Origins of controlling
In Europe, controlling developed in the fifties of the twentieth century in particular by the establishment of subsidiaries of U.S. companies:
- it was broadly accepted in Germany, despite initial reluctance due to the bad opinion on the controller, which is widely regarded as the chief having the power, but who did not take upon himself the responsibility for his decisions. Over time, Germany became the European center for controlling,
- In Switzerland, controlling beginnings date back to the mid 50's,
- In France, controlling develops in 60's,
Controlling in the world
The first controller appeared in England in the fifteenth century. He was called as countroller and his task was to record receipts and payments of cash and goods. In the U.S. since 1778 government appointed "comptrollers" whose main function was to balance the budget and supervise of its use.
Controller in the private sector first appeared in the U.S. railway company Atchison, Topeka & Santa Fe Railway System in 1880. Main part of the task was related to financial and securities management. With time, the position of "controller" started gaining in importance particularly in the 20s of the twentieth century.
Initially controlling focused on financial problems, but over time it included broader range of areas in the company.
There are following differences in controlling development between U.S. and Europe:
- Controller in the U.S. is a person standing at the head of finance and accounting department, responsible for financial accounting, cost and tax reporting, budgeting and internal reviews. Controlling is the process of measuring and monitoring actual performance compared to predetermined objectives and operating plans.
- The controlling in Europe has a different meaning. It is defined as controller-ship, but refer to literal meaning of word "controlling", i.e.: steering, directing, acting intentionally, monitoring how the system work, but not only function of "control"
Sources of controlling concept
- Budgeting: This process involves setting aside funds for an organization’s future objectives. Budgeting helps to allocate resources to achieve goals, monitor spending, and measure performance.
- Performance Evaluation: This process involves measuring an employee's performance to determine if the individual is meeting their goals and objectives. Performance evaluations are typically conducted annually or at the end of a project.
- Quality Assurance: This process involves determining whether products and services meet the standards set by the company. Quality assurance helps to identify areas for improvement and ensure that customer satisfaction is maintained.
- Risk Management: This process involves identifying, analyzing, and managing potential risks in order to minimize their impact on the organization. Risk management helps to ensure that the organization is aware of potential risks and is prepared to address them.
- Process Improvement: This process involves identifying areas for improvement within an organization's processes. Process improvement helps to reduce costs, increase efficiency, and improve customer satisfaction.
Advantages of controlling
Controlling is a business management process driven by planning, reporting and control. It is an important part of the management process that helps an organization achieve its goals. The origins of controlling can be traced back to the early twentieth century when Frederick Taylor developed the scientific management system. There are several advantages of controlling, including:
- Improved decision making - Controlling helps managers make better decisions by providing them with data and analysis. This can lead to more informed decisions and help the organization reach its goals.
- Better resource utilization - Controlling helps organizations identify how resources are being used and how they can be used more efficiently. This can lead to improved efficiency and cost savings.
- Increased accountability - Controlling helps ensure that everyone in the organization is held accountable for their actions. This can lead to improved performance and greater accountability.
- Improved communication - Controlling can also help improve communication between different departments in an organization. This can improve coordination and help the organization reach its goals.
- Improved risk management - Controlling helps organizations identify and manage risks. This can help the organization reduce losses and ensure its long-term success.
Limitations of controlling
Controlling is a business management process driven by planning, reporting and control, but it is not without its limitations. The following are some of the key limitations of controlling:
- Lack of adaptability: The nature of controlling can make it difficult to adapt to changes in the external environment or to rapidly changing customer needs.
- Time consuming: The process of continuous monitoring and evaluation of performance can be time-consuming and costly.
- Over-emphasis on the past: Controlling can lead to an over-emphasis on past results rather than focusing on future performance and opportunities.
- Reliance on data: The accuracy and reliability of the data used for controlling can be an issue, as it may not always be up to date or comprehensive.
- Unforeseen circumstances: Controlling does not take into account unforeseen circumstances or events that may affect the performance of the business.
Controlling is a business management process driven by planning, reporting and control. Other approaches related to the origins of controlling include:
- Management by Objectives (MBO): a process in which employees and managers identify and set goals based on the company's mission and objectives.
- Activity-based Costing (ABC): a system of cost accounting that assigns costs to activities instead of products or services.
- Financial Reporting: the process of providing financial information to decision-makers to help them understand the financial results of the business.
- Total Quality Management (TQM): an approach to management that focuses on improving the quality of products and services by utilizing customer feedback and continuous improvement.
- Just-in-Time (JIT) Manufacturing: an inventory control system that focuses on reducing costs by producing products in small batches just in time for customer orders.
In summary, controlling is an important business management process that involves planning, reporting, control and other approaches such as MBO, ABC, financial reporting, TQM and JIT manufacturing.
|Origins of controlling — recommended articles
|Activity-based management — Managerial controlling — Cost tracking — Effective system of control — Operational control — Budgetary control — Planning and control — Strategic risk management — Strategic priorities