1. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–1 Chapter 10 Controlling the organisation

2. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–2 Lecture outline Control as a management function The control process Types of controls Managerial approaches to implementing controls Assessing control systems

3. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–3 Control as a management function Controlling Process of regulating organisational activities so that actual performance conforms to expected organisational standards and goals.

4. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–4 Control as a management function Significance of the control system A set of mechanisms designed to increase probability of meeting organisational standards and goals. Controlling ensures resources are used for organisational objectives supporting organising and leading functions.

5. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–5 Control as a management function Role of controls Coping with uncertainty –Watching environmental factors for change Detecting irregularities –Such as quality, cost, staff turnover Identifying opportunities –Alerting management to opportunities

6. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–6 Control as a management function Role of controls (contd) Handling complex situations –Aiding coordination of complex situations Decentralising authority –Controls allow decision-making at lower levels

7. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–7 Control as a management function Levels of control: Strategic control - Monitoring critical environmental factors Tactical control - Assessing implementation of tactical plans at department level Operational control - Overseeing implementation of operating plans, monitoring day-to-day results

8. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–8 Levels of control Strategic planning Tactical planning Operational planning Strategic control Tactical control Operational control Top management Middle management 1st level management

9. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–9 The control process Steps in the control process 1.Determine areas to control 2.Establish standards 3.Measure performance 4.Compare performance against standards 5.Recognise positive performance; take corrective action as necessary 6.Adjust standards and measures as necessary

10. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–10 The control process Determine areas to control Establish standards Measure performance Compare performance Recognise positive performance Recognise positive performance Control process steps Control process steps Take corrective action Adjust standards

11. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–11 The control process Deciding what to control Resource dependence –Approach that argues that managers need to control areas where they depend on others for resources. –Four conditions must be met to justify a control point. –These controls are known as strategic control points

12. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–12 The control process Deciding what to control (contd) Four conditions for control –High dependence on resource –Expected resource flow is unacceptable –Control-process feasibility –Cost acceptability

13. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–13 Deciding what to control High dependence on the resource Chance that expected resource flow will be unacceptable Chance that expected resource flow will be unacceptable Control-process feasibility Cost acceptability Determining strategic control points Determining strategic control points Alternatives to control: Change dependence relationships Change nature of dependence relationships Alternatives to control: Change dependence relationships Change nature of dependence relationships

14. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–14 The control process Deciding what to control (contd) Alternatives to control If the first of these conditions shows a need for control, but such control process is either not feasible or too costly, then managers must develop alternatives to control, e.g.: –Change dependence relationship on suppliers etc. –Change nature of dependence relationship –Build reliability –Eliminate dependence

15. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–15 Types of controls Major control types by timing Feedforward control Regulation of inputs to ensure they meet standards Concurrent control Regulation of activities to ensure they conform to standards Feedback control Regulation of completed product to ensure standards are met

16. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–16 Control types by timing Input Transformation processes Transformation processes Outputs Feed-forward control Anticipating problems Feed-forward control Anticipating problems Concurrent control Attending to problems as they occur Concurrent control Attending to problems as they occur Feedback control Correcting problems after product/service is produced Feedback control Correcting problems after product/service is produced

17. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–17 Types of controls Multiple controls –Systems using two or more of the feedforward, concurrent and feedback control processes and involving several strategic control points. Cybernetic control –Self-regulating control system which, once operating, can automatically monitor the situation and take corrective action when necessary. Non-cybernetic control –Control system relying on human discretion as a basic part of its process.

18. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–18 Managerial approaches to implementing controls Bureaucratic control Clan control Market control Control and innovation

19. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–19 Managerial approaches to implementing controls Bureaucratic control Managerial approach relying on regulation through rules, policies, supervision, budgets, schedules, reward systems and other administrative mechanisms aimed at ensuring employees exhibit appropriate behaviours and meet performance standards.

20. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–20 Managerial approaches to implementing controls Clan control Managerial approach relying on values, beliefs, traditions, corporate culture, shared norms and informal relationships to regulate employee behaviours and facilitate reaching of organisational goals.

21. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–21 Managerial approaches to implementing controls Market control Managerial approach relying on market mechanisms to regulate prices for certain clearly-specified goods and services needed by an organisation.

22. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–22 Managerial approaches to implementing controls Control and innovation Four levers for strategic control/innovation –Belief systems –Boundary systems –Performance management systems –Interactive monitoring systems Incrementalist approach Control of an innovative project that relies on clan control but also involves a phased set of plans and accompanying bureaucratic controls.

23. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–23 Assessing control systems Potential dysfunctional aspects Behavioural displacement Game playing Operating delays Negative attitudes

24. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–24 Assessing control systems Overcontrol versus undercontrol Overcontrol Cutting job autonomy to the point where it seriously inhibits effective job performance. Undercontrol Granting autonomy to an employee to the point where the organisation loses its ability to direct individual effort towards achieving the organisational goals.

25. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–25 Assessing control systems Characteristics of an effective control system: Future-oriented Multidimensional Cost-effective Accurate Realistic

26. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–26 Assessing control systems Characteristics of effective control systems (contd): Timely Monitorable Acceptable to organisation members Flexible

27. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–27 Lecture summary Control as a management function –Significance of the control process –Role of controls –Levels of control The control process –Steps in the process –Strategic control points Types of control –Types by timing, multiple, cybernetic, non-cybernetic

28. © 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim Focus 1e by Bartol et al. 10–28 Lecture summary Managerial approaches to control –Bureaucratic, clan, market –Control and innovation Assessing control systems –Dysfunctions –Over-control/under-control –Characteristics of effective control systems