Controlling in the enterprise: tools, goals and objectives

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Those who hear the word "controlling" for the first time usually imagine controlling something, but in reality this is not at all the case. Controlling in an enterprise is a complex system that is aimed at improving financial, personnel, and technological processes in order to achieve the effective functioning of the organization as a whole. Unlike control, which is designed to identify problems and mistakes made in the past, controlling seeks to build a process management system in the company that focuses on current and future affairs. Why is this so important?

The controlling service at the enterprise is an important element, as its employees can minimize the loss of resources, analyze current and future plans, and also identify possible errors, that is, those that may be made in the course of the company's activities. However, in order to understand what this type of activity is, it is important to study its features and key points in more detail. This article will discuss the basic concepts, goals and objectivescontrolling, as well as its concepts, tools and functions.

Concepts and definitions

Controlling is a new direction in the management system, so today there is no unambiguous definition of this concept. However, there are several definitions that are most popular and reflect the essence of this term.

Its origin is connected with the English verb to control. In translation, "controlling" is "management, supervision, control, management, regulation." However, such a description is not enough to understand the essence of this phenomenon, so it is worth considering the following two more precise definitions.

Controlling is a separate area of activity in organizations, which is associated with the implementation of the economic function and is aimed at making the right strategic and operational decisions by management.

Controlling is a set of actions aimed at supporting all processes with the necessary information and analytical support for making the right management decisions. Most often, they are aimed at increasing profits in the organization.

Modern controlling in an enterprise must necessarily include a quality management system, risk management and a system of key indicators, as well as process management in the implementation of any type of planning.

Goals and objectives

Based on the basic concepts, we can conclude that the mainthe purpose of controlling in an enterprise is the orientation of all management processes towards achieving certain goals, which can be expressed in improving products, achieving an adequate level of competitiveness, and so on. In other words, the goal is to maintain the effective management of the organization. What is its purpose?

Based on the goal, the following main tasks of controlling when managing a company are distinguished:

• development of planning methodology and its organization;
• accounting, including the collection of information and its processing;
• control;
• organization of special observing system events.

These tasks, summarized, have peculiar subtasks that must be performed by the service or department that is entrusted with the controlling function. The development of a planning methodology and its organization includes the following:

• ensuring the creation of a regulatory framework that will help implement company development forecasts;
• providing advice to people who develop strategic plans;
• coordinating work in the preparation of various plans, in determining the main goals of the company and budgeting;
• participation in discussions and definitions of parameters (qualitative and quantitative) of the work.

The accounting task includes the following:

• development of the structure for transmitting and receiving information;
• creating an information support system to provide references, information andreports to persons responsible for a certain process in the management of the company;
• determine the need to supply the necessary information to managers or other responsible persons;
• comparing plans and reports and compiling interim reporting documentation that shows the progress of the plans;
• analysis of deviations from plans, identification of possible causes and development of proposals to prevent the influence of negative factors that caused disruptions in work.

The control task includes:

• monitoring the implementation of plans aimed at achieving strategic goals;
• monitoring the state of environmental conditions related to the development of strategic plans;
• monitoring weaknesses that were identified during planning or review of program progress.

The task of organizing events for a special observing system provides for the following:

• development of a regulatory framework for obtaining and providing information within the organization;
• development of activities providing for additional information and analytical support.

A special place in the system of controlling finances, personnel and resources is accounting. As a rule, traditional reporting implies a focus on the past and a presentation of factual data about past processes and phenomena, while reporting in controlling is focused on the future.

Thus, you can see that the organization of controlling in the enterprise contributes to the creationcurrent control over processes in order to determine the consequences of certain management decisions. It can also be said that the introduction of controlling allows you to save the company's management from making rash or unprofitable decisions that entail a waste of resources.

Methods

To fulfill all the tasks set when managing an organization, controlling involves the use of the following general scientific methods:

• analysis;
• deduction;
• induction;
• specification;
• abstraction;
• synthesis;
• analogy;
• simulation.

After the goals, objectives and methods of this area of activity have been considered, it is extremely important to dwell on its functions.

Functions

The controlling system at the enterprise includes such basic functions as:

• informational;
• accounting and control;
• analytical;
• planning function.

And also, conditionally, three functions can be distinguished, which will be a combination of the above - service, commenting and management.

Reasons for Controlling

At the turn of the nineteenth and twentieth centuries, many American leaders in the process of managing organizations faced an urgent need to improve the methods of economic accounting and financial control. The first attempts to improve the accounting system looked like thisway - the heads of enterprises assigned to the chief financier and the secretary of the company the task of providing analytical information on issues of the economic and economic part. Thus, a close working relationship was formed between the financial service and the person who assists the chief executive. Subsequently, it was found that due to the variety of information and the need for its detail, it is more expedient to entrust this task to individual officials. Thus, the introduction of controlling in the enterprise took place.

The following prerequisites for the emergence of controlling can be distinguished:

• global economic crisis;
• complication and tightening of the taxation system for entrepreneurs;
• complication of forms of financing.

The development of controlling as a branch of economic science is due to the following reasons:

• internationalization and differentiation of companies;
• change of technologies involved in production areas;
• complication of the enterprise management system;
• complication of the external environment;
• complication of communication processes for making management decisions, which led to an urgent need for competent personnel in the field of systems engineering and organization.

Today, many heads of foreign enterprises note that after the creation of controlling departments at the enterprise, for example, the company's income increased, the use of financial, human and other types of resources became more correct and succeeded in a significant way.reduce costs.

The controlling service in the organization faces a very serious task - to ensure the prompt collection and preparation of a detailed analysis of information on all available costs in order to manage the enterprise. The director of the enterprise, the head of the financial service and the heads of production departments must receive information in a timely and regular manner so that in case of possible deviations, they can take the right measures and correct the work of the entire enterprise.

Concepts

Today, the German and American concept of controlling is distinguished in the economic literature. In general, these concepts are very similar to each other, but their main difference is that the first is more focused on considering the problems of internal accounting and analysis of the internal environment of the organization, and the second is more focused on the problems of the external environment with which the company is closely interconnected.

It is worth noting that the German concept has gained wider acceptance. According to this concept, the central task is to solve the problems of internal accounting in a planned, control and documentary form.

The American concept also puts in the foreground the solution of issues related to the planned, control and documentary form of internal accounting, but here the central place is also given to solving the problems of assessing the external environment and its detailed analysis.

Tools

Controlling tools are a set of actions that allow you to perform certain functions and tasks. These tools can be classified ascriteria:

• validity period (strategic or operational);
• scope (depends on the tasks).

In order to clearly understand what are the main tools used in controlling and under what circumstances they are best used, consider the table below.

Scope of application	Toolkit	Validity period
Accounting	Reports of business activities Record Forms Accounting figures Reporting analysis methods	Operational
Organization of information flows	Document management system	Strategic
Planning	Working with order volumes Breaking point analysis ABC analysis Analysis of firm weaknesses Analysis of investment projects Discount Analysis Sales and consumption patterns analysis Evaluation of the profitability of starting the production of raw materials for the manufacture of our own products Estimating the learning curve Logistics methods Benchmarking Assessing the potential of the firm SWOT analysis Perception maps Measurement of service quality Gantt chart Inventory level calculation Capacity planning Pricing Analysis of entry barriers Network planning and more	Strategic
Monitoring and control	Early warning system Cost Analysis Analysis of the correspondence of indicators (planned and actual) Gap analysis	Strategic

The choice of tools in controlling should be approached with extreme caution. For example, for an organization operating in an oligopoly or monopoly market, there is absolutely no point in using competitor analysis.

The above tools in controlling finance can greatly simplify the procedure for economic development and the preparation of planning and reporting documentation.

Strategic and operational controlling

There are two types of controlling, which differ in the period of their action, as well as tasks and ways to solve them.

Strategic controlling is aimed at the implementation of long-term programs, strategies. Its goal is to form a clear planning system that will allow you to reliably manage the company, which will lead to an increase in profits.

A. Galweiter (scientist-economist) in his writings identified eight areas that strategic controlling should cover, namely:

1. Determination of the completeness of the company's plans, as well as their formal and financial content.
2. Control of unstableconditions within the organization and in the external environment, which are closely related to the implementation of the company's strategic plans.
3. Control over the adoption of important decisions and their implementation, based on the aspect of timing.
4. Tracking the implementation of plans, especially at difficult or important stages of its implementation.
5. Timely response to adverse external and internal conditions that may cause financial harm to the organization or give a by-product of activity.
6. Tracking the strategic situation of the firm based on regular reviews.
7. Checking the delimitation of the strategic units of the enterprise.
8. Monitoring compliance with the defining principles of the enterprise, which were previously defined.

The following tasks of this type of controlling can be distinguished:

• define quantitative and qualitative goals;
• responsibility for planning;
• working out a system of alternative strategies;
• determination of critical points in the internal and external environment for the system of alternative strategies;
• identifying and managing organizational weaknesses;
• formation of a scorecard;
• management of deviations and their indicators;
• motivation management in an institution;
• managing economic potential.

Operational controlling in an enterprise differs from strategic in that it is aimed at helping managers achieve short-term goals. It should be noted that its main task is to prevent a crisisstatus in the organization and track the current progress of the planned activities.

To understand the differences between these two species, consider the table below.

Signs	Strategic controlling	Operational controlling
Orientation	Internal environment External environment	Profitability Cost efficiency
Control level	Strategic (long term)	Tactical and operational
Goals	Creating conditions for survival Carrying out anti-crisis measures Maintaining Successful Potential	Ensuring liquidity and profitability
Main Tasks	Define quantitative and qualitative goals Planning Responsibility Developing a system of alternative strategies Determination of critical points in the internal and external environment for the system of alternative strategies Identification and management of organizational weaknesses Cost-effectiveness analysis	Methodological assistance in budget development Search for weaknesses for tactical control Determination of the set of controllable indicators in accordance with the currentgoals Comparison of planned and actual indicators Determination of the impact of deviations on the execution of current plans Motivation

Relationship between operational and strategic controlling

These two types of controlling are integral parts of each other. The most important task of strategic controlling is to ensure the long-term existence of a particular enterprise, and operational - current planning and implementation of certain plans for profit.

The relationship of these two types can be represented as such sayings:

• "doing the right thing" is strategic controlling;
• "doing the right thing" is operational.

Thus, we can conclude that operational controlling is an integral part of the implementation of the strategic one.

Introduction and organization of the service

If the head of an enterprise has decided to implement a controlling system, then he will first need to make changes to the organizational structure and create a service (department), which must be directly subordinate to the general director or chief executive. The controlling service may include the following specialists:

• head of service;
• controller-curator of workshops (divisions/divisions/departments);
• management accountant;
• Information systems specialist.

If production volumes orthe size of the organization is small, then you can combine the functions of these areas and exclude one position.

For the proper organization of work when implementing such a system, each specialist should be given job descriptions, the functionality of which will be determined based on the needs of the enterprise.

Each leader, especially those enterprises located in the post-Soviet territories, must remember that the introduction of innovative management methods can cause staff criticism, and in some cases, complete rejection. Therefore, before starting the work of the controlling service, it is necessary to present innovations and convey to the attention of all employees the main tasks, goals and main functions that this structural unit will perform.

It is also worth noting that the implementation of such a service should be phased and include a preparatory stage in which the state of the enterprise is studied, then the implementation itself, and finally an automation stage, if necessary.

Conclusion

In general, controlling reflects a huge range of scientific economic and managerial disciplines - management, strategic planning, cybernetics, economic theory and so on. Thanks to this, a professional manager or a team of several specialists entrusted with the controlling function is able to solve production, economic and personnel issues, taking into account the diversity and wide range of problems of this activity. That is why the presence of an established controlling system at the enterprise allows solving, and often foreseeing problems, which, in turn, leads to timely response and minimization of various costs and serious financial losses.