Business Controls and Management

Control Functions In Your Business

The four central functions of management include planning, organizing, leading, and controlling. Strategies and planning are vital to operating a business. But once those foundations are in place, the management's primary responsibility is to ensure that their goals are met through control measures. Leaders must overcome various challenges to guide the team to complete the company's goals. Control ensures that the ultimate business goals are achieved and makes adjustments when they're not.

What Is Control?

Control, or organizational control, is the established processes and tools to guide an organization towards objectives and monitor performance, making changes as needed. Controls help protect and manage a company. Micromanaging may be considered one extreme level of control where leaders have their hand in everything. Instead, healthier control measures help ensure your business stays on track to meet its goals without overextending management.

What's an Example of Control?

A hardware store sets a goal to reduce shoplifting damage. Then, they develop a plan to reduce it by 25%. Of course, to achieve this plan, they'll have to hire more employees for monitoring, install more cameras, etc. But without control measures, they wouldn't know if they achieved their goal. Therefore, control measures would include shoplifting reports submitted by each department at the end of each shift. Then, an assistant manager can determine if they're reducing shoplifting or not. If they aren't, they can take further action, continuing to reach their goal. That's control in action.

5 Steps of the Basic Control Process

The following five basic control steps ensure your business carries out its plans while improving various business components as needed.

  1. Establishing performance standards.
  2. Measuring and monitoring actual performance.
  3. Comparing performance with goals.
  4. Evaluating variances.
  5. Making changes and implementing action.

Benefits of Control

From sole proprietorships to large corporations, controls are an essential business tool.

And there are many different benefits to implementing controls. Here are five of those benefits.

  1. Controls help safeguard the organization.
    • Individuals don't always act in the business's best interests. These measures can help prevent undesirable behaviors within the team and, instead, promote desirable actions.
  2. Controls clarify a business's objectives and improve communication.
    • Measures help clarify objectives for employees to achieve. They also help safeguard against abusing resources.
  3. Controls improve productivity and efficiency.
    • When your team understands expectations and goals, morale is improved, leading to improved performance.
  4. Controls stabilize an organization's finances.
  5. Controls improve quality control, reduce fraud, and establish legal compliance.

Disadvantages of Controls

The following are four control challenges to keep in mind when implementing these tools within your organization.

  1. Some measures can be costly.
    • Consider weighing the costs and benefits before moving forward with each control.
  2. Control mentalities can result in overstaffing and unsustainable expenses.
    • Smaller businesses may have a difficult time meeting state and federal regulations.
  3. Measures can be a blindspot for leadership and management.
    • Businesses can become too reliant on controls, which can cause relaxed supervision and even allow account or asset manipulation.
  4. Rigid implementations can slow business operations.