Integrated controlling--a new perspective of managing a company.

Pop, Nicolae Alexandru ; Pelau, Corina ; Ghinea, Valentina Mihaela 等

1. INTRODUCTION

In a permanent changing environment, characterized by the well-known globalization phenomenon, the intensification of the competition process and fast developing technologies, every little detail can make the difference. It is not anymore about standardization, but only about emphasizing each particularity of the process, product or human capital of the company. It can be easily observed that only those companies which have the ability to adapt to these permanent changing conditions by implementing a permanent controlling system of its performances and results, can survive. Thus, a similarity can be observed between the business environment and nature. So, in the business world, as in nature, only those companies which have the capability to adapt to the business environment can survive and enjoy long term success. This statement relies on the theory "survival of the fittest" of the socio-Darwinist philosopher Herbert Spencer. Under these conditions, controlling should be seen as a "helping hand" of the management which contributes to the development of this adaptation capability of a company to the environment. So, the controlling department should set the informational basis for the management decisions and warn it in case of negative company developments.

Several decades ago, it was unheard of for a company to undertake contingency planning, critical incident analysis or implement a monitorization system of its performance. Nowadays, these activities have become a necessity, for companies focus their attention more and more on activities that minimize risk, avoid liabilities and ensure employees' safety and the company success.

2. INTEGRATED CONTROLLING

One of the main objectives of this paper is to define the concept and to make the delimitation among other disciplines and company departments. Ehrmann states the fact that there is no unanimously accepted definition of the concept controlling (Ehrmann 2004). Weber and Schaffer agree with him by stating that there are many definitions of controlling. Pemoller strengthens this idea by affirming that the term controlling is often used with different meaning in different situations (Peemoller 1992). PreiBler affirms that even managers are not certain of what controlling is (PreiBler 1995). Controlling is often compared with the simple "control", but many specialists agree that it is more than a simple control of the company activity (Ehrmann 2004, Peemoller 1992, Hungenberg & Wulf 2004). By analyzing the definitions and functions attributed to controlling a similarity can be observed regarding the management activity of the company. Thus Peemoller defines controlling as the management function which coordinates the activities of planning, control and collection of information in a company (Peemoller 1992). According to Ehrmann the main functions of controlling are planning, collecting and providing information, analysis, control and coordination of a company (Ehrmann 2004). Horvath combines these elements and defines controlling as a subsystem of the company management which systematically combines the planning and control of the company as well as the information system, and sustains by this, the adaptation and coordination of the whole system (Zerres 2000). On the other hand, if we analyze the definition of management, it refers to the target oriented planning, organization, leading and control of a company. By comparing these definitions one can observe that both management and controlling contain the activities of planning, control, and coordination. The conceptual question which has to be asked is where the limit between these two concepts is. Confusion exists regarding the financial, accounting orientation of controlling. American specialists perceive controlling as an activity of the financial department of a company (Zerres 2000). Starting from all these different definitions and functionalities of the controlling, there is a need to confer a certain meaning to controlling by making a delimitation of its objectives, function, roles, instruments and obligations in the company activity. It is also important to find the limit between controlling and the other departments of a company and to establish its clear position in the company organizational chart.

As presented in the existing literature in the field most of the instruments measure the performance of the activity of the company (Zerres 2000). So it can be stated that one of the functions of controlling is the performance measurement. There are presented several controlling instruments which measure the efficiency, efficacy and performance of the company's activity by which the adaptation capability of the company can be ensured. These elements are the internal processes, the customers, the human resources and the financial activity of the company, as mentioned in the balanced score card (fig. 1).

First of all, there are several instruments that measure the efficiency, profitability and also productivity of the internal process. An essential element for the performance measurement of the internal processes is the reduction of costs, which can lead to a better profitability of the company. In the marketing department of a company, there are controlling instruments which evaluate the company's customers and the four policies of the marketing mix. Each company has to analyze its customers in order to be able to invest in the "good customers" and reduce the costs with the "not that good customers" (Pop, Pelau, 2005, pg. 43-52). Besides this, for each component of the marketing mix there are instruments of efficiency and effectiveness evaluation. Another important department that uses controlling instruments is the human resources department. For an efficient and effective running of a company's activity, it is important to evaluate the performance and structure regarding the human resources both from a quantitative and qualitative point of view. More than that, an analysis of their degree of innovation provides a clear image about the company's development capability and its performance (Florescu, Malcomete, Pop, 2003). Last but not least, the financial department has also the duty to monitor and analyze all financial processes. This is done by using indicators like cash-flow, return-on-investment, etc.

[FIGURE 1 OMITTED]

In order to determine and analyze the existence and implementation of controlling in companies, a pilot study has been conducted in 23 Romanian companies from different fields. The research has consisted in interviews with the managers or controllers of the companies, and has had as main objective to determine if companies in Romania have a controlling department, if they use controlling or performance measurement instruments and which indicators do they use.

The analyses of the results have lead to the formulation of two hypotheses which should be proved within an extended research. The first hypothesis is that many companies use performance measurement instruments, even though they do not have an integrated controlling system. This is especially valid for small and medium companies. The second hypothesis is that there is a relation between the existence of a controlling system or the use of controlling instruments and the performance of the company. So the existence of an integrated controlling system influences in a positive way the performance of the company.

The limitations of this research consist in the subjective view and the limited information provided by the respondents and the quality of the application of a controlling system. According to the position of the company representatives, namely the interview respondents, the results might be influenced by his/her view and information of the controlling department or system. Besides this, the influence of the existence of a controlling department on the company performance depends on the quality of implementation and application. Regarding this issue, it is important to analyze the complexity of the controlling system and the quality of the communication between the controller and the manager. Even if a company has a complex controlling system, these reports can not have an influence on the company performance if the manager does not take the reports of the controller in consideration.

In order for a company to be able to make forecasts about future developments, it needs, first of all, an evaluation of the actual internal and external situation. Checking current performance against pre-established plans, with a view to ensure adequate progress and satisfactory performance has become compulsory for a company. It is not only about the performance measurement, but also about the correction of performance in order to ensure that the company's objectives are accomplished. Besides this, it has become compulsory to integrate all control activities into one well structured system that bridges gaps between departments.

3. CONCLUSION

In fast developing markets characterized by the intensification of competition and increased comparability between products, a company can gain a long term success by its capacity to adapt itself to the changing conditions of the markets. More "organic" forms of companies allow organizations to be more responsive and adaptable in today's rapidly changing world. These forms also cultivate empowerment among employees, much more than the hierarchical, rigidly structured organizations of the past, but they also provide a strong management control known as "controlling". In order to reach the ultimate company's goal, the profit maximization, this kind of ongoing communication between the internal processes, the marketing department, the human resources and also the financial activities tends to become one of the essence of the management science.

By permanent monitoring of the company and its environment as well as the knowledge about performance of the company, controlling can improve this adaptability of the company and contribute by this to the long-term success of the company.

4. REFERENCES

Baier, P. (1994). Fuhren mit Controlling--So aktivieren Sie das Leistungspotential Ihres Unternehmens (Leading with controlling--That is how you activate the performance potential of your company), Walhalla, Berlin.

Ehrmann, H. (2004). Marketing-Controlling, Kiehl, Modernes Marketing fur Studium und Praxis, 4th edition, Ludwigshafen.

Florescu, C.; Malcomete, P. & Pop, N. Al.(2003). Marketing, Dictionar explicativ, Editura economica, Bucuresti.

Geis, G.; Reinecke, S. & Tomczak, T. (2001). Handbuch Marketingcontrolling--Marketing als Motor von Wachstum und Erfolg (Marketingcontrolling Manual--Marketing as a Engine for Growth), Wirtschaftsverlag Ueberreuter, Frankfurt/Wien.

Hungenberg, H. & Wulf, T. (2004) Grundlagen der Unternehmensfuhrung (Basics of Company Leading), Springer, Berlin.

Peemoller, V. (1992) Controlling--Grundlagen und Einsatzgebiete (Controlling--Basics and Application Fields), Neue Wirtschaftsbriefe, 2nd edition, Herne/ Berlin.

Pop, N. Al. & Pelau, C. (2005). Elemente de Controlling in Marketing--Metode de evaluare a clienfilor (Controlling Elements in Marketing--Methods of evaluating customers), in: Revista de Management s,i Inginerie Economica, Vol. 4, Nr. 3, pg. 43-52.

Preissler, P. R.(1995) Controlling--Lehrbuch und Intensivkurs (Controlling--Manual and intensive course)), Oldenburg, Munchen.

Zentes, J. & Swoboda, B. (2001). Grundbegriffe des Marketing --Marktorientiertes globales Management-Wissen (Basics of Marketing--Global Market Oriented Management Know-How), Schaffer-Poeschel, 5th edition, Stuttgart.

Zerres, M. & al. (2000). Handbuch Marketing-Controlling (ManualMarketing-Controlling), Springer, Berlin.