1. © Prentice Hall, 2002 19 - 1 Modern Management 9 th edition.

2. © Prentice Hall, 2002 19 - 2  Objectives A definition of control A thorough understanding of the controlling subsystem An appreciation for various kinds of control and for how each kind can be used advantageously by managers Insights into the relationship between power and control Knowledge of the various potential barriers that must be overcome to implement successful control An understanding of steps that can be taken to increase the quality of a controlling subsystem.

3. © Prentice Hall, 2002 19 - 3 T HE F UNDAMENTALS O F C ONTROLLING Defining Control Defining Controlling The Controlling Subsystem The Controlling Process Measuring Performance How to Measure What to Measure.

4. © Prentice Hall, 2002 19 - 4 T HE F UNDAMENTALS O F C ONTROLLING Figure 19.1 Relationship between overall management system and controlling subsystem.

5. © Prentice Hall, 2002 19 - 5 T HE F UNDAMENTALS O F C ONTROLLING Figure 19.2 The controlling subsystem.

6. © Prentice Hall, 2002 19 - 6 T HE F UNDAMENTALS O F C ONTROLLING Defining Controlling (con’t) The Controlling Process (con’t) Comparing Measured Performance to Standards GE's standards: 1. Profitability standards 2. Market position standards 3. Productivity standards 4. Product leadership standards 5. Personnel development standards 6. Employee attitudes standards 7. Social responsibility standards 8. Standards reflecting relative balance between short- and long-range goals American Airlines standards: 1. 95% accuracy on posted flight arrival times 2. No more than 5 minute wait for 85% of customers at ticket counter.

7. © Prentice Hall, 2002 19 - 7 T HE F UNDAMENTALS O F C ONTROLLING Defining Controlling (con’t) The Controlling Process (con’t) Taking Corrective Action Recognizing Problems Recognizing Symptoms.

8. © Prentice Hall, 2002 19 - 8 T HE F UNDAMENTALS O F C ONTROLLING Types of Control Precontrol Concurrent Control Feedback Control.

9. © Prentice Hall, 2002 19 - 9 T HE C ONTROLLER A ND C ONTROL The Job of the Controller Works with these organizational financial dimensions: 1. Profits 2. Revenues 3. Costs 4. Investments 5. Discretionary expenses How Much Control Is Needed? Cost-benefit analysis.

10. © Prentice Hall, 2002 19 - 10 T HE C ONTROLLER A ND C ONTROL Table 19.1 Sample Job Description for a Controller in a Large Company (part 1 of 2) Objectives The controller (or comptroller) is responsible for all accounting activities within the organization. Functions 1.General accounting—Maintain the company’s accounting books, accounting records, and forms. This includes: a. Preparing balance sheets, income statements, and other statements and reports b. Giving the president interim reports on operations for the recent quarter and fiscal year to date c. Supervising the preparation and filing of reports to the SEC 2.Budgeting—Prepare a budget outlining the company’s future operations and cash requirements. 3.Cost accounting—Determine the cost to manufacture a product and prepare internal reports for management of the processing divisions. This includes: a. Developing standard costs b. Accumulating actual cost data c. Preparing reports that compare standard costs to actual costs and highlight unfavorable differences.

11. © Prentice Hall, 2002 19 - 11 T HE C ONTROLLER A ND C ONTROL Table 19.1 Sample Job Description for a Controller in a Large Company (part 2 of 2) 4.Performance reporting—Identify individuals in the organization who control activities and prepare reports to show how well or how poorly they perform. 5.Data processing—Assist in the analysis and design of a computer-based information system. Frequently, the data-processing department is under the controller, and the controller is involved in management of that department as well as other communications equipment. 6.Other duties—Other duties may be assigned to the controller by the president or by corporate bylaws. Some of these include: a. Tax planning and reporting b. Service departments such as mailing, telephone, janitors, and filing c. Forecasting d. Corporate social relations and obligations Relationship The controller reports to the vice president of finance..

12. © Prentice Hall, 2002 19 - 12 T HE C ONTROLLER A ND C ONTROL Figure 19.3 Value of additional controlling.

13. © Prentice Hall, 2002 19 - 13 P OWER A ND C ONTROL A Definition of Power Total Power of a Manager Position power Personal power Steps for Increasing Total Power 1. Sense of obligation toward manager 2. Belief that manager possesses high level of expertise 3. Sense of identification with manager 4. Perception of dependency on manager.

14. © Prentice Hall, 2002 19 - 14 P ERFORMING T HE C ONTROL F UNCTION Potential Barriers to Successful Controlling Long-Term Versus Short-Term Production Employee Frustration and Morale Filing of Reports Perspective of Organization Members Mean Versus Ends.

15. © Prentice Hall, 2002 19 - 15 P ERFORMING T HE C ONTROL F UNCTION Making Controlling Successful Specific Organizational Activities Being Focused On Different Kinds of Organizational Goals Timely Corrective Action Communication of the Mechanics of the Control Process.

16. © Prentice Hall, 2002 19 - 16 Chapter Nineteen Questions