Planning and controlling go hand in hand. There could be no control without a plan and plans cannot be successfully implemented in the absence of controls. Controls give a means of checking the progress of the plans and correcting any deviations which might occur along the way.
A control is meaningful only while there is clear cut responsibility for activities and results. It is meaningless to have a control procedure that simply points out deviations but cannot pinpoint the area in that they occurred and who is responsible for taking the corrective measures.
Controls might be used to measure physical quantities (such as volume of output, number of man hours, number of units of raw material consumed per machine and etc.), monetary results (value of sale, capital expenditure, return on investment, earning per share, etc.) or to evaluate intangibles such as employee morale, loyalty, and commitment to work. Obviously, the third type of control is the most hard to design and implement. No quantitative measure could be used and only a descriptive, qualitative evaluation is probable for intangibles.
There are three basic steps involved in designing a control procedure. They are:
i) Establishment of standards;
ii) Measurement of performance; and
iii) Correcting deviations.