The First Step In The Controlling Process Is

The First Step in the Controlling Process Is… Establishing Standards

The controlling process, a crucial element of effective management, ensures that an organization achieves its objectives. It's a cyclical process involving setting standards, measuring performance, comparing performance against standards, and taking corrective action. But what's the very first step? It's establishing clear, measurable, achievable, relevant, and time-bound (SMART) standards. Without well-defined standards, the entire controlling process crumbles. This article will delve deep into the critical importance of this initial step, exploring its nuances and offering practical examples to illustrate its significance.

The Importance of Establishing Standards

Standards act as the bedrock of the controlling process. They provide the benchmark against which actual performance is measured. Think of them as the destination on a map; without a clear destination, navigation becomes impossible. Similarly, without defined standards, managers lack the ability to gauge progress, identify deviations, and implement necessary corrective actions.

Defining SMART Standards

The acronym SMART is crucial here. Let's break down each component:

• Specific: Standards must be unambiguous and clearly defined. Vague objectives lead to vague measurements and ineffective control. Instead of "improve customer satisfaction," a specific standard could be "achieve a customer satisfaction score of 4.5 out of 5 based on post-purchase surveys."

• Measurable: The standard needs to be quantifiable. How will you know if you've achieved it? Using metrics like numbers, percentages, or ratios provides concrete evidence of progress or lack thereof. For instance, "reduce production costs by 10% within the next quarter" is measurable.

• Achievable: While challenging standards are essential for growth, they need to be realistic and attainable. Unrealistic standards demotivate employees and create a culture of failure. Before setting standards, conduct a thorough analysis of resources, capabilities, and market conditions.

• Relevant: Standards should directly contribute to the organization's overall goals and objectives. Irrelevant standards waste time and resources. For example, tracking the number of paperclips used might be measurable but irrelevant to a company's strategic goals.

• Time-bound: Every standard needs a deadline. This creates urgency and accountability. Instead of "increase market share," a time-bound standard could be "increase market share by 5% within the next fiscal year."

Practical Examples of Standard Setting Across Different Functions

Let's explore how different departments within an organization can establish SMART standards:

1. Marketing Department:

• Goal: Increase brand awareness.
• Standard: Achieve a 20% increase in social media followers and a 15% increase in website traffic within six months. This standard is SMART because it's Specific, Measurable, Achievable (with appropriate marketing strategy), Relevant (directly impacting brand awareness), and Time-bound (six months).

2. Sales Department:

• Goal: Boost sales revenue.
• Standard: Increase sales revenue by 15% in the next quarter, with a minimum of 20 new customer acquisitions. This is SMART as it's Specific (revenue increase and new customers), Measurable (quantifiable targets), Achievable (depending on sales strategies and market conditions), Relevant to the overall sales objective, and Time-bound (one quarter).

3. Production Department:

• Goal: Improve efficiency.
• Standard: Reduce production time per unit by 10% while maintaining a defect rate below 2% within three months. This standard is SMART as it specifies both time reduction and defect rate, making it Measurable, Achievable with process improvement strategies, Relevant to production efficiency, and Time-bound.

4. Human Resources Department:

• Goal: Enhance employee satisfaction.
• Standard: Achieve an employee satisfaction score of 4 out of 5 based on an anonymous employee survey within the next year. This is SMART as it's Specific (employee satisfaction score), Measurable (quantifiable score), Achievable with initiatives to improve work environment and employee well-being, Relevant to employee retention and productivity, and Time-bound (one year).

The Cascade Effect: Aligning Standards Across the Organization

Effective controlling requires alignment of standards across all levels of the organization. This means that higher-level strategic goals should cascade down into departmental objectives, team goals, and individual targets. This ensures that every employee understands their contribution to the overall organization's success. For instance, a company's overall goal of "becoming the market leader" might translate into specific sales targets, marketing initiatives, and product development goals across different departments.

Challenges in Establishing Standards and Overcoming Them

While establishing standards is crucial, it presents its own set of challenges:

• Resistance to Change: Employees may resist changes in procedures or targets. Addressing concerns proactively, explaining the rationale behind new standards, and involving employees in the standard-setting process can mitigate this resistance.

• Lack of Data: Setting accurate standards requires reliable data. Investing in data collection and analysis systems is crucial for effective standard setting.

• Dynamic Environments: In constantly changing environments, standards need to be reviewed and updated regularly. Flexibility and adaptability are key to maintaining effective control in such contexts.

• Measuring Intangibles: Some aspects of performance, like creativity or innovation, are difficult to quantify. Finding appropriate proxies or qualitative measures for such aspects is important.

The Link Between Standards and Performance Management

Effective standards are intrinsically linked to performance management. They provide the framework for evaluating employee performance, setting performance objectives, and providing feedback. When standards are clearly defined, employees understand what's expected of them, facilitating performance improvement and accountability.

Conclusion: The Foundation of Effective Control

Establishing SMART standards is the cornerstone of effective control within any organization. It's the first, crucial step in a cyclical process that ensures the achievement of organizational objectives. By dedicating sufficient time and effort to this initial phase, organizations lay the foundation for successful performance monitoring, efficient resource allocation, and continuous improvement. Understanding the importance of SMART standards, and implementing them correctly, is not merely a management technique – it's the bedrock of organizational success. Remember that regular review and adaptation of these standards are crucial to maintain their relevance and effectiveness in an ever-changing business environment. Without well-defined standards, the controlling process becomes a rudderless ship, adrift in a sea of uncertainty. Therefore, prioritize the establishment of SMART standards as the first step towards achieving your organizational aspirations.