Control Of Overall Performance
Most of the controls we have dealt with are designed for specific things such as policies, wages, salaries training, development, product quality, cost expenditure cash etc. Such controls are partial, they only apply to a single part, so they do not measure total accomplishments against total goals. To make controlling more complete devices have been developed to measure overall performance of an enterprise.
Need for overall controls (reasons) arises from:
(a) Overall planning must apply to enterprises or major division goals and so controls must be applied.
(b) Decentralization creates semi-autonomous units which must be subjected to overall controls to avoid complete autonomy
(c) Overall control enables managers to measure the total effort of an integrated area rather than part of it.
Largely overall controls are financial. Businesses survive on profits, with limited resources and its best measure of effectiveness is finally money.
• Finance is the binding force of business and therefore financial controls are the most important single objective measure of the success of plans.
• Financial measurements also summarize through a common denominator, the operation of a number of plans
• Financial controls also do accurately indicate total expenditures of resources in reaching goals. Even in organizations whose main objective is not to make money, managers must have some way of knowing what their goal achievement has cost in terms of resources.
For those reasons in all forms of firms control of overall performance is usually financial as financial weaknesses provide a good "way" through which accomplishment in non-financial areas can be seen. This is not to say however we do not have control of non-financial areas as part of overall control. The control of human organization is also used. So overall control is mainly done through:
(a) budget summaries and reports
(b) profit and loss control (Standard costing methods)
(c) control through return on investment
(d) control of human factor