Preconditions for Effective Control

          From the above examples, you can see that the controlling function keeps many managers busy. But that's not enough. Unless it is effective, the controlling function serves no purpose (just as worrying about grades-in itself-does nothing to raise them). And for the controlling function to be effective, at least three organizational arrangements, or preconditions, are necessary:

1.)   Standards of performance must be established in advance. Actual results are measured against established standards. These must be determined for every phase of a firm's operations-not only for production schedules, but also for sales, purchasing, finance, accounting, and personnel. The importance of establishing sound, useful standards cannot be over-emphasized.

2.)   A system for collecting data about performance must be established. Information about performance (called feedback) enables managers to make evaluations and accomplish their controlling function. Unless they have complete, carefully prepared data, the controlling function cannot be performed properly.

3.)   Managers must have authority to initiate corrective action when it is found necessary. When evaluation of performance shows that standards have not been met, managers must find out why, and they may have to suggest corrective action. This could require changes in policies affecting personnel, prices, sources of raw materials, production methods, equipment, packaging, sales territories, or many other things. To perform the controlling function effectively, managers must have the authority and responsibility to take action that corrects the problems.