controlling

What Is control? Control is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting significant deviations.

The Control Process A three step process including: 1.Measuring actual performance 2.Comparing actual performance against a standard 3.Taking action to correct deviations or inadequate standards

The control process Step 1 Step 2 Step 3 Measuring Actual Performance GOALS Organizational Divisional Departmental Individual Measuring Actual Performance Comparing Actual Performance Against Standard Taking Managerial Action Step 1 Step 3 Step 2

The control process Steps in the control process: Determine areas to control Establish standards Measure performance Compare performance Recognise positive performance Take corrective actions Adjust standards

Types of Control Input Output Feedforward Control Concurrent Feedback Processes Anticipates problems Corrects problems as they happen problems after they occur

Feed Forward Control Regulates inputs to ensure that they meet standards necessary for transformation process Concurrent Control Regulates ongoing activities to ensure that they conform to orgnaization standards. Feedback Control Regulates products or service after completion to ensure final output meets organization standards and goals.

Managerial Approaches Bureaucratic Control Organic / Clan Control Market Control

Bureaucratic Control Managerial approaches relying on regulation through rules, policies, supervision, budgets, schedules, reward systems and other administrative mechanisms aimed at ensuring employees exhibit appropriate behaviors and meet performance standards

Characteristics of Bureaucratic Methods 1. Emphasizes organizational authority. 2. Relies on administrative and hierarchical mechanism, such as rules, regulation, procedures,standardization of activities. 3. Well-defined job descriptions. 4. Emphasis on extrinsic rewards (wages, pensions, status symbols) for controlling performance.

Organic/Clan Control Managerial approach relying on values beliefs, traditions, corporate culture, shared norms and informal relationships to regulate employee behaviors and facilitate reaching of organizational goals.

Characteristics of Clan Control Methods 1. Results-based job descriptions that emphasize goals to be achieved 2. Regulate employee behavior by the shared values, norms, traditions, rituals and other aspects of the organization’s culture. 3. Emphasis on both extrinsic and intrinsic rewards (meaningful work) for controlling performance. 4. Harnessing of group controls, based on an assumption that group goals and norms assist in achieving organizational goals.

Market Control Emphasizes the use of external market mechanisms to establish the standards used in the control system

Characteristics of Market control methods 1.Uses external market mechanisms, such as price competition and relative market share, to establish standards used in system. 2.Useful where marketplace competition is considerable

Traditional Financial controls The budgets provide quantitative standards against which to measure and compare resources consumption.

Financial Ratios Financial ratios compare two significant and express them as a percentage or ratio. Liquidity Ratio Profitability Ratio

Other financial controls Other financial control Measures increasing in popularity.

Economic value added(EVA) A financial tool for measuring corporate and divisional performance calculated by taking after tax operating profit minus the total annual cost of capital.

Market value added(MVA) A financial tool that measures the stock market’s estimate of the value of a firm’s past and expected investment.

AUTOMATION BASED CONTROLS Management Information Systems MIS are used to provide management with needed information on a regular basis. Organizes data in a meaningful way Can access the information in a reasonable amount of time.

Balance Scorecard A performance measurement tool that looks at four areas; financial customers, internal processes, and people/ innovation/ growth assets- that contribute to a company’s performance.

What to Control? Balanced Scorecard! Customer perspective Internal perspective Innovation and learning perspective Financial perspective

Planning Controlling Link Goals Objectives Strategies plans Organizing Structure Human resource mangement Leading Motivation Communication Individual and group behavior Controlling standards Measurements Comparisons actions