Introduction to management

Partial Social Audit: Partial social audit evaluates any particular aspects 

of social performance like energy conservation or ecological preservation. 

(vi) 

Comprehensive Audit: Comprehensive audit attempts to evaluate the 

total performance of the organisation including social performance. 

(vii) 

Corporate Rating Approach: In contradistinction to the audits 

mentioned above, this is 

an  external evaluation of the company's 

performance by public groups like consumer organisations, social welfare 

organisations or media. 

The format of social reporting used by the Cement Corporation of India is given 

below. 

13.11  OBSTACLES TO SOCIAL AUDIT 

 

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Social audit encounters a number of problems. The important obstacles are: 

1. 

Being a relatively new concept, social audit is yet to gain wide 

appreciation and acceptance. 

2. 

Being a relatively new concept, a clear and generally well accepted 

methodology for conducting the social audits is not available. 

3. 

There is no agreement as to the items to be included for social audit. 

4. 

It is very difficult, and in several cases even impossible, to quantify the 

social costs and benefits of different activities or items. 

5. 

There may be resistance within the company to social audit because of the 

time, effort, and difficulty involved in the task. 

6. 

There may also be resistance because of the fear of a dismal or 

unsatisfactory picture that may be presented by the social audit. 

As the Committee set up by the Tata Iron and Steel Company Limited (TISCO) to 

conduct the Social Audit of the TISCO points out, though social audits have been 

undertaken in a number of countries, principally in the U.S.A. (to which the 

practice owes its origin), Japan, the U.K. and one or two other Western countries, 

the subject has not yet attained the status of a science. There is no agreement, 

much less unanimity, among its most ardent proponents, particularly as to its 

basic principles or its true objectives. It is only a child of the last decade, during 

which there has been a growing concern about the environment and the problems 

of pollution, consumer protection, worker’s safety -and equal employment 

opportunities. Melvin Anshen, Professor of Public Policy and Business 

Responsibility at the Graduate School of Business, Columbia University, and an 

eminent authority on the subject, remarks that "the social audit has been described 

as an idea whose time has come but which isn't ready to be taken off the drawing 

board and put to work". 

13.12  SOCIAL AUDIT IN INDIA 

Although, the idea of social audit originated in the United States about half a 

century ago, it is only recently that it received serious attention of corporations 

even in the advance countries. The first comprehensive social audit in India was 

conducted by the TISCO in 1980. It was conducted by the Social Audit 

 

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Committee appointed by the Board of Directors of the company "to examine and 

report whether, and the extent to which, the company has fulfilled the objectives 

contained in Clause 3A of its Articles of Association regarding its social and 

moral responsibilities to the consumers, employees, shareholders, society and the 

local community." The report of the Committee was a glowing tribute to the 

endeavours of the company in the discharge of its social and moral obligations to 

the various segments of the society. Some companies like the Cement Corporation 

of India have been making some social reporting in their annual reports. 

The High Powered Expert Committee on Companies and MRTP Acts (Sachar 

Committee) observes that the acceptance of the concept of social responsibility 

must be reflected in the information and disclosures that the company makes 

available for the benefit of its various constituents - shareholders, creditors, 

workers and the community and has suggested that a provision may be made in 

the Companies Act that every company shall give a social report which will 

indicate and quantify, in as precise and clear terms as possible, the various 

activities relating to social responsibility which have been carried out by the 

company in the previous year. The Committee has further suggested that it is 

possible that a company may be required to alter its Memorandum with respect to 

the objects of the company so as to carry out its activities as an obligation to the 

concept of social responsibility. It should be pointed out here that the TISCO had, 

in 1970, voluntarily incorporated in its Articles "of Association it’s social and 

"moral responsibilities to the consumers, employees, shareholders, society and the 

local people. The concept of social audit has not yet taken off in India. 

13.13 SUMMARY 

The rationale of the concept of social responsibility is that industry "can no longer 

be regarded as a private arrangement for enriching shareholders. It has become a 

joint enterprise in which workers, management, consumers, the locality, 

Government and trade union officials all playa part. If the system which we know 

by the name private enterprise is to continue, some way must be found to embrace 

many interests who go to make up industry in a common purpose." It is argued 

that a company has a number of social responsibilities to the employees, 

 

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shareholders, consumers and the community. Social responsibility of business is 

advocated on the ground that the resources it makes use of are not limited to those 

of the proprietors and the impact of their operations is felt also by many a people 

who are in no way connected with the enterprises. The shareholders, the suppliers 

of resources, the consumers, the local community and society at large are affected 

by the way an enterprise functions. Hence, a business enterprise has to be socially 

very responsive so that a social balance may be struck between the opposing 

interests of these groups. Further, companies, which have huge resources at their 

disposal, have a moral responsibility to care for the society. Besides, discharge of 

social responsibilities will be in the company's own interest, because it will help 

build up good rapport with the society and Government and improve employee 

morale and industrial relations. However, there are also arguments against the 

social involvement of business. It will affect the financial health of companies, it 

may lead to attempt to dominate the community's affairs, the costs of social 

involvement may be passed on to the consumers by price increase, for many 

companies it is a tax saving gimmick, so goes the arguments. A social audit 

enables the public as well as the company to evaluate the social performance of 

the company. The "social audit - much like the financial audit - is an identification 

and examination of the activities of the firm in order to assess, evaluate, measure 

and report their impact on the immediate social environment." There is no single 

universally agreed upon method of social auditing. Some of the important 

methods of social audit developed by different people or organisations include 

social process audit, financial statement format audit, macro-micro social 

indicator audit, constituency group audit, partial social audit, comprehensive 

audit, and corporate rating approach. 

13.14 SELF-TEST 

QUESTIONS 

1.  What do you mean by social responsibility of a business? 

2.  How can you evaluate the social responsibilities of business in Indian economy? 

3.  What do you mean by social audit? Why it is compulsory? 

4.  Explain the benefits and limitations of social responsibilities? 

13.15  SUGGESTED READINGS  

 

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1. 

Cherrunilam, Francis (2003), Business Environment, New Delhi: Vikas 

Publishing House Private Limited. 

2. 

Glueck, William (1980), Business Policy and Strategic Management, 

Auckland: McGraw-Hill International Book Company. 

3. 

Paul, Srivastava, Strategic Management, Cinicinnati:South-Western 

Publishing Conmpany. 

4. 

Fred Luthans, Organisational Behaviour (8

th

 ed.), Irvin/Tata McGraw Hill. 

5. 

Stephen P. Robbins, Organisational Behaviour (9th ed.), Prentice Hall India. 

 

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CONTROLLING 

 

OBJECTIVE:  

The objective of the chapter is to give awareness to the students 

about the controlling process and its techniques. 

STRUCTURE: 

14.1 

Introduction 

14.2 

Definition 

14.3 

Controlling and Other Functions 

14.4 

Importance of Control 

14.5 

Steps in Controlling 

14.6 

Behavioural Implications of Control 

14.7 

Control and Organisational Factors 

14.8 

Overcoming Behavioural Problems 

14.9 

Controlling and Management by Exception  

14.10  Scope of Control  

14.11  Summary 

14.12  Self-Test Questions 

14.13  Suggested Readings 

 

14.1 INTRODUCTION 

 

All organisations, business or non-business, face the necessity of coping with, 

problems of control. Like other managerial functions, the need for control arises 

to maximise the use of scarce resources and to achieve purposeful behaviour of 

organisation members. In the planning stage, managers decide how, the resources 

would be utilised to achieve organisational objectives; at the controlling stage; 

managers try to visualise whether resources are utilised in the same way as 

planned. Thus control completes the whole sequence of management process. 

COURSE: MANAGEMENT CONCEPTS AND ORGANIZATIONAL BEHAVIOUR 

 

COURSE CODE: MC-101   

AUTHOR:   SURINDER SINGH  

LESSON: 14   

 

 

 

VETTER:  

DR. KARAM PAL 

 

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14.2 DEFINITION 

Control is any process that guides activity towards some predetermined goals. Thus 

control can be applied in any field such as price control, distribution control, pollution 

control, etc. However, control as an element of management process can be defined 

as the process of analysing whether actions are being taken as planned and taking 

corrective actions to make these to conform to planning. Thus control process tries to 

find out deviations between planned performance and actual performance and to 

suggest corrective actions wherever these are needed. For example, Terry has defined 

control as follows: 

“Controlling is determining what is being accomplished, that is evaluating the 

performance and, if necessary, applying corrected measures so that the 

performance takes place according to plan.” 

Based on the definition of control, its following features can be identified: 

1. 

Control is forward looking because one can control future happenings and 

not the past. However, on control process always the past performance is 

measured because no one can measure the outcome of a happening which 

has not occurred. In the light of these measurements, managers suggest 

corrective actions for future period. 

2. 

Control is both an executive process and, from the point of view of the 

organisations of the system, a result. As an executive process, each 

manager has to perform control function in the organisation. It is true that 

according to the level of a manager in the organisation, the nature, scope, 

and limit of his control function may be different as compared to a 

manager at other level. The word control is also preceded by an adjective 

to designate a control problem, such as, quality control, inventory control, 

production control, or even administrative control. In fact, it is 

administrative control, which constitutes the most comprehensive control 

concept. All other types of control may be subsumed under it. 

3. 

Control is a continuous process. Though managerial control enables the 

manager to exercise control at the point of action, it follows a definite 

pattern and timetable, month after month and year after year on-a 

 

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continuous basis. 

4. 

A control system is a coordinated-integrated system. This emphasises that, 

although data collected for one purpose may differ from those with 

another purpose, these data should be reconciled with one another. In a 

sense, control system is a single system, but it is more accurate to think of 

it as a set of interlocking sub-systems. 

14.3  CONTROLLING AND OTHER FUNCTIONS 

Control is closely related with other functions of management because control 

may be affected by other functions and may affect other functions too. Often it is 

said planning is the basis, action is the essence, delegation is the key, and 

information is the guide for control. This reflects how control is closely related 

with other functions of management. In fact, managing process is an integrated 

system and all managerial functions are interrelated and interdependent. When 

control exists in the organisation, people know: what targets they are striving for, 

how they are doing in relation to the targets, and what changes are needed to keep 

their performance at a satisfactory level. The relationship of control with major 

managerial functions can be described as follows: 

1.  

Planning as the Basis: Planning is the basis for control in the sense that it 

provides the entire spectrum on which control function is based. In fact, 

these two terms are often used interchangeably in the designation of the 

department, which carries production planning, scheduling, and routing. It 

emphasises that there is a plan, which directs the behaviour and activities 

in the organisation. Control measures these behaviour and activities and 

suggests measures to remove deviation, if any. Control further implies the 

existence of certain goals and standards. The planning process provides 

these goals. Control is the result of particular plans, goals, or policies. 

Thus, planning offers and affects control. Thus, there is a reciprocal 

relationship between planning and control, as presented in Figure 14.1. 

 

 

Planning 

Action  

Controlling 

 

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Figure 14.1: Planning and controlling relationships 

 

Thus various elements of planning provide what is intended and expected 

and the means by which the goals are achieved. They provide a means for 

reporting back the progress made against the goals, and a general 

framework for new decisions and actions in an integrated pattern. Properly 

conceived plan become important elements in implementing effective 

control. 

2. 

Action as the Essence: Control basically emphasises what actions can be 

taken to correct the deviation that may be found between standards and 

actual results. The whole exercise of managerial process is taken to arrive 

at organisational objectives set by the planning process. For this purpose, 

actions and further actions are necessary; each time there may be 

correction and change in the actions depending upon the information 

provided by control procedure. Though it is not necessary that each time a 

corrective action is taken but control ensures the desirability of a particular 

action. This is important for organisational effectiveness. Thus, in a real 

sense, control means action to correct a condition found to be in error or 

action to prevent such a condition from arising and is never achieved 

without having action as an essential step. 

3. 

Delegation as the Key: Delegation is the key for control to take place 

because control action can be taken only by the managers who are 

responsible for performance but who have authority to get the things done. 

A manager in the organisation gets authority through delegation and red 

legation. It does not make sense to make someone responsible for 

achieving results without delegating him adequate authority. In the 

absence of adequate authority, a manager is unlikely to take effective steps 

 

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for correcting the various deviations located in the process of analysis. 

Taking of corrective actions may be seen in the context of controllability 

of a factor effecting the deviation or non-achievement of organisational 

objectives. Some of these factors are controllable and some are 

uncontrollable. A controllable factor is one, which can be controlled by an 

executive action, while the uncontrollable factors lie outside his 

jurisdiction. A manager's action is likely to be more effective if more 

factors are controllable by him. He can have better controllability if he has 

been authorised to take decisions on various matters concerning him and 

affecting his action. Tile best policy of delegation is the matching of 

responsibility and authority. It suggests that a manager must have 

corresponding authority as compared to his responsibility. He has to 

control the operations, which are exercised by taking action, and action 

may be taken within the limit of the authority. So the only person who can 

directly control activities is the one who is directly responsible for them. 

This is the basic principle for effective organisations. 

4. 

Information as the Guide: Control action is guided by adequate 

information from beginning to the end. Management information and 

management control systems are closely interrelated; the information 

system is designed on the basis of control system. Every manager in the 

organisation must have adequate information about his performance, 

standards, and how he is contributing to the achievement of organisational 

objectives. There must be a system of information tailored to the specific 

management needs at every level, both in terms of adequacy and 

timeliness. Control system ensures that every manager gets adequate 

information. The criterion for adequacy of information for a manager is 

his responsibility and authority that is in the context of his responsibility 

and authority, what type of information a manager needs. This can be 

determined on the basis of careful analysis of the manager's functions. If 

the manager is not using any information for taking certain action, the 

information may be meant for informing him only and not falling within 

 

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his information requirement. Thus, an effective control system ensures the 

flow of the information that is required by an executive, nothing more or 

less. There is another aspect of information for control and other function, 

that is, the timeliness of information. Ideally speaking, the manager should 

be supplied the information when he needs it for taking action. For 

correcting the deviation, timely action is required by the manager 

concerned. For this purpose, he must have the information at proper time 

and covering the functioning of a period, which is subject to control. The 

control system functions effectively on the basis of the information, which 

is supplied in the organisation. However, the information is used as a 

guide and on this basis, a manager what action can be taken. 

14.3 

IMPORTANCE OF CONTROL 

Organisations try to achieve their objectives through various actions. From this 

point of view, all the objectives lead to the achievement of organisational 

objectives. However, the organisations must also monitor whether they are 

achieving their objectives or-not. Thus control is an integrated action of an 

organisation or manager. It offers help in the following directions: 

1. 

Adjustments in Operations: A control system acts as an adjustment in 

organisational operations. Every organisation has certain objectives to 

achieve which becomes the basis for control. It is not only sufficient to 

have objectives but also to ensure that these objectives are being achieved 

by various functions. Control provides this clue by finding out whether 

plans are being observed and suitable progress towards the objectives is 

being made, and acting, if necessary, to correct any-deviation. This may 

result into taking actions more suitable for the achievement of 

organisational objectives. 

2. 

Policy Verification:  Various policies on the organisation generate the 

need for control. For organisational functioning, managers set certain 

policies and other planning elements, which later become the basis and 

reason for control. They become basis in the sense that organisational 

performance is reviewed in these lights. They also become the reason for 

 

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control because through these, an organisation tries that its various 

individuals adhere to such framework. In this process, the organisation 

and its management can verify the quality of various policies.