Presentation on theme: "What Is Control? Control"— Presentation transcript:
1What Is Control? Control the process of monitoring activities to ensure that they are being accomplished as planned and of correcting significant deviationscontrol systems are judged in terms of how well they facilitate goal achievement
2Control is a critical issue facing every manager in every organization todayQuality controlOffice productivityBasic systemsallocating financial resources,developing human resources,analyzing financial performance, and evaluating overall productivity
3Organizational Control Organizational ControlThe systematic process through which managers regulate organizational activities to make them consistent with expectations established inPlansTargetsStandards of performance
4To effectively control an organization, managers need to decideWhat information is essentialHow will they obtain that informationHow they can and should respond to it
5Why Is Control Important? Control is the Final Link in the Management Processprovides the critical link back to planningonly way managers know whether organizational goals are being metPermits Delegation of Authorityprovides information and feedback on employee performance
6The Planning-Controlling Link GoalsObjectivesStrategiesPlansPlanningStructureHuman ResourceManagementOrganizingStandardsMeasurementsComparisonsActionsControllingMotivationLeadershipCommunicationIndividual andGroup BehaviorLeading
7Measuring How We Measure personal observation - permits intensive coverageManagement By Walking Around (MBWA)drawbacks - subject to personal biasesconsumes a great deal of time
8oral reports - includes meetings, telephone calls statistical reports - numerical data are easy to visualize and effective for showing relationshipsdrawbacks - not all operations can be measuredimportant subjective factors may be ignoredoral reports - includes meetings, telephone callsmay be best way to control work in a virtual environmenttechnology permits creation of written record from oral reportdrawbacks - filtering of information
9Comprehensive control efforts should use all four approaches written reports - often more comprehensive and concise than oral reportsusually easy to file and retrieveComprehensive control efforts should use all four approaches
10What We Measure what we measure more critical than how we measure control criteria applicable to any management situation:employee satisfaction, absenteeism, and turnoverkeeping costs within budgetscontrol system needs to recognize the diversity of activitiessome activities difficult to measure in quantifiable termsmost activities can be grouped into some objective segments that can be measuredwhen objective measures are not available, should rely on subjective measures
11Comparingdetermines the degree of variation between actual performance and standardacceptable range of variation - deviations that exceed this range become significant
12Defining The Acceptable Range Of Variation Upper LimitStandardLower LimitMeasurement of PerformanceAcceptableRange ofVariationtt+1t+2t+3t+4t+5Time Period (t)
13Taking Managerial Action Correct Actual Performance - action taken when the performance variation is unsatisfactoryimmediate corrective action - corrects problems at once to get performance back on trackbasic corrective action - identifies reason for performance variationcorrects the source of variationRevise the Standard - variance results from an unrealistic standardstandard, not performance, needs correctiontroublesome to revise the standard downward
15Organizational Control Three types of controlFeed forwardSometimes called preliminary or preventive controlConcurrentAssesses current work activities, relies on performance standardsIncludes rules and regulations for guiding employee tasks and behaviorsIntent to ensure that work activities produce the correct resultsFeedbackFocuses on the organization’s outputs; also called post-action or output control
16Feed forward Controlprevents anticipated problemsmost desirable type of controlrequires timely and accurate information that often is difficult to getConcurrent Controltakes place while activity is in progresscorrects problem before it becomes too costlybest-known form is direct supervision
17Feedback Control takes place after the activity is done problems may already have caused damage or wastethe most popular type of controlfeedback may be only viable form of control availablefeedback has two advantagesprovides meaningful information on the effectiveness of planningcan enhance employee motivation
18Feedback Control Model Adjust StandardsAdjust PerformanceEstablish Strategic Goals.1. Establish standards of performance.2. Measure actual performance.3. Compare performance to standards.4. Take corrective action.IfInadequateIf Adequate4. Do nothing or provide reinforcement.Feedback
19Control PhilosophiesBureaucratic control influencing employee behavior and assess performance throughrulespolicieshierarchy of authorityreward systemswritten documentationDecentralized control relies oncultural valuestraditionsshared beliefstrust
20Financial statement analysis Human resource accounting TECHNIQUES OF CONTROLBreak even analysisBudgetary controlFinancial statement analysisHuman resource accountingManagement auditMISTQMPERT( Programme evaluation & review technique)18-
21Budgetary Control Most commonly used method of managerial control Budgetary ControlMost commonly used method of managerial controlProcess of setting targetsUsed to monitor results and compare to budget
22Budgets Managers Use Expense = anticipated and actual expenses Expense = anticipated and actual expensesRevenue = identifies forecasted and actual revenuesCash = estimates and reports cash flowsCapital = plans and reports investments in major assets to be depreciatedMaster budget
23Financial AnalysisManagers need to be able to evaluate financial reports that compare the organization’s performance with earlier data or industry normsLiquidity ratiosActivity ratiosProfitability ratiosLeverage ratios
24Total Quality Management - TQM Total Quality Management - TQMBased on decentralized control philosophyOrganization wide commitment to infusing quality into every activity through continuous improvementQuality circlesBenchmarkingReduced cycle timeContinuous improvement
25Human 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.
26MISMIS 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.
27Management AuditIndependent 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.
28PERTIt 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.