Business Management S Mahelal 2012

2 CONTROL  The management function that involves monitoring activities to ensure that they’re being accomplished as planned and correcting any significant deviations.

3 Planning-Control Link

4 What is control and how is it achieved? –The control process is intended to support the achievement of objectives at any level, by using suitable control systems. This Involves: –Setting targets – what and when to measure –Measuring with control tools –Comparing actual with target –Correcting deviations or altering target

5 The Control Process

Management 8/e - Chapter 86 Setting targets –Performance targets provide direction and a standard of performance to aim for –The Standard of Performance is the defined level of performance to be achieved against which actual performance is compared

Management 8/e - Chapter 87 Measuring

8 Comparing

How Do Managers Measure? To determine actual performance, a manager must first get information about it. Thus, the first step in control is measuring Four common sources of information frequently used to measure actual performance are –personal observation –statistical reports –oral reports –written reports Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

Tactics for control –Direct supervision –Organisational structuring –Rules and procedures –Management by objectives –Machinery and automation –Human resource management –Values and beliefs

Strategies for control – Mechanistic or Organic

What is Managing By Walking Around? Management By Walking Around (MBWA) – When a manager is out in the work area interacting with employees Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

How do you know you are in control? Types of performance measure  An input measure is an element of resource that is measured as it is put in to the transformation process  A process measure is a measurement taken during an operational process that provides data on how the process is performing  An output measure is a measurement taken after an operational process is complete

Efficiency and effectiveness 4 Efficiency is a measure of the inputs required for each unit of output 4 Effectiveness is a measure of how well an activity contributes to achieving organisational goals

What Management Action Can Be Taken? Immediate Corrective Action – Corrective action that addresses problems at once to get performance back on track Basic Corrective Action – Corrective action that looks at how and why performance deviated before correcting the source of deviation Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

When Does Control Take Place? Feedforward Control – Control that takes place before a work activity is done Concurrent Control – Control that takes place while a work activity is in progress Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

Feedback Control – Control that takes place after a work activity is done Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

How Do Managers Keep Track of Finances?  In order to meet profitability goals, managers need financial controls  Traditional financial measures managers might use include –ratio analysis –budget analysis Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

Balanced scorecard  A performance measurement tool that looks at four areas – financial, customer, internal processes and innovation and learning  Views performance in four areas simultaneously: –Financial – how do we look to shareholders? –Customer – how do customers see us? –Internal – what must we excel at? –Innovation and learning – can we continue to improve and create value?

Balanced scorecard

How is an Organization’s Information Controlled? Managers deal with information controls in two ways: 1. as a tool to help them control other organizational activities 2. as an organizational area they need to control Management Information System (MIS) –A system used to provide management with needed information on a regular basis Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

What are Contemporary Control Issues? Employee Theft –Any unauthorized taking of company property by employees for their personal use Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

Contemporary Issues Workplace Violence –According to the U.S. National Institute of Occupational Safety and Health, 2 million American workers per year are victims of some type of workplace violence Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall.

Simons’ four levers of control  Diagnostic controls –Enable managers to monitor performance on critical variables  Beliefs systems –Control through concise statements of core beliefs  Boundary systems –Setting limits to action – what not to do  Interactive control systems –Regular, frequent meetings to monitor performance and agree on actions

Conclusion  Organisations must maintain control over their performance  The control process includes setting targets, measuring, comparing and correcting  The balanced scorecard is one of the most common methods for measuring performance  Type of control – mechanistic or organic – will depend on the type of organisation as defined by the competing values framework