Managerial controlling
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Managerial controlling is a relatively new way of conducting the performance evaluation of individual units of the company. To realize its objectives, management create special cells that normally do not have imposed any specific era of interest or permanent staffing. Such controlling teams may also be permanently introduced in the organizational structure of the company. The term usually means system of coordination, planning and control of enterprise information security. In the most general terms, controlling support knowledge creation and oversee the transformation of this knowledge into concrete actions that deliver measurable results.
Definitions of managerial controlling
- Controlling is a management function, whose essence is the measurement and correction of the tasks performed by subordinates, and therefore it is needed to assess their performance.
- Controlling coordinates the whole process of planning, control and reporting thereby directing the business to realization of its objectives.
- Controlling the process of measuring and assessing the current state of the company in relation to agreed objectives, plans, standards and budgets. It allows making effective corrective actions.
In a narrow sense, it is defined as process of measuring and evaluating the current state of the organization with respect to the previous goal, plan, standard or budget. In the broadest sense controlling involves all of these tasks and additional: correcting tasks (design, improvement), to motivating and organizing tasks. It can often be identified with the whole management process. In literature in the field of management science authors adopted a narrow interpretation of the term control, which means only one of the functions that make up the management process. It is reasonable to distinguish between controlling and control as the function of management in the narrow sense.
Specificity of managerial controlling
Its task is to develop and control the various business areas. This process takes place in a specific way, it combines operations of coordination, planning, control and reporting. It is performed by so-called "controlling task forces" which consist of: coordinators, planners and controllers.
Controlling is often regarded as management function, the essence of which is the measurement and correction of the tasks performed by subordinates, performed because of need of assessment of objectives. Controlling subsystem is recognized as a certain organization, whose task is to coordinate the overall planning processes, controls and fulfilling information needs.
Applications of managerial controlling
- Continuous monitoring of technical and economic situation of enterprise.
- Assistance in the preparation and implementation of new operations and innovative technological solutions,
- An invaluable help to the company's management during decision processes related to the development, improvement and implementation,
- A tool for efficient and rational management of the enterprise,
- Determination of the likely effects of certain decisions taken at higher management level.
Goals of managerial controlling
According to the concept of managerial controlling its primary purpose is improvement, and control of all business areas of organization. Activities associated with it are arranged in a process that takes place in a strictly prescribed manner. It contains steps such as: coordination, planning, control, and information analysis. Controlling task forces, may include coordinators, planners and controllers. In terms of measuring the efficiency of actions in the organization, the use of managerial controlling can allow:
- Continuous or periodic monitoring of the technical state of machinery and equipment,
- An analysis of the economic situation of the company and each of its units,
- Efficient design and implementation of the new - improved - practices and technological solutions
- Fast, efficient and effective decisions related to the improvement and development of organization.
- Modeling of the possible decisions results.
See also:
- Controlling as one of four main Management functions
Examples of Managerial controlling
- Budget control: Managerial controlling involves the management of budgets and the comparison of actual results to budgeted amounts. This can involve tracking expenditures, analyzing cost trends, and addressing problems before they become too costly.
- Performance measurement: Performance measurement is an important element of managerial controlling. This involves setting goals and objectives and then tracking progress towards them. Performance measurements can include sales targets, customer satisfaction, and other key performance indicators.
- Risk management: Risk management involves assessing, understanding, and controlling risks associated with an organization. This includes identifying and mitigating risks, creating contingency plans, and monitoring the effectiveness of risk management measures.
- Process management: Process management is the process of controlling and monitoring the various steps involved in completing a task or achieving a goal. This includes identifying the tasks involved, setting deadlines, defining roles, and monitoring progress.
- Quality control: Quality control involves ensuring that products and services meet customer expectations. This includes setting quality standards, conducting quality assurance testing, and ensuring that products and services are continuously improved.
Advantages of Managerial controlling
Managerial controlling offers a number of advantages to businesses looking to increase their efficiency and profitability. These advantages include:
- Improved Decision Making: Managerial controlling helps the organization to analyze data accurately and develop well-informed decisions at all levels of the organization. It allows managers to track and monitor the progress of projects and make adjustments accordingly.
- Increased Efficiency: Managerial controlling hones the existing processes and automates the manual tasks to reduce time and resources spent on mundane tasks. This helps to reduce costs and improve overall efficiency.
- Improved Performance: Managerial controlling provides tools for measuring and evaluating performance. This helps to identify areas of improvement and allows for more accurate goal setting and better performance management.
- Risk Mitigation: Managerial controlling helps to identify and address potential risks before they become a problem. This helps to reduce the chances of costly mistakes, which can have a major impact on the organization's bottom line.
- Increased Visibility: Managerial controlling provides managers with real-time visibility into the performance of their teams and departments. This helps to make sure that everyone is on track and that any issues are addressed quickly.
- Improved Communication: Managerial controlling provides a clear communication structure and makes sure that all teams are working towards the same goals. This helps to reduce confusion and ensure that everyone is on the same page.
Limitations of Managerial controlling
Managerial controlling has its limitations that should be considered when implementing it in an organization. These limitations include:
- It requires significant financial resources to implement, which can be a barrier for smaller companies.
- It can be difficult to create effective controls for complex systems and processes.
- It can be difficult to measure results accurately and consistently, as there are often multiple factors that affect performance.
- It can be difficult to ensure consistency between different units or departments, as each will have different strengths and weaknesses.
- It can be difficult to ensure that all team members have an equal voice in the decision-making, which can lead to an unbalanced decision-making process.
- It can be difficult to ensure that all team members have the same level of knowledge and understanding of the process, leading to potential errors or misunderstandings.
- Total Quality Management (TQM): This approach focuses on increasing customer satisfaction, reducing errors and increasing efficiency in order to achieve higher levels of quality and performance.
- Operational Excellence: This approach focuses on improving organizational processes and systems in order to achieve greater efficiency and effectiveness.
- Lean Six Sigma: This approach combines the principles of Lean Manufacturing and Six Sigma to reduce waste, defects and improve customer service.
- Balanced Scorecard: This approach seeks to measure and assess performance in terms of a broad range of financial and non-financial metrics.
- Performance Measurement System: This approach focuses on measuring and assessing performance in order to identify areas for improvement and set goals for the organization.
In summary, Managerial controlling is a relatively new way of conducting the performance evaluation of individual units of the company by creating special cells and introducing them into the organizational structure. Other approaches related to Managerial controlling include Total Quality Management, Operational Excellence, Lean Six Sigma, Balanced Scorecard and Performance Measurement System. All of these approaches focus on improving organizational processes, reducing errors, increasing customer satisfaction and measuring and assessing performance in order to identify areas for improvement and set goals for the organization.
References
- La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of financial economics, 58(1), 3-27.
