Question

Which of the following best describes the purpose of setting performance standards in the controlling process?

• A. To eliminate the need for employee training
• B. To serve as benchmarks towards which an organization strives to work
• C. To reduce the importance of external factors
• D. To ensure that no deviations occur

Hint:

Remember:

• Performance Standards $\rightarrow$ Benchmarks for evaluation
• Used to compare actual performance with planned performance
• Essential step in the controlling process

Answer 1

The Correct Option is B

Concept: In the controlling process, performance standards are predetermined criteria used to measure actual performance. These standards help managers:

• Compare actual performance with expected performance
• Identify deviations
• Take corrective actions

Thus, standards act as benchmarks for organizational performance.

Step 1: Understand the meaning of performance standards. Performance standards define:

• Expected targets
• Desired level of performance
• Goals to be achieved

They provide a basis for evaluation during controlling.

Step 2: Identify the correct purpose of standards. Since standards guide employees and management toward organizational objectives, they serve as: \[ \text{Benchmarks for performance} \] Therefore, option (B) is correct.

Step 3: Eliminate the incorrect options.

• Performance standards do not eliminate the need for training.
• They cannot reduce the importance of external factors.
• Deviations may still occur even after setting standards.

Hence, these options are incorrect. Therefore, the purpose of setting performance standards is to provide benchmarks for organizational performance. \[ \boxed{\text{To serve as benchmarks towards which an organization strives to work}} \]