Planning and Control are two words often used together, mostly in the corporate world, usually in the context of performance management or strategy formulation. The objective of planning and Control is to ensure that an organization achieves its goals and avoid any unforeseen adverse circumstances.
We can define planning as “a pathway outlining a series of steps which should are ought to be taken to achieve a goal or an objective”.
So, for example, if you plan to visit the nearest lake on the weekend, you’ll list out the steps to be taken to achieve this goal, which would include allocating a time slot, arranging travel to the place, purchasing or renting items for using on the picnic day etc.
So, in the corporate context, a plan to achieve the objective of profit maximization may include identification of profitable products, purchase or production of those products and then selling such products to customers to achieve the aim of profit.
Some of the examples of planning are as follows:
- Identification of market gap and drafting a suitable line of action to enter the market.
- Preparing a sales plan (budget) for the first three months of the business.
- Allocation of limited resources on different activities for optimum output, for example, how to utilize a limited quantity of material on the production of various products.
- Preparing a schedule of activities at the beginning of the day to be done during the day.
- Identification of resources to achieve a particular objective, like plan to use social media to recruit talented staff.
- During a war, planning is assessing your environment and then coming up with a thoughtful response.
Control is ensuring that plan works out in the planned way. If things are going out of the plan, Control will help things bring back to the track. Controls would handle many risks and uncertainties including laziness, fraud, unprofessionalism, delays, competition, regulatory compliance etc.
For example, keeping a record of all products entering and exiting the warehouse is an example of Control. This Control ensures that there is no misappropriation of goods from the warehouse.
There can be various examples of controls; some of these are listed below:
- Setting salaries for the employees to avoid any conflict in future.
- Maintaining daily attendance to ensure that everyone comes to work.
- Setting credit limits for the customers to avoid significant bad debts.
- Keeping limited signatories of bank accounts to ensure the safety of cash at bank.
- A compliance team to be assigned responsibilities for ensuring regulatory compliance.
- Setting budgets and targets for different expenses and revenue items for cost control and business development, respectively.
The word ‘planning and control’ is often used together, often as a synonym. Some activities can be classified as both as a plan and as a control. For example, a budget is both a plan and Control. A budget is a plan to achieve the desired level of revenue or costs. However, if the budget is not being achieved, an intimation alerts higher management, and thus management takes suitable corrective measures. Thus budget acts as a control mechanism also to report and suggest improvements.
Planning and Controlling is a vital skill in today’s career market. It is one of the desired skills mentioned in most of the job advertisements. Organizations are looking for candidates who can plan in a dynamic ever-changing environment and can control various factors to help an organization achieve its objective.
Planning and control activity is primarily designed at the strategic level of the organization. Board of directors and top management would be entrusted mainly with planning the resources of the organization, controlling the risks and uncertainties and keeping organization progressive and profitable. It is a tool of performance management as well as performance measurement.
Many middle-level managers and operational level staff would also be planning and Control in their daily routines jobs. For example, a machine operator worker has to plan and control the quantity of the raw material being inserted in the production machine and control the flow. A driver has to plan all endeavours and control the vehicle as per the surroundings.
An adequate level of planning and Control can help an organization achieve its objectives; any major draw-back in the planning and Control may lead the organization into astray.