10 Types of Traditional Control Techniques

The ten types of traditional techniques of controlling are

discussed below :-
1. Direct Supervision and bservation
!Direct Supervision and bservation! is the oldest technique of
controlling. The supervisor hi"self observes the e"ployees
and their wor#. This brings hi" in direct contact with the
wor#ers. So$ "any proble"s are solved during supervision.
The supervisor gets first hand infor"ation$ and he has
better understanding with the wor#ers. This technique is
"ost suitable for a s"all-si%ed business.
Control Techniques of Controlling
&"age Credits ' (elvin)*s.
+. ,inancial State"ents
-ll business organisations prepare .rofit and /oss -ccount. &t
gives a su""ary of the inco"e and e0penses for a
specified period. They also prepare 1alance Sheet$ which
shows the financial position of the organisation at the end
of the specified period. ,inancial state"ents are used to
control the organisation. The figures of the current year can
be co"pared with the previous year!s figures. They can
also be co"pared with the figures of other si"ilar
organisations.
2atio analysis can be used to find out and analyse the financial
state"ents. 2atio analysis helps to understand the
profitability$ liquidity and solvency position of the business.
3. 1udgetary Control
- budget is a planning and controlling device. 1udgetary control
is a technique of "anagerial control through budgets. &t is
the essence of financial control. 1udgetary control is done
for all aspects of a business such as inco"e$ e0penditure$
production$ capital and revenue. 1udgetary control is done
by the budget co""ittee.
4. 1rea# *ven -nalysis
1rea# *ven -nalysis or 1rea# *ven .oint is the point of no profit$
no loss. ,or e.g. 5hen an organisation sells 607 cars it will
brea# even. &t "eans that$ any sale below this point will
cause losses and any sale above this point will earn profits.
The 1rea#-even analysis acts as a control device. &t helps
to find out the co"pany!s perfor"ance. So the co"pany
can ta#e collective action to i"prove its perfor"ance in the
future. 1rea#-even analysis is a si"ple control tool.
6. 2eturn on &nvest"ent 82&9
&nvest"ent consists of fi0ed assets and wor#ing capital used in
business. .rofit on the invest"ent is a reward for ris#
ta#ing. &f the 2& is high then the financial perfor"ance of a
business is good and vice-versa.
2& is a tool to i"prove financial perfor"ance. &t helps the
business to co"pare its present perfor"ance with that of
previous years! perfor"ance. &t helps to conduct inter-fir"
co"parisons. &t also shows the areas where corrective
actions are needed.
:. (anage"ent by b;ectives 8(19
(1 facilitates planning and control. &t "ust fulfill following
require"ents :-
b;ectives for individuals are ;ointly fi0ed by the superior and the
subordinate.
.eriodic evaluation and regular feedbac# to evaluate individual
perfor"ance.
-chieve"ent of ob;ectives brings rewards to individuals.
<. (anage"ent -udit
(anage"ent -udit is an evaluation of the "anage"ent as a
whole. &t critically e0a"ines the full "anage"ent process$
i.e. planning$ organising$ directing$ and controlling. &t finds
out the efficiency of the "anage"ent. To chec# the
efficiency of the "anage"ent$ the co"pany!s plans$
ob;ectives$ policies$ procedures$ personnel relations and
syste"s of control are e0a"ined very carefully.
(anage"ent auditing is conducted by a tea" of e0perts.
They collect data fro" past records$ "e"bers of
"anage"ent$ clients and e"ployees. The data is analysed
and conclusions are drawn about "anagerial perfor"ance
and efficiency.
=. (anage"ent &nfor"ation Syste" 8(&S9
&n order to control the organisation properly the "anage"ent
needs accurate infor"ation. They need infor"ation about
the internal wor#ing of the organisation and also about the
e0ternal environ"ent. &nfor"ation is collected continuously
to identify proble"s and find out solutions. (&S collects
data$ processes it and provides it to the "anagers. (&S
"ay be "anual or co"puterised. 5ith (&S$ "anagers can
delegate authority to subordinates without losing control.
>. .*2T and C.( Techniques
.rogra""e *valuation and 2eview Technique 8.*2T9 and
Critical .ath (ethod 8C.(9 techniques were developed in
?S- in the late 60!s. -ny progra""e consists of various
activities and sub-activities. Successful co"pletion of any
activity depends upon doing the wor# in a given sequence
and in a given ti"e.
C.( @ .*2T can be used to "ini"ise the total ti"e or the total
cost required to perfor" the total operations.
&"portance is given to identifying the critical activities. Critical
activities are those which have to be co"pleted on ti"e
otherwise the full pro;ect will be delayed.
So$ in these techniques$ the ;ob is divided into various activities @
sub-activities. ,ro" these activities$ the critical activities are
identified. (ore i"portance is given to co"pletion of these
critical activities. So$ by controlling the ti"e of the critical
activities$ the total ti"e and cost of the ;ob are "ini"ised.
10. Self-Control
Self-Control "eans self-directed control. - person is given
freedo" to set his own targets$ evaluate his own
perfor"ance and ta#e corrective "easures as and when
required. Self-control is especially required for top level
"anagers because they do not li#e e0ternal control.
The subordinates "ust be encouraged to use self-control
because it is not good for the superior to control each and
everything. Aowever$ self-control does not "ean no control
by the superiors. The superiors "ust control the i"portant
activities of the subordinates.
D&,,*2*BC* 1*T5**B *BT2*.2*B*?2-&BT2-.2*B*?2-
T2-D&T&B-/ (-B-C*2
ENTREPRENEUR
People who have a talent for seeing opportunities and the abilities to develop those
opportunities into profit-making businesses.
INTRAPRENEUR
The practice of using entrepreneurial skills without taking off the risks or accountability
associated with entrepreneurial activities. It is practiced by employees within an
established organization using a systemized business model.
CHARACTERISTIC
S
ENTREPRENEUR INTRAPRENEUR TRADITIONAL
MANAGER
PRIMARY
MOTIVES
Wants freedom, goal
oriented, self reliant,
and self motivated
Wants freedom and
access to corporate
resources, goal
oriented and self
motivated, but also
responds to corporate
rewards and
recognition.
Wants promotion
and other traditional
corporate rewards
power motivated,
TIME
ORIENTATION
ses and goals of ! to
"# year growth of the
business as guides$
takes action how to
ne%t step along the
way
&nd goals of ' to "!
years, depending on
the type of venture$
urgency to meet self
imposed and
corporate time tables
(esponds to )uotes
and budgets $ to
weekly, monthly,
)uarterly, and
annual planning
horizons$ and to the
ne%t promotion or
transfer,
TENDENCY TO
ACTION
*ets hand dirty$ may
upset employee by
suddenly doing their
work,
*ets hands dirty$ may
know how to delegate
but when necessary,
does what needs to be
done,
+elegates action$
supervising and
reporting takes most
energy,
SKILLS ,nows business
intimately$ more
business acumen then
managerial or
political skills$ often
technically trained if
in technical business$
may have had profit
and loss responsibility
in the company,
Professional
management $ often
business school
trained$ uses abstract
analytical tools,
people-management
and political skills,
Professional
management $ often
business school
trained$ uses
abstract analytical
tools, people-
management and
political skills,
ATTITUDE
TOWARDS
COURAGE AND
-elf confident,
optimistic and
courageous,
-ees others being in
charge of his or her
destiny$ can be
-elf confident and
courageous$ many
are cynical about the
DESTINY forceful and
ambitious but may be
fearful of others
ability to do him or
her in,
system but optimistic
about their ability to
outwit it.
FOCUS OF
ATTENTION
Primarily on
technology and
marketplace,
.oth inside and
outside$ sells insiders
on needs of venture
and market place but
also focuses on
customers.
Primarily on events
inside corporation,
ATTITUDE
TOWARDS RISK
/ikes moderate risk$
invests heavily but
e%pects to succeed,
/ike moderate risks$
generally not afraid
of being fired, so sees
little personal risk,
0autions,
USE OF MARKET
RESEARCH
0reates needs$ creates
products that often
cannot be tested with
market research$
potential customers do
not yet understand
them$ talks to
customers and forms
own opinion,
+oes own market
research and
initiative market
evaluation, like the
entrepreneur.
1as market studies
done to discover
needs and guide
product
conceptualization,
Entrepreneurs Intrapreneurs Traditional Managers
1. .ri"ary (otive
&ndependence$
opportunity to create
and "oney
&ndependence and
ability to advance in
the corporate rewards
.ro"otion and other
traditional corporate
rewards such as office
staff
2. Ti"e orientation
Survival and achieving
6-10 years growth of
business
1etween
entrepreneurial and
traditional "anagers$
depending on urgency
to "eet self-i"posed
and corporate ti"e-
table.
Short-ter" "eeting
quotas and budgets$
wee#ly "onthly$
quarterly and the
annual planning
hori%on.
3. -ctivity Direct involve"ent
Direct involve"ent
"ore than delegation
Delegates and
surprises "ore than
direct involve"ent
4. 2is# (oderate ris#-ta#er (oderate ris#-ta#er Careful
5. Status
Bot concerned about
status sy"bol
Bot concerned about
traditional status
sy"bolsD desires
independence
Concerned about
status sy"bol
6. ,ailure and
"ista#es
Deals with "ista#es
and failures
-tte"pts to hide ris#y
fro" view unless ready
Tries to avoids
"ista#es and
supervises
7. Decisions
,ollows drea"s with
decisions
-ble to get others to
agree to help achieve
drea"s
?sually agrees with
those in upper
"anage"ent position
8. ,a"ily history
*ntrepreneurial s"all
business$ professional
or far" bac#ground
*ntrepreneurial s"all
business$ professional
or far" bac#ground
,a"ily "e"bers wor#
for large organisation
9. 5ho serves Self and custo"ers
Self$ custo"ers and
Sponsors thers
10. 2elationship with
others
Transactions and deal-
"a#ing as basic
relationship
Transaction within
hierarchy
Aierarchy as basic
relationship