Recently, the term “controlling” has become very popular in business. A lot of large Western companies have controlling departments, in Germany and the USA there are special universities! Let’s figure out what is controlling and why every company needs it.
The first thing that comes to mind regarding the word “controlling” is, of course, to associate it with the concept of control, but these are not the same things. Control – is only a small functional part of controlling, that identifies errors and problems in the past. But controlling itself is focused on managing the future to ensure a long, effective operation of business via planning, forecasting and analysis. The purpose of controlling is to help make the right decisions for company’s goals achievement.
A good controller is the eyes and the right arm of any manager, who is focusing on the prosperity of the company.
These are some basic controlling functions:
• Planning: when the strategy is developed and the goals are set, it is necessary to communicate them to all employees and make an operational plan. The Controller develops planning methods, determines the sources and timing of the necessary information. After checking the quality and compliance with the company’s global goals, the controller aggregates the information received into a single plan. It is important to note that implementing of plan is the manager’s competence.
• Control: “What are the reasons of personnel costs increase? Why we have decline in Net Sales? What influenced on transport costs decrease?” – controller answers on these and many other questions on a regular basis, as well as preparation of actual-plan data comparison with defining of deviations and its reasons. Based on the results of the analysis, proposals are made to optimize these deviations.
• Monitoring: the controller in real time monitors information about all ongoing processes of the company, provides actual reports and information to the manager. Therefore the manager is always aware of all financial results and their compliance with the plan, which allows him to make in time important decisions and actions to achieve the company’s goals.
• Special functions: external environment data collection and analysis, comparison with competitors, calculation of the effectiveness of investment projects, calculations for special orders, rationale for merging with other firms, opening / closing a branch, a factory and others.
Summarizing all information above: although controller has no direct participation in company management, performing a service function (forecasts, collects, processes, analyzes and comments), he provides managers with very important information for decision making.
In big corporations, for the analysis of a huge amount of data, there are departments of controllers responsible for different divisions and functions: production, financial, purchasing, business controlling.
Detailed and useful information about controlling in business you can also find in book “Controlling” edited by Thomas Reichmann.
Sources: “Business Controlling” O. Buresh, L. Soldatova, L. Gerbaeva and others, 2013, “Controlling in business” A.M. Karminsky, N.I. Olenev, A.G. Primak, S.G. Falco, 2002, http://www.up-pro.ru/encyclopedia/controlling-functions.