Controlling is an information system supporting decision making in the company. It's a specific business management style.
Of course, many companies use different controlling tools, such as: sales analysis per customer/market /distribution channels, cost comparisons over different periods, development of investment plans, preparation of periodic budgets, etc. The staff prepare numerous reports and reports for the management and board.
However, these activities, in many cases, do not constitute a comprehensive and specifically developed management system for the company through controlling.
The rapid growth of companies and changes in the business world often force the implementation of controlling even in small companies wishing to stay on the market and to gain and build sustainable competitive advantages.
Many consider the size of the company to be an overarching criterion for decision-making on the implementation of the controlling system, claiming that the system makes sense and justification only in large units. However, the experience of companies shows that the size criterion of the company should not be the only determinant of the introduction of a controlling system.
It is worth deciding to implement controlling in the company not only on the scale of the business (measured by the volume of turnover or the number of persons employed), but also on:
- • the specificity of the company's activities,
- • number and type of customers,
- • scope of activity (local, regional, global),
- • differentiation of products/services sold,
- • the number of points of sale,
- • organisation of distribution network (flat or wide distribution channels),
- • the complexity of the products produced,
- • sources of supply of materials for production (national, foreign)
You can find many companies whose turnover reaches several dozen one million The nature of the business does not force the implementation of advanced controlling solutions. On the other hand, are also smaller economic operators with turnover not exceeding several or more one million the value added from the implementation of controlling is significant.
What signals should, therefore, prompt companies (including smaller and medium size ones) to implement the controlling system? The most common in practice that is worth paying attention to are:
- • lack of reliable and ongoing data to make business decisions,
- • no monitoring of revenues and costs according to established criteria to ensure the success of the company on the market,
- • a low level of involvement of employees in achieving the identified operational objectives in the company,
- • no planning process and thereby safeguarding the business in the short and long term.
Modern and effective implementation of controlling is primarily related to the introduction of responsibility centres. The concept of ‘centres of responsibility’ is based on the assumption that costs and revenues cannot be an element, that there must be no ‘anybody’ costs.
Costs and revenues must be consciously affected, each component must be subject to a specific cell or division. Such a solution encourages workers to carefully analyse the data entered into budgets.
In addition, the attribution of decision-making powers and responsibility for them increases the involvement of the staff in developing the planned result. Implementation of controlling is a change in the management style of its decentralisation.
The practice indicates that the added value for undertakings implementing controlling includes:
- • greater involvement of workers in the implementation of the plans through the implementation of the incentive system also involving greater responsibility,
- • autonomy of managers of responsibility centres for planning, verification and analysis of deviations,
- • a uniform and orderly way of recording data in the system and access to current information in the form of useful reports,
- • „tailor-made” planning process adapted to the nature of the individual and the specifics of its industry,
- • the use of an early warning system,
- • deviation analysis for flexible adaptation to changing ambient conditions
The rapid growth of companies and changes in the business world often force the implementation of controlling even in small companies wishing to stay on the market and to gain and build sustainable competitive advantages.
The design and implementation of the controlling system concept in a given company can be carried out on its own by setting up an implementation team with specific tasks, while at the same time supporting the board, or by means of an external advisor/consultator who can often implement controlling faster and better.
It is easier for an external person/ company to discipline employees to cooperate, convince them to make the necessary changes, justify new solutions and conduct the entire implementation process smoothly.
It is worth noting that the implementation of controlling in a small company does not have to involve the purchase of special and often expensive software. System implementation can be based on existing IT solutions in the company and only requires more use than so far (e.g.
designing reports/analysis using advanced Excel based on customized data from the existing accounting system) .
So, breaking stereotypes is worth pointing out again that the controlling system is not and should not be just a domain of large companies. With the right design and implementation, it can provide invaluable assistance in the management of any, even small, enterprise that has the opportunity to operate more efficiently and to identify and exploit the opportunities for development and building sustainable competitive advantages.