting a style of control bases the decision on four factors:management style, organizational style, performance measures, and employee desire to participate. Management styles are presumed to be either participative (Consulting withsubordinates) or directive (telling others what to do). Organizational style, which is acomposite of culture, structure, and reward systems, can be participative (participativedecision making throughout the organization) or no participative (centralized, with few people participating in the decision making process). Performance measures are classifiedas accurate (reliable, valid, and truly reflective of performance) or relatively inaccurate(unreliable, ambiguous, and not totally reflective of performance). Finally, employees areassumed to have either considerable desire to participate in decision-making or littledesire to participate.

Effective Controls
The Best Controls in Organizations are
•Strategic and results oriented•Understandable•Encourage self-control•Timely and exception oriented•Positive in nature16
•Fair and objective•Flexible

Organizational Control Systems
•Management Processes –Strategy and objectives –Policies and procedures –Selection and training –Performance appraisal –Job design and work structures –Performance modeling, norms, and organization culture•
Compensation and Benefits –Attract talented people and retain them. –Motivate people to exert maximum effort in their work. –Recognize the value of their performance contributions
.Employee Discipline
•Discipline is defined as influencing behavior through reprimand.•Progressive Discipline ties reprimand to the severity and frequency of theemployee’s infractions.•Positive Discipline tries to involve people more positively and directly in makingdecisions to improve their behavior.
Effective Discipline
•Immediate•Focus on activity not personality•Consistent•Informative•Occur in a supportive setting•Support realistic rules Operations Management and Control
•Purchasing
–Economic Order Quantity
–automatic reorder points
–Just-In-Time Scheduling
–Project Management
•Program Evaluation and Review Technique (PERT) - Identifies and controls themany separate events in complex projects.
Statistical Quality Control –Based on the establishment of upper and lower control limits, that can begraphically and statistically monitored to ensure that products meet standards.
Controlling has got two basic purposes
1.It facilitates co-ordination2.It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management-1.
Controlling is an end function-
A function which comes once the performancesare made in conformities with plans.2.
Controlling is a pervasive function- which means it is performed by managers atall levels and in all type of concerns.3.
Controlling is forward looking- because effective control is not possible without past being controlled. Controlling always look to future so that follow-up can bemade whenever required.4.
Controlling is a dynamic process- since controlling requires taking reviewalmethods, changes have to be made wherever possible.5.
Controlling is related with planning-
Planning and Controlling are twoinseperable functions of management. Without planning, controlling is ameaningless exercise and without controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning

Characteristics of the Control Process The control process is cyclical which means it is never finished. Controlling leads toidentification of new problems that in turn need to be addressed through establishment of performance standards, measuring performance etc.Employees often view controlling negatively. By its very nature, controlling often leadsto management expecting employee behavior to change. No matter how positive thechanges may be for the organization, employees may still view them negatively.Control is both anticipatory and retrospective. The process anticipates problems and takes preventive action. With corrective action, the process also follows up on problems.Ideally, each person in the business views control as his or her responsibility. Theorganizational culture should prevent a person walking away from a small, easilysolvable problem because "that isn't my responsibility." In customer driven businesses,each employee cares about each customer. In quality driven dairy farms, for example,each employee cares about the welfare of each animal and the wear and tear on each piece of equipment.Controlling is related to each of the other functions of management. Controlling builds on planning, organizing and leading.
Management Control Strategies
Managers can use one or a combination of three control strategies or styles: market, bureaucracy and clan. (Figure 18.3) Each serves a different purpose. External forcesmake up market control. Without external forces to bring about needed control, managerscan turn to internal bureaucratic or clan control. The first relies primarily on budgets andrules. The second relies on employees wanting to satisfy their social needs throughfeeling a valued part of the business.Self-control, sometimes called adhocracy control, is complementary to market, bureaucratic and clan control. By training and encouraging individuals to take initiativein addressing problems on their own, there can be a resulting sense of individualempowerment. This empowerment plays out as self-control. The self-control then benefits the organization and increases the sense of worth to the business in theindividual.19 Designing Effective Control Systems Effective control systems have the following characteristics:1. Control at all levels in the business (Figure 19.1)2. Acceptability to those who will enforce decisions3. Flexibility4. Accuracy5. Timeliness6. Cost effectiveness7. Understandability8. Balance between objectivity and subjectivity9. Coordinated with planning, organizing and leading
Dysfunctional Consequences of Control Managers expect people in an organization to change their behavior in response tocontrol. However, employee resistance can easily make control efforts dysfunctional. Thefollowing behaviors demonstrate means by which the manager's control efforts can befrustrated:1. Game playing--> control is something to be beaten, a game between the "boss and meand I want to win."2. Resisting control--> a "blue flu" reaction to too much control3. Providing inaccurate information --> a lack of understanding of why the information isneeded and important leading to "you want numbers, we will give you numbers."4. Following rules to the letter--> people following dumb and unprofitable rules inreaction to "do as I say."
5. Sabotaging --> stealing, discrediting other workers, chasing customers away, gossipingabout the firm to people in the community
6. Playing one manager off against another --> exploiting lack of communication amongmanagers, asking a second manager if don't like the answer from the first manager.

Various Administrative Controls
Organizations often use standardized documents to ensure complete and consistentinformation is gathered. Documents include titles and dates to detect different versions of the document. Computers have revolutionized administrative controls through use of integrated management information systems, project management software, humanresource information systems, office automation software, etc. Organizations typicallyrequire a wide range of reports, e.g., financial reports, status reports, project reports, etc.to monitor what's being done, by when and how.
22.1 Delegation
Delegation is an approach to get things done, in conjunction with other employees.Delegation is often viewed as a major means of influence and therefore is categorized asan activity in leading (rather than controlling/coordinating). Delegation generallyincludes assigning responsibility to an employee to complete a task, granting theemployee sufficient authority to gain the resources to do the task and letting the employeedecide how that task will be carried out. Typically, the person assigning the task sharesaccountability with the employee for ensuring the task is completed..
22.2 Evaluations
Evaluation is carefully collecting and analyzing information in order to make decisions.There are many types of evaluations in organizations, for example, evaluation of marketing efforts, evaluation of employee performance, program evaluations, etc.Evaluations can focus on many aspects of an organization and its processes, for example,its goals, processes, outcomes, etc.
Financial Statements (particularly budget management)
Once the organization has establish goals and associated strategies (or ways to reach thegoals), funds are set aside for the resources and labor to the accomplish goals and tasks.As the money is spent, statements are changed to reflect what was spent, how it was spentand what it obtained. Review of financial statements is one of the more common methodsto monitor the progress of programs and plans. The most common financial statements include the balance sheet, income statement and cash flow statement. Financial audits are regularly conducted to ensure that financial management practices follow generally accepted standards, as well. Performance Management (particularly observation and feedback phases)Performance management focuses on the performance of the total organization, includingits processes, critical subsystems (departments, programs, projects, etc.) and employees. Most of us have some basic impression of employee performance management, includingthe role of performance reviews. Performance reviews provide an opportunity for supervisors and their employees to regularly communicate about goals, how well thosegoals should be met, how well the goals are being met and what must be done to continueto meet (or change) those goals. The employee is rewarded in some form for meeting performance standards, or embarks on a development plan with the supervisor in order toimprove performance.Policies and Procedures (to guide behaviors in the workplace)Policies help ensure that behaviors in the workplace conform to federal and state laws,and also to expectations of the organization. Often, policies are applied to specifiedsituations in the form of procedures. Personnel policies and procedures help ensure thatemployee laws are followed (e.g., laws such as the Americans with Disabilities Act,Occupational Health and Safety Act, etc.) and minimize the likelihood of costlylitigation. A procedure is a step-by-step list of activities required to conduct a certaintask. Procedures ensure that routine tasks are carried out in an effective and efficientfashion.
Quality Control and Operations Management
The concept of quality control has received a great deal of attention over the past twentyyears. Many people recognize phrases such as "do it right the first time, "zero defects","Total Quality Management", etc. Very broadly, quality includes specifying a performance standard (often by benchmarking, or comparing to a well-acceptedstandard), monitoring and measuring results, comparing the results to the standard andthen making adjusts as necessary. Recently, the concept of quality management hasexpanded to include organization-wide programs, such as Total Quality Management,ISO9000, Balanced Scorecard, etc. Operations management includes the overall activitiesinvolved in developing, producing and distributing products and services.Risk, Safety and LiabilitiesFor a variety of reasons (including the increasing number of lawsuits), organizations arefocusing a great deal of attention to activities that minimize risk, avoid liabilities andensure safety of employees. Several decades ago, it was rare to hear of an organizationundertaking contingency planning, disaster recovery planning or critical incidentanalysis. Now those activities are becoming commonplace. See 22 Relationship between planning and controlling
Planning and controlling are two separate functions of management, yet they are closelyrelated. The scope of activities if both is overlapping to each other. Without the basis of planning, controlling activities becomes baseless and without controlling, planning becomes a meaningless exercise. In absence of controlling, no purpose can be served by.Therefore, planning and controlling reinforce each other. According to Billy Goetz,“Relationship between the two can be summarized in the following points1.Planning precedes controlling and controlling succeeds planning.2.Planning and controlling are inseparable functions of management.3.Activities are put on rails by planning and they are kept at right place throughcontrolling.4.The process of planning and controlling works on Systems Approach which is asfollows :
Planning → Results → Corrective Action 5.Planning and controlling are integral parts of an organization as both areimportant for smooth running of an enterprise.6.Planning and controlling reinforce each other. Each drives the other function of management.In the present dynamic environment which affects the organization, the strongrelationship between the two is very critical and important. In the present dayenvironment, it is quite likely that planning fails due to some unforeseen events. Therecontrolling comes to the rescue. Once controlling is done effectively, it gives us stimulusto make better plans. Therefore, planning and controlling are in separate functions of a business enterprise.
Quality control
Quality control is a process employed to ensure a certain level of quality in a product or service. It may include whatever actions a business deems necessary to provide for thecontrol and verification of certain characteristics of a product or service. The basic goalof quality control is to ensure that the products, services, or processes provided meetspecific requirements and are dependable, satisfactory, and fiscally sound.Essentially, quality control involves the examination of a product, service, or process for certain minimum levels of quality. The goal of a quality control team is to identify products or services that do not meet a company’s specified standards of quality. If a problem is identified, the job of a quality control team or professional may involve stopping production temporarily. Depending on the particular service or product, as wellas the type of problem identified, production or implementation may not cease entirely.Usually, it is not the job of a quality control team or professional to correct quality issues.Typically, other individuals are involved in the process of discovering the cause of quality issues and fixing them. Once such problems are overcome, the product, service,or process continues production or implementation as usual.Quality control can cover not just products, services, and processes, but also people.Employees are an important part of any company. If a company has employees that don’thave adequate skills or training, have trouble understanding directions, or aremisinformed, quality may be severely diminished. When quality control is considered interms of human beings, it concerns correctable issues. However, it should not beconfused with human resource issues.Often, quality control is confused withquality assurance. Though the two are verysimilar, there are some basic differences. Quality control is concerned with the product,while quality assurance is process–oriented.Even with such a clear-cut difference defined, identifying the differences between thetwo can be hard. Basically, quality control involves evaluating a product, activity, process, or service. By contrast, quality assurance is designed to make sure processes aresufficient to meet objectives. Simply put, quality assurance ensures a product or service ismanufactured, implemented, created, or produced in the right way; while quality controlevaluates whether or not the end result is satisfactory.
View of Organizational Control
I. Organization Control includes any process designed to assure that organization plansare carried out the way they were designed.a. Traditionally, control processes were primarily quantitative in nature. budgets,standard cost systems, market quotas b. Thus, the duty for establishment and analysis of control system results developed primarily as an accounting function.c. During the past decade, control systems have moved from strictly quantitative innature to both quantitative and qualitative in nature. i.e.; From performance bonuses based on bottom-line net income to efforts that generate increased satisfaction of customers with the quality of product services24

II. The contemporary attitude of control and control systems is that such control effortsshould motivate people toward desired organizational behavior and not promotedysfunctional behavior.Traditional Outlook 1990s Through 21st CenturyWhat is measured Meeting Budget Customer SatisfactionProduction Efficiency New Product DevelopmentInputs OutcomesQuantitative Performance Quantitative andQualitative PerformanceWho is measured Individuals Teams (Groups)Functions Cross-Functional EffortsResponsibility CentersHow rewarded Efficiency QualityProfits InnovationROI CreativityOverall CompanyPerformanceFocus Internal Macro-EnvironmentIndustry EnvironmentInternal
Statistical Process Control Charts
Statistical process control charts are a widely used quality management tool because theycan be applied in many different situations. When maintained in real time, these charts provide an early warning about quality problems. Most cost management and accountingliterature focuses on control charts with only a single variable, even though manyvariables can be measured for the same process.
Univariate
(one-variable) charts measure only one characteristic, while multivariate (many-variable) charts monitor more than one characteristic simultaneously. A singlevariable control chart can, under certain conditions, give misleading information whenmultiple variables are being measured concurrently. This article shows how a25
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multivariate control chart can be used to acquire more useful information about a processor activity when more than one characteristic is monitored at once.
Control Chart Elements
An SPC chart is a graph that shows the measurements of some characteristic of interest.This characteristic can be a qualitative or a quantitative attribute. In general, SPC charts possess the following elements:  Center line, or process average, surrounded by individual observations.
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 Upper and lower control limits (three standard deviations from the

short-term process average).  Horizontal axis that identifies observations and preserves the time order
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of their collection. Vertical axis scaled to the values of the observations.
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SPC charts are used to identify points that differ from the process average as well as toreveal shifts in the process. If the points (observations) in a chart fall within the upper andlower limits then the process is considered to be in statistical control. If an observationfalls outside of the control limits or a run is detected in the data then the process isconsidered to be out of control. (A run is a series of consecutive points above or belowthe center line). An investigator tries to discover the source of variation and determine aremedy by evaluatingA control chart can also be used to evaluate the non-financial aspects of various processesand activities (i.e. cycle time, schedule attainment, machine availability, defect rate, etc.).Performance measurement is a recurring part of the accounting function. Employees inthis area should have an understanding of the control chart and how they can help inevaluating performance.Administrative processes, especially repetitive ones, are also candidates for SPC (i.e. payroll, accounts payable, accounts receivable). If SPC is used, personnel would gain agreater understanding of the natural variability in the processes and of how reducingvariation could result in better services.
29.1 The Multivariate Control Chart
A multivariate control chart should be used to obtain more complete information aboutthe state of control when more than one variable is being measured simultaneously. The purpose of this chart is to determine if the variation present in a process is attributable to unusual influences. This chart measures several variables at once and sends out a signalwhen the relationship among the variables changes unexpectedly.
29.2 Differences Between Multivariate and Univariate Charts
Three main differences occur between multi- and univariate control charts:1. Calculating the data point to be plotted on the chart—points plotted on aunivariate control chart for averages are the sample means. In amultivariate control chart based on samples, the points plotted are aquadratic form of the means of the measurements in each sample.2. Calculating the control limits—there is only an upper control limit in amultivariate control chart due to the way the observations are calculated.3. Investigating out-of-control points—in a multivariate control chart, theinvestigator must first determine which characteristic caused the processto be out-of-control. This is not necessary in a univariate control chartbecause only one characteristic is measured.
29.3 Multivariate Charts Complement Univariate Charts
Both multivariate and univariate charts should be used together because they complementeach other. The univariate chart signals when an observation falls outside of the upper and lower control limits. The multivariate chart sends out a signal when an imbalanceexists among the variables. This shows that when multiple variables are concurrentlymonitored for the same process or activity, the best and most complete information isgenerated when using the two charts in conjunction with one another.
29.4 Advantages of Multivariate Charts Provides an out-of-control signal when the variables move in a direction
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that is unexpected. Indicates whether this variation is statistically significant.
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Easier to examine than multiple univariate charts simultaneously.
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Detects differences in the degree of movement away from a process
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average. May detect subtle changes in the relationships among the variables that

would not be noticeable from separate univariate charts.27 Allows users to evaluate the system as a whole rather than the sum of
many individual parts. Requires no additional data if the data currently are accumulated for

univariate control charts.
Use of Statistical charts in Controlling
The general approach to on-line quality control is straightforward: We simply extractsamples of a certain size from the ongoing production process. We then produce linecharts of the variability in those samples, and consider their closeness to targetspecifications. If a trend emerges in those lines, or if samples fall outside pre-specifiedlimits, then we declare the process to be out of control and take action to find the cause of the problem. These types of charts are sometimes also referred to as Shewhart controlcharts
Interpreting the chart:
The most standard display actually contains two charts, one iscalled an X-bar chart
, the other is called an R chart
.In both line charts, the horizontal axis represents the different samples; the vertical axisfor the X-bar chart represents the means for the characteristic of interest; the vertical axisfor the R chart represents the ranges. For example, suppose we wanted to control thediameter of piston rings that we are producing. The center line in the X-bar chart wouldrepresent the desired standard size (e.g., diameter in millimeters) of the rings, while thecenter line in the R chart would represent the acceptable (within-specification) range of the rings within samples; thus, this latter chart is a chart of the variability of the process(the larger the variability, the larger the range). In addition to the center line, a typicalchart includes two additional horizontal lines to represent the upper and lower controllimits (
UCL, LCL
, respectively); we will return to those lines shortly. Typically, theindividual points in the chart, representing the samples, are connected by a line. If thisline moves outside the upper or lower control limits or exhibits systematic patterns across consecutive samples then a quality problem may potentially exist.

Common Types of Charts
The types of charts are often classified according to the type of quality characteristic that they are supposed to monitor: there are quality control charts for

Variables and control28 charts for attributes. Specifically, the following charts are commonly constructed for controlling variables:
•
X-bar chart.
In this chart the sample means are plotted in order to control themean value of a variable (e.g., size of piston rings, strength of materials, etc.).
•
R chart.
In this chart, the sample ranges are plotted in order to control thevariability of a variable.
•
S chart.
In this chart, the sample standard deviations are plotted in order tocontrol the variability of a variable.
•
S**2 chart.
In this chart, the sample variances are plotted in order to control thevariability of a variable.For controlling quality characteristics that represent attributes of the product, thefollowing charts are commonly constructed:
•
C chart.
In this chart (see example below), we plot the number of defectives
(per batch, per day, per machine, per 100 feet of pipe, etc.). This chart assumes thatdefects of the quality attribute are rare , and the control limits in this chart arecomputed based on the Poisson distribution (distribution of rare events).
•
U chart.
In this chart we plot the rate of defectives
, that is, the number of defectives divided by the number of units inspected (the n ; e.g., feet of pipe,number of batches). Unlike the C chart, this chart does not require a constantnumber of units, and it can be used, for example, when the batches (samples) areof different sizes.
•
Np chart.
In this chart, we plot the number of defectives (per batch, per day, per machine) as in the C chart. However, the control limits in this chart are not basedon the distribution of rare events, but rather on the binomial distribution.Therefore, this chart should be used if the occurrence of defectives is not rare(e.g., they occur in more than 5% of the units inspected). For example, we mayuse this chart to control the number of units produced with minor flaws.
•
P chart.
In this chart, we plot the percent of defectives (per batch, per day, per machine, etc.) as in the U chart. However, the control limits in this chart are not based on the distribution of rare events but rather on the binomial distribution (of proportions). Therefore, this chart is most applicable to situations where theoccurrence of defectives is not rare (e.g., we expect the percent of defectives to bemore than 5% of the total number of units produced).
Control Individual Observations
Variable control charts can by constructed for individual observations taken from the production line, rather than samples of observations. This is sometimes necessary whentesting samples of multiple observations would be too expensive, inconvenient, or impossible. For example, the number of customer complaints or product returns may only be available on a monthly basis; yet, you want to chart those numbers to detect quality problems. Another common application of these charts occurs in cases when automatedtesting devices inspect every single unit that is produced. In that case, you are often primarily interested in detecting small shifts in the product quality (for example, gradualdeterioration of quality due to machine wear). The
CUSUM, MA
, and EWMA charts of cumulative sums and weighted averages discussed below may be most applicable in thosesituations.
Out-Of-Control Process: Runs Tests
As mentioned earlier in the introduction, when a sample point (e.g., mean in an X-bar chart) falls outside the control lines, you have reason to believe that the process may nolonger be in control. In addition, you should look for systematic patterns of points (e.g.,means) across samples, because such patterns may indicate that the processas the sigma control limits discussed earlier, the runs rules are based on "statistical"reasoning. For example, the probability of any sample mean in an X-bar control chartfalling above the center line is equal to 0.5, provided (1) that the process is in control(i.e., that the center line value is equal to the population mean), (2) that consecutivesample means are independent (i.e., not auto-correlated), and (3) that the distribution of means follows the normal distribution. Simply stated, under those conditions there is a50-50 chance that a mean will fall above or below the center line. Thus, the probabilitythat two consecutive means will fall above the center line is equal to 0.5 times 0.5 = 0.25.Accordingly, the probability that 9 consecutive samples (or a run of 9 samples) will fallon the same side of the center line is equal to 0.5**9 = .00195. Note that this isapproximately the probability with which a sample mean can be expected to fall outsidethe 3- times sigma limits (given the normal distribution, and a process in control).Therefore, you could look for 9 consecutive sample means on the same side of the center line as another indication of an out-of-control condition. Refer to Duncan (1974) for details concerning the "statistical" interpretation of the other (more complex) tests.Zone A, B, C. Customarily, to define the runs tests, the area above and below the chartcenter line is divided into three "zones."30 By default, Zone A is defined as the area between 2 and 3 times sigma above and belowthe center line; Zone B is defined as the area between 1 and 2 times sigma
, and Zone C isdefined as the area between the center line and 1 times sigma
.
9 points in Zone C or beyond ( on one side of central line ).
If this test is positive (i.e.,if this pattern is detected), then the process average has probably changed. Note that it isassumed that the distribution of the respective quality characteristic in the plot issymmetrical around the mean. This is, for example, not the case for R charts, S charts, or most attribute charts. However, this is still a useful test to alert the quality controlengineer to potential shifts in the process. For example, successive samples with less-than-average variability may be worth investigating, since they may provide hints on howto decrease the variation in the process.
6 points in a row steadily increasing or decreasing.
This test signals a drift in the process average. Often, such drift can be the result of tool wear, deterioratingmaintenance, improvement in skill, etc. (Nelson, 1985).
14 points in a row alternating up and down.
If this test is positive, it indicates that twosystematically alternating causes are producing different results. For example, you may be using two alternating suppliers, or monitor the quality for two different (alternating)shifts.
2 out of 3 points in a row in Zone A or beyond.
This test provides an "early warning"of a process shift. Note that the probability of a false-positive (test is positive but processis in control) for this test in X-bar charts is approximately 2%.
4 out of 5 points in a row in Zone B or beyond.
Like the previous test, this test may beconsidered to be an "early warning indicator" of a potential process shift. The false- positive error rate for this test is also about 2%.
15 points in a row in Zone C (above and below the center line).
This test indicates asmaller variability than is expected (based on the current control limits).
31
[pic] 8 points in a row in Zone B, A, or beyond, on either side of the center line (withoutpoints in Zone C).
This test indicates that different samples are affected by differentfactors, resulting in a bimodal distribution of means. This may happen, for example, if different samples in an X-bar chart where produced by one of two different machines,where one produces above average parts, and the other below average parts.
Learning
Controlling is a vital part in management and it is done to run the business activitiesaccordingly to reach a business purpose. we will finish the discussion on controlling bystating our learning from this report.
•
It makes us aware about the various characteristics and implications of controllingin Business and real life.
•
As future managers we will be better prepared to control a business process.
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We learned different types and forms of controlling used in business.
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Get detailed idea about different stages of control process.
•
Working in a group we saw how controlling in a group works as well.