Standards are yardsticks against which expected performance is measured. In simple
operation a manager may control through careful observations. But, in most
operations this is not possible because of the complexity of the operations. Manager
must choose points for special attention and then watch them to be sure that the whole
operation is proceeding as planned.
The points selected for control should be critical. With such standards,
manager can handle a large group of subordinates and plans are working out the
principle or critical. Points control states “effective control requires attention to these
factors critical to evaluating performance against plans.
QUESTION OF SELECTED CRITICAL POINT OF CONTROL
In selection of critical control points, manager must ask themselves such questions.
1- What will best reflect the goals of my department?
2- What will best show me when these goals are not being met?
3- What will best measure critical deviation?
4- What will tell me who is responsible for any failure?
5- What standard will cost the least?
6- For what standards is information economically-available?
TYPES OF CRITICAL POINT STANDARDS
There are many types of standards
1- PHYSICAL STANDARDS
Physical standards are non monetary measurements and common at operating level
where material is used, labor is employed, services are rendered and goods- are
produce-they may-reflect quantities such as labor hours per unit of output, unit of
production per machine hour etc. physical standards may also reflect quality such as
hardness of bearing, durability of fabric, fastness of color etc.
2- COST STANDARDS
Cost standards are monetary measurements and common at the operating level. Cost
standards are widely used to measure direct and indirect costs per unit produced,
labor cost per unit or per hour material cost per unit, machine cost per hour etc.
3- CAPITAL STANDARDS
There are varieties of capital standards. These standards are primarily related to the
balance sheet rather than to the income statements. Capital standards range from
monetary measurements to physical items. These standards may be indifferent ratios
such as the ratio of current assets to current liabilities etc.
REVENUE STANDARDS
Revenue standards arise from attaching monetary values to sales. They may include
such standards as average sales per customer etc.
PROGRAME STANDARDS
Such standards are determined for installing a variable budget program, for example
program for improving the quality of a sale fore.
INTANGIBLE STANDARDS
Sometime it is difficult to establish standards for quantitative and qualitative
measurement, especially when human relationships count in performance. It is very
difficult to measure human attitudes, in connection with individual’s loyalty,
efficiency, etc. All this need to be based on intangible standards.
GOALS AS STANDARDS
Goal can be used as performance standards. Both in simple in complex operations
quantitative and qualitative Goals represents an important development in the area of
standards.
