(i) Setting performance standards: The first step in the process of controlling is to set performance standards. Performance standards are the benchmarks against which the actual performance of the organization is measured. These standards may be set for various aspects of the organization, such as quality, quantity, cost, time, and customer satisfaction. The standards should be clear, specific, and measurable so that the performance can be evaluated objectively.
(ii) Measurement of actual performance: The next step in the process of controlling is to measure the actual performance of the organization. This involves collecting data on the actual performance of the organization and comparing it with the set performance standards. The data can be collected through various methods, such as observation, feedback from customers, and analysis of financial statements.
(iii) Comparison of actual performance with standards: Once the actual performance is measured, it is compared with the set performance standards. This helps in identifying the deviations from the standards and the areas where corrective actions are required. If the actual performance is better than the set standards, it is an indication that the organization is performing well. However, if the actual performance is below the set standards, it indicates that corrective actions are required.
In conclusion, setting performance standards and measuring the actual performance are two important steps in the process of controlling. By comparing the actual performance with the set standards, the organization can identify the areas where corrective actions are required to ensure that the performance is in line with the set goals and objectives.
