Control of Overall Performance

• Planning and control are increasingly being treated as an interrelated system. Along with techniques for partial control, control devices have been developed for measuring the overall performance of an enterprise-or an integrated division or project within it-against total goals.
• There are many reasons for control of overall performance. In the first place, just as overall control be applied. In the second place, decentralization of authority-especially in product or territorial divisions-creates semi-independent units, and these must be subjected to overall control to avoid the chaos of complete independence. In the third place, overall control permits the measurement of an integrated area manager's total effort, rather than parts of it.
• Many overall controls in business are, as one might expect, financial. Business owes its continued existence to profit making; its capital resources are a scarce, life-giving element. Since finance is the binding force of business, financial controls are certainly an important objective gauge of the success of plans. Moreover, sophisticated computer programs can use financial records as strategic tools.
• Financial measurements also summarize; as a common denominator, the operation of a number of plans. Further, they accurately indicate total expenditure of resources in reaching goals. This is true in all forms of enterprises. Although the purpose of an educational or government enterprise is not make monetary profits, any responsibile manager must have some way of knowing what goal achievement has cost in terms of resources. Proper accounting is important not only for business but for government as well.
• Financial controls, like any other control, have to be tailored to the specific needs of the enterprise or the position. Doctors, lawyers, and managers at different organizational levels do have different needs for controlling their area of operation. Financial analyses also furnish an excellent "window" through which accomplishment in nonfinancial areas can be seen. A deviation from planned costs, for example, may lead a manager to find the causes in poor planning, inadequate training of employees, or other nonfinancial factors.
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Fundamentals of Management : Controlling [BBA 2305]