The Controlling Concept. Horváth & Partners Management Consultants

continually in business practice and has become an indispensable management support function for any modern company. Nevertheless, there are still considerable differences of opinion about the term Controlling. In many cases, Controlling is often taken erroneously to mean control, but Controlling is much more than that. Controlling is a cross-functional performance management concept tasked with the performance-based coordination of planning, control and the provision of information. Hence, the controller is the “economic conscience” of the company.

      In recent decades Controlling has become strongly rooted in nearly all industries; nowadays, Controlling departments can be found not only in classical industrial companies but also in retail, financial services providers, or public authorities. However, alongside the universal necessity for coordinating planning, information provision and control, there are often further specific reasons for setting up a Controlling function in the respective field. These reasons also explain why Controlling functions in different industries sometimes have very individual characteristics.

1.3Tasks of Controlling

      In principle, we must differentiate between Controlling as a function (“controller service”, “controllership”) and the controller as the executor of that function. As a matter of fact, in terms of performance management, Controlling is a core task of management. To a certain extent, every manager performs some Controlling functions. Thus, Controlling as a process and mindset is created jointly by managers and controllers in a team and forms a type of “intersection”. In this, the controller is involved in the management processes of target-setting, planning and performance management by supporting decision-making through the provision of information and the creation of transparency, as well as being a planning facilitator. As a result, the controller is partially responsible for enabling the manager to take timely, target-based decisions.

      Together, managers and controllers share responsibility for the Controlling process (see Chapter 8 for details of the Controlling process). Fig. 1.3 shows Controlling as the area of intersection between the tasks of the manager and those of the controller.

      Primarily, Controlling is not the name of a position or person, but rather a remit or scope of tasks carried out by different people, or by management itself, without a specific person actually having to hold the title of “controller”. Above all, in small companies the Controlling function is frequently executed by management itself or by the head of accounting.

Is there a controller mission statement in your company?

      Fig. 1.3:Controlling as intersection between managers and controllers (International Controller Association [ICV] e. V. o. J., p. 3)

      The tasks, the self-image and the responsibility of the controller are described very concisely and succinctly in the Controller Mission Statement from the International Group of Controlling (IGC) (cf. Fig. 1.4). The current version of the mission statement explicitly emphasises the controller’s joint responsibility for target achievement. On the one hand, this joint responsibility stems from the fact that controllers are responsible for the accuracy of the information they collect and prepare; on the other hand, it can be derived from the fact that controllers, by designing and accompanying the management processes of target-setting, planning and performance management, make a significant contribution to management’s ability to make decisions in time and with an eye on corporate objectives. However, responsibility for the decisions actually taken, as expressed in the adoption of plans, still remains with management.

      Fig. 1.4: Controller Mission Statement of the International Group of Controlling (IGC 2013)

      In general, through coordination, controllers help solve problems caused by the increasing impact of these environmental factors:

      •Increasing dynamism and volatility

      •Ongoing globalisation

      •Changes in value creation owing to new technologies

      •Increasingly shorter product life cycles

      •The spread of digitisation across all organisations

      Controlling enables corporate management to face these challenges head-on with innovative solutions, instead of relying on old, outdated remedies.

Which concrete strategic and operative challenges does your company face?

      However, Controlling is not merely a service to enable management to “cover their backs” with the information it provides. It is also an idea which all employees in a company should take to heart. This idea consists of two aspects. First, acting, and taking personal responsibility for one’s actions, to further the company’s bottom line and in line with corporate planning; and second, thinking outside of one’s specific remit and embracing the concept of interface management. Thus, Controlling is not only carried out by controllers but ideally on the spot by the member of staff directly affected. In this way, Controlling is increasingly transitioning into self-Controlling; more than ever, controllers are undertaking “missionary work” to spread the underlying idea behind Controlling.

1.4Role and job description of the controller

      Now that we have discussed the tasks of Controlling, let us turn to the controller as a person and their position in the organisation. As already mentioned, on the one hand, controllers support management, but on the other hand, they also have decentralised (local) activities in that they spread the word about the idea of controlling among employees. Through their involvement in the planning process and the attendant need for information supply, they provide direct support for corporate management. That being said, controllers are active on all tiers of the hierarchy and in all corporate functions. Accordingly, we are starting to see a differentiated Controlling organisation among larger companies, one which is made up of both central and local controllers.

      At this stage, however, we do not want to discuss organisational details – that is the subject of Chapter 8. At the moment, it is enough to say that alongside the performance management model and the claim to leadership of the management, the tasks and position of the controller depend heavily on the size of the company. Thus, for small and mid-sized enterprises it is typical for the controller to be a “Jack-of-all-trades” and not only deal with purely Controlling tasks, while large companies often employ specialists for sub-sections of Controlling in their finance and business functions.

      Hence, one way of further defining the tasks of controllers and their position within the leadership structure of a company is to take a look at the respective job description.

Is there a job description for the controllers in your company?

      Fig. 1.5 shows the job description of the head of controlling in a mid-sized company. The job description provides information about the rank and chain of command/line of reporting of the controller and their precise fields of activity, competences and powers. Hence, it is particularly suited to clarifying the framework of the controller’s activities and to clearly document the position of the controller.