Read the following case study and attempt questions.

Mr Vinay is a Production Manager in a company. Being a Manager he seeks planned results from his subordinates so he sets the criteria against which the actual performance of subordinates will be measured. He also conveys these criteria to his subordinates. He knows that it is neither economical nor easy to keep a check on each and every activity. He also finds that if he tries to control everything it will result in controlling nothing After these two considerations, he gives the main focus of his effort on comparatively more important tasks and finally, he gets planned results.

Name the step of Management Function which is discussed in given phrase "he sets criteria"?

Setting Performance Standards

The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms. For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, all represents quantitative standards. Sometimes standards may also be set in qualitative terms. Improving goodwill and motivation level of employees are examples of qualitative standards.