Define production standards, inventory standards, accounts receivable standards,

Define the subsystem and identify key characteristicsTo define the subsystem it is important to realize that a formal control system might be created for an individual, a department, or an entire organization. There is therefore a need to define employee, the group, department or organization as whole in order to establish the focus of the control process.Key characteristics refer to the process of identifying the key types of information needed to obtain about a person, team, department, or organization to ensure effective control. Set performance standards for control Setting performance standards includes ensuring that an organization is functioning at a proper level.

To implement the control process workers must know what is required or what is to be expected of them. Therefore, companies need to set standards. Standard levels help the company meet its expected goals. Standards target and establish desired performance levels, motivate performance, and serve as a benchmark against which to assess actual performances.

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Different activities such as financial activities, operating activities, legal compliance, and charitable contributions can be used to set standards.Standards may include profitability standards, marketing standards, production standards, inventory standards, accounts receivable standards, sales productivity standards, employee turnover standards, production waste standards, time standards, quantity standards, quality standards, monetary standards, and many others. 3. Collect information on the actual performanceInformation on each of the standards can be collected manually or automatically. Information should be an accurate measurement of what is actually taking place. Information could be obtained in many ways, but often it is collected from three sources, namely; written reports, oral reports, and personal observation.4. Making comparisonsComparisons are needed to determine whether what is happening is what should be happening.

In other words, information about actual results must be compared with performance standards.5. Diagnose and correct problemsDiagnosis involves assessing the types, amounts, and causes of deviations from standards. Action can then be taken to eliminate these deviations and correct problems.

However, not all deviations justify corrective actions. Personal judgment is necessary in some cases.Appropriate corrective action depends on the nature of the problem. There are different forms of corrective actions, such as, disciplinary action, changing in procedures or method; a new way of check accuracy or maybe some form of employee training is needed.


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