Presentation on theme: "What Is Control? Control Control –the process of monitoring activities to ensure that they are being accomplished as planned and of correcting significant."— Presentation transcript:
What Is Control? Control Control –the process of monitoring activities to ensure that they are being accomplished as planned and of correcting significant deviations –control systems are judged in terms of how well they facilitate goal achievement
2 Control is a critical issue facing every manager in every organization today Control is a critical issue facing every manager in every organization today Quality control Quality control Office productivity Office productivity Basic systems Basic systems allocating financial resources, allocating financial resources, developing human resources, developing human resources, analyzing financial performance, and evaluating overall productivity analyzing financial performance, and evaluating overall productivity
3 Organizational Control The systematic process through which managers regulate organizational activities to make them consistent with expectations established in The systematic process through which managers regulate organizational activities to make them consistent with expectations established in ● Plans ● Targets ● Standards of performance
4 To effectively control an organization, managers need to decide What information is essential What information is essential How will they obtain that information How will they obtain that information How they can and should respond to it How they can and should respond to it
Why Is Control Important? Control is the Final Link in the Management Process Control is the Final Link in the Management Process –provides the critical link back to planning –only way managers know whether organizational goals are being met Permits Delegation of Authority Permits Delegation of Authority –provides information and feedback on employee performance
Structure Human Resource Management Organizing The Planning-Controlling Link Standards Measurements Comparisons Actions Controlling Goals Objectives Strategies Plans Planning Motivation Leadership Communication Individual and Group Behavior Leading
Measuring Measuring –How We Measure personal observation - permits intensive coverage personal observation - permits intensive coverage –Management By Walking Around (MBWA) –drawbacks - subject to personal biases consumes a great deal of time
statistical reports - numerical data are easy to visualize and effective for showing relationships statistical reports - numerical data are easy to visualize and effective for showing relationships –drawbacks - not all operations can be measured important subjective factors may be ignored oral reports - includes meetings, telephone calls oral reports - includes meetings, telephone calls –may be best way to control work in a virtual environment –technology permits creation of written record from oral report –drawbacks - filtering of information
–written reports - often more comprehensive and concise than oral reports usually easy to file and retrieve usually easy to file and retrieve Comprehensive control efforts should use all four approaches
What We Measure What We Measure –what we measure more critical than how we measure –control criteria applicable to any management situation: employee satisfaction, absenteeism, and turnover employee satisfaction, absenteeism, and turnover keeping costs within budgets keeping costs within budgets –control system needs to recognize the diversity of activities –some activities difficult to measure in quantifiable terms most activities can be grouped into some objective segments that can be measured most activities can be grouped into some objective segments that can be measured when objective measures are not available, should rely on subjective measures when objective measures are not available, should rely on subjective measures
Comparing Comparing –determines the degree of variation between actual performance and standard –acceptable range of variation - deviations that exceed this range become significant
Defining The Acceptable Range Of Variation Acceptable Upper Limit Standard Acceptable Lower Limit Measurement of Performance Acceptable Range of Variation tt+1t+2t+3t+4t+5 Time Period (t)
Taking Managerial Action Taking Managerial Action –Correct Actual Performance - action taken when the performance variation is unsatisfactory immediate corrective action - corrects problems at once to get performance back on track immediate corrective action - corrects problems at once to get performance back on track basic corrective action - identifies reason for performance variation basic corrective action - identifies reason for performance variation –corrects the source of variation –Revise the Standard - variance results from an unrealistic standard standard, not performance, needs correction standard, not performance, needs correction troublesome to revise the standard downward troublesome to revise the standard downward
Managerial Decisions in the Control Process
15 Organizational Control Feed forward Sometimes called preliminary or preventive control Sometimes called preliminary or preventive control Concurrent ● Assesses current work activities, relies on performance standards ● Includes rules and regulations for guiding employee tasks and behaviors ● Intent to ensure that work activities produce the correct results Feedback Focuses on the organization’s outputs; also called post-action or output control Focuses on the organization’s outputs; also called post-action or output control Three types of control
Feed forward Control Feed forward Control –prevents anticipated problems –most desirable type of control –requires timely and accurate information that often is difficult to get Concurrent Control Concurrent Control –takes place while activity is in progress –corrects problem before it becomes too costly –best-known form is direct supervision
Feedback Control Feedback Control –takes place after the activity is done –problems may already have caused damage or waste –the most popular type of control feedback may be only viable form of control available feedback may be only viable form of control available –feedback has two advantages provides meaningful information on the effectiveness of planning provides meaningful information on the effectiveness of planning can enhance employee motivation can enhance employee motivation
18 Feedback Control Model If Inadequate If Adequate Adjust Standards Adjust Performance Feedback Establish Strategic Goals. 1. Establish standards of performance. 2. Measure actual performance. 3. Compare performance to standards. 4. Take corrective action. 4. Do nothing or provide reinforcement.
19 Control Philosophies Bureaucratic control influencing employee behavior and assess performance through – rules – policies – hierarchy of authority – reward systems – written documentation Decentralized control relies on –cultural values –traditions –shared beliefs –trust
18-20 TECHNIQUES OF CONTROL Break even analysis Budgetary control Financial statement analysis Human resource accounting Management audit MIS TQM PERT( Programme evaluation & review technique)
21 Budgetary Control Most commonly used method of managerial control Most commonly used method of managerial control Process of setting targets Process of setting targets Used to monitor results and compare to budget Used to monitor results and compare to budget
22 Budgets Managers Use ● Expense = anticipated and actual expenses ● Revenue = identifies forecasted and actual revenues ● Cash = estimates and reports cash flows ● Capital = plans and reports investments in major assets to be depreciated ● Master budget
23 Financial Analysis Managers need to be able to evaluate financial reports that compare the organization’s performance with earlier data or industry norms Managers need to be able to evaluate financial reports that compare the organization’s performance with earlier data or industry norms Liquidity ratios Activity ratios Profitability ratios Leverage ratios
24 Total Quality Management - TQM Organization wide commitment to infusing quality into every activity through continuous improvement Organization wide commitment to infusing quality into every activity through continuous improvement Quality circles Benchmarking Reduced cycle time Continuous improvement Based on decentralized control philosophy
Human Resource Accounting It is the accounting for people as an organizational resource involving measurement of the cost incurred in the acquisition and development of human assets and the measurement of economic value of employees to an organization.
MIS MIS is a formal method of making available to management the accurate and timely information necessary to facilitate the decision making process and enable the organization’s planning, control and operational functions to be carried out effectively.
Management Audit Independent and critical appraisal of the total managerial process. It measures the deviations from the principles and practices of effective management at different levels of organization and their impact on the organization and on end results.
PERT It is a very useful technique of managerial control particularly at the top level concerned with overall responsibility of a project. PERT concentrates attention on critical elements that may need correction. It facilitates control by exception. It enables forward looking control as a delay will effect succeeding events, and possibly the whole project, unless the manager can somehow make up the time by shortening that of some action in the future.